** Midday CBOT Grain and Oilseed Comment: A mixed start produced modest buying with CBOT corn, soybeans and wheat slightly higher at midday. The large short positions of funds and big jump in Thursday’s corn open interest has traders looking for a reason to be a buyer. However, the ongoing Midwest harvest and the oversupply of US grain is capping gains. And corn appears to be up via the short covering in wheat, while soybeans uncovered modest Chinese pricing on the AM decline. ARC doubts that the CBOT can sustain any lasting recovery, today’s CBOT advance appears to be a “dead cat” bounce.
** CBOT brokers estimate that funds have bought 3,100 contracts of corn, 1,900 contracts of wheat, and 2,400 contracts of soybeans. In soy products, funds have bought 1,700 contracts of soymeal and sold 1,200 contracts of soyoil. The market continues to feature index funds rolling December positions forward which accounts for the elevated volume total in corn and wheat. Funds have not decided to bank profits on long soybean/short grain spreads.
** The CFTC CoT report is delayed until Monday via the US Gov’t Veteran’s Day holiday. ARC estimates that thru Tuesday, funds were holding a short corn position of around 230,000 contracts while being short 100,000 wheat and long 52,000 contracts of soybeans. The funds appear comfortable to hold their short grain positions heading into 1st notice day against Dec futures.
** The Russian ag minister confirmed that that Russia plans to add 50% to its grain export capacity in the next 3 years to have total grain export capacity at 7.5 MMTs/month (275 Mil Bu/month). Russia is also planning investment in new wagons and rail to help facilitate grain movement. The announcement was expected and confirmed Russia’s desire to produce 100 MMTs of wheat by 2022. Russia still has another 20 Mil acres that can come under cultivation, and investment in export infrastructure is key to further growth in Russia’s agricultural sector. Russia today has the capacity to export 45 MMTs of grain annually, and their goal is to reach 90 MMTs by 2020.
** Turkey has launched a tender to secure 230,000 MTs of European wheat with shipment between November and mid December. The tender will close in a week on November 17th. The requested wheat will have to be 13.5% protein.
** China is cracking down on the amount of GMO soybeans that leak into their food supply and taking longer to issue safety certificates for GMO cargoes. The certs have been harder to receive and could slow demand at some point. Importers are slow to make forward purchases without a safety certificate.
** Midday GFS Weather Update for South America: The midday forecast is unchanged from recent runs. Abundant rains will fall across much of Brazil over the next 10 days including S Brazil, while a drier weather pattern favors spring planting across Argentina. The moisture set up is favorable for now, key going forward is whether rains the rains return to Agentina in early December? The 11-15 day forecast hints at the return of a few showers, but totals are not expected to range from .25-.75”. No lasting heat is forecast with highs ranging from the mid 70’s to the lower 90’s. As stated above, the forecast is favorable assuming Argentine rains return in December.
** AgResource Market Comment: There is not much to do, but wait for a South American weather scare to bring back market volatility to the CBOT. Current good volume totals are related to forward rolling of December futures. The EPA will be announcing biofuel mandates later this month, but otherwise the world is awash in grain and it’s hard to get overly bullish or bearish. Our bet is that CBOT prices hold in trading range into December deliveries.
