** CBOT prices are weaker at midday with wheat sagging to new contract lows on continued technical selling amid large world supplies. Favorable weather in the Black Sea is allowing Russia to export record tonnages of wheat, which is stealing “sales thunder” from the rest of the world’s exporters.
The drop in wheat is pressuring corn, with wetter forecasts for Argentina and S Brazil producing liquidation in soybeans. The market expects that WASDE will raise their end stock forecasts for soybeans and corn due to sagging US export forecasts. The mentality of the markets is bearish, with most pointing to world weather as offering the only hope for a lasting recovery.
ARC research argues that this is no place to be making new sales. Patience is advised with uncertainty surrounding South American weather forecasts. Cash basis levels are again starting to gain as farmers shut their bin doors
** CBOT brokers estimate that funds have sold 6,400 contracts of corn, 4,800 contracts of soybeans, and 4,300 contracts of wheat.
** For the week ending Dec 7th, the US exported 25.9 Mil Bu of corn, 45.2 Mil Bu of soybeans, and 11.6 Mil Bu of wheat. For their respective crop years to date, the US has shipped out 336 Mil Bu of corn (down 240 Mil Bu or 42%), 885 Mil Bu of soybeans (down 142 Mil Bu or 14%), and 480.3 Mil Bu of wheat (down 38 Mil Bu or 8%). The US export pace for the 2017/18 crop year remains disappointing and a cap to rallies.
** The daily FAS sales report confirmed a sale of 110,000 MTs of US corn to Mexico and 132,000 MTs of soybeans to an unknown destination.
** CONAB will be out in the AM with their updated corn and soybean crop estimates for Brazil. The data will be ahead of the USDA report at 11 AM CST. The trade is looking for a modest increase in crop size to 109-110 MMTs of soybeans. The corn crop is expected to change little based on the importance of safrinha production.
** Limited progress was scored between the Argentine Gov’t and the US Commerce Dept last week. The Argentines are trying to negotiate a lower duty or a complete end of the duty on their soyoil biodiesel imports into the US.
The odds are high that the US Commerce Dept will maintain Argentine B100 biodiesel duties at 51-72%, which will be prohibitive to US import. A final 5 year ruling is expected from the US Dept of Commerce in early February.
** Midday GFS South American Weather Update: The 10 day forecast is little changed from the overnight run. Mostly dry weather will persist for the next 5-6 days with high temps ranging from the mid 80’s to lower 100’s. Showers are slated to fall late in the weekend and early next week. The rain will start across SE Argentina and push northward into the remainder of Argentina and S Brazil late next week. The 10-15 day forecast offers much better chances of rain, but it’s a long ways out for any confidence in a La Nina year. ARC advises clients to watch the forecasts closely and make sure that extended rains are pulled forward in the forecasts.
** South American Rainfall Forecast for the next 10 days:
** AgResource Market Comment: The bearishness at the CBOT is thick this morning as wheat values push to new contract lows. And everyone expects a bearish report from USDA on Tuesday. It’s the market’s reaction to the report that will be the most interesting. This is not a place to join the bears, and we await additional weather rallies with La Nina forecast to persist.
