AgResource Daily Farm Marketing Advice for Thursday: 1/ Corn Producers: Sell 10% of the estimated ‘18 corn harvest at $4.01 basis Dec ‘18 futures. 2/ Corn Producers: Sell 10% of estimated ‘19 corn production at $4.17 basis Dec ‘19 futures. 3/ Corn Producers: Sell 15% if the 2017 corn crop if March ‘18 corn futures reach $3.72.
6:30 AM CST CBOT Prices: January soybeans are down 7.50 cents at $9.95, March corn is down 0.75 cents at $3.52, and March Chi wheat is unchanged at $4.2525.
Good Morning! Grain futures are flat while the soy complex is weaker this AM. This morning’s weekly export sales report is likely to include bean sales again below the pace needed to meet the USDA’s forecast, and some long soy-short grain spread unwinding is noted. There still does not appear to be a meaningful shift in South America’s weather pattern, and ARC expects chart-based support in soybeans at $9.85, January, to hold.
Weekly export sales should include 400–600,000 MTs of wheat, 800,000-1.0 Mil MTs of corn, 1.1-1.4 MTs of beans and 100-300,000 MTs of meal. If realized, corn/wheat sales would be pretty decent, while bean sales of less than 2.0 MMTs will push cumulative sales further behind last year.
The same narrow band of rainfall is offered to Cordoba, Santa Fe & Entre Rios that was included in Wednesday’s midday GFS run. Isolated totals will reach upwards of 1.00-1.25”, though this covers just 25-30% of production.
This rain will no doubt welcomed, but the remainder of Argentina & far Southern Brazil will stay in a dry trend into Dec 17th. The models also maintain better shower chances thereafter, but still we wait for this to be pulled into the nearby period before raising our confidence in the solution. The market may trade the 11-15 day forecast, but as weather pertains to yield, we remain concerned about developing dryness.
South American basis levels continue to creep higher amid a drawdown in stocks and slow corn planting in Argentina. On paper, US Gulf corn is the world’s cheapest feedgrain, and Gulf soybeans maintain their position as being the world’s low cost origin into early March.
But next Tuesday’s WASDE report of course won’t alter harvest estimates in any major producing countries, and downward revisions to exports are possible. It’s ARC’s opinion that the USDA will wait until Jan/Feb, when critical S American weather is better known, before making any adjustments. The trade, however, expects US soy end stocks to be raised 15 Mil Bu to 440 Mil amid the laggard pace of export sales & shipments to date. There’s no doubt the pace has been disappointing, but May-Aug US soy exports can vary wildly depending on South American production.
Raw material markets across the globe are weaker this AM. Malaysian palm oil futures hit new 6-month lows overnight as Nov stocks are likely to reach/exceed 2.0 MMTs. EU milling wheat futures are down another €.25-.75/MT. Dalian corn, soy and meal futures ended lower, and a host of major exporting currencies (in Russia, Brazil, Australia, Canada) are weaker.
Row crop markets will ebb & flow along with S American weather, but La Nina increasingly looks to be sustained through March.
