AgResource Daily Farm Marketing Advice for Wednesday: 1/Corn Producers: Sell 10% of the estimated ‘18 corn harvest at $4.01 basis Dec 2018 futures. 2/ Corn Producers: Sell 10% of estimated ‘19 corn production at $4.17 basis Dec 2019 futures. 3/ Corn Producers: Sell 15% if the 2017 corn crop is March 2018 corn futures reach $3.72.
It’s been another mixed morning, with all markets off session highs, currencies weakening in a host of major exporting countries, and again grain markets have been unable to exceed chart-based resistance. Crude is down $.50/barrel following a slight build in US inventories last week. The US dollar has extended its overnight losses modestly.
US crude inventories less strategic reserves through the week ending October 20th were pegged at 457.3 Mil Barrels, up a marginal 0.8 Mil on the week but still down 2% from last year. Otherwise this week’s EIA report is viewed as supportive, with ethanol production rising (again) and US ethanol stocks falling. US ethanol production last week totaled 305 Mil Gal, up 6 Mil on the week and a lofty 14 Mil Gal above the same week in 2016. Despite another week of elevated production, ethanol stocks fell for a second consecutive week to 882 Mil Gal, vs. 904 Mil in early October. Motor gasoline stocks also retreated, and at 216.9 Mil Barrels are the lowest since Sep of 2015 and down 4% from a year ago.
Other news this morning includes Jordan purchasing 200,000 MTs of hard wheat at $229/MT, a price unchanged from earlier in the month, which is in line with limited movement in world wheat cash prices in reent weeks.
Following excessive rainfall in Southern Brazil – with more to come over the next 6-7 days – Brazil’s Ag Ministry is seeking approval to import 750,000 MTs from outside of South America duty free. This is the first sign that non-Argentine supply will be needed, and though the Black Sea would welcome Brazil’s market, it’s more evidence that additional changes to the world wheat trade matrix lie ahead. South Africa’s wheat crop, too, is struggling amid persistent dryness and total S Hemisphere wheat production looks to be down 18 MMTs (30%) from a year ago.
Export sales on Thursday are expected to include 1.3-1.5 MMTs of soybeans, 700,000-1.0 MMTs of corn and 450-600,000 MTs of wheat. Corn sales in recent weeks have been much better than anticipated given ongoing cheap offers from Argentina.
The midday US forecast features some moderation in abnormally cold temps Nov 4-7, but is otherwise unchanged. Moderate snowfall is probable on the weekend across the N Plains and Upper Midwest, through elsewhere drier weather through Nov 5-6 will allow harvest to accelerate.
Midday GFS South American Weather Update: The GFS is much wetter in Central Brazil beginning mid/late next week, as the jet stream moves incrementally northward, with needed soaking precip offered to nearly the whole of Brazil’s soybean belt within the next 10-12 days. We await this afternoon’s EU model, but finally the growing season there looks to begin in earnest. Too much rain will across Southern Brazil & Paraguay into early next week, but there’s hope for a lasting period of dryness thereafter. The midday update is more favorable.
AgResource Market Comment: There’s nothing available to push corn, wheat and soy futures outside of their long-established ranges. As such, rallies will continue to be used to price old and new crop production.
