Written Commentary
MORNING AG OUTLOOK
Mostly lower trade across the Ag space ahead of this morning’s weekly export sales. The soybean complex is the downside leader as speculative traders continue to shed length. Feed grains are little changed as prospects for peace in the Black Sea region combined with no serious weather threats from the “Super El Nino” limit upside price potential. Energy prices are lower following reports US VP Vance reached out to Iran’s Supreme National Security Council to jump start peace negotiations. WTI Dec-26 crude oil is down $.90 per barrel at $101.90, spot RBOB is down $.03 per gallon while HO is off $.09. Light precipitation across the NC Midwest the past 24 hours while continued dry across the central and ECB. The next round of rain will begin to fill in across the central and southern Midwest this weekend before widespread, heavy precipitation blankets the nation’s midsection early through the middle of next week. Above normal temperatures and precipitation look to hold across the Midwest through the 1st 10 days of November. Mostly dry across Brazil and Argentina the past 24 hours. Light rain in S. Buenos Aires the past 24 hours while dry across Brazil. Scattered rains and above normal temperatures will benefit plantings in Argentina over the next week. Heavy rains in the interior south of Brazil may raise flood risk. Scattered showers are expected in WC growing areas. The US $$$ is slightly lower, however within yesterday’s range after the Fed held rates steady. US stock indices are lower.
Corn:
Dec-26 is steady at $4.51 ¾ holding within yesterday’s range as prices continue to consolidate around $4.50. Speculative traders were net buyers of 3k contracts yesterday, while open interest surged 29k contracts. Yesterday’s EIA data showed ethanol production rose to 329 mil. gallons last week, up from 322 mil. the previous week while up 2.5% YOY. Production was above the pace needed to reach the USDA corn usage forecast for the 1st time in 6 weeks. Production margins are firm as energy prices remain high while corn and natural gas prices have slid. Export sales are expected to range from 40-65 mil. bu. The path of least resistance remains lower until US demand improves and/or a more threatening SA forecast.
Soybeans:
Nov-26 beans are $.09 lower at $12.15 ½ falling to a fresh 2 month low. Dec-26 meal is down $1.60 at $334.10 holding near its 100-day MA support. Dec-26 oil is down 83 points at 64.73 holding near its June-26 low and 38% Fibonacci retracement support. Despite net selling yesterday, we have the MM’s net long position across the complex at nearly 450k contracts, still historically large however off from the recent record of 558k. Soybean O.I. was down 26k contracts, meal was off 7.7k while oil was up 11.5k. Crush margins are down another $.05 to $2.30 bu. Chinese purchases likely rest between 18-19 mmt. Sinograin is expected to auction off another 400k mt of soybeans next Tues. Nov. 3rd. Their last auction earlier this week sold only 172k mt, roughly a third of the total volume offered. Export sales are expected to range from 50-100 mil. bu. of soybeans, 200-450k tons of meal and 0-10k tons of oil.
Wheat:
Prices are little changed as all 3 classes consolidate within yesterday’s range. CGO Dec-26 is $.01 higher at $6.00, Dec-26 KC is unchanged at $6.43 while Dec-26 MIAX is $.00 ½ lower at $6.19 ¼. Both CGO and KC fell to 3-4 month lows yesterday while MIAX set a new contract low. Wire services report that at least 1 vessel has already safely passed thru the Kerch Strait into the Black Sea. Only time will tell whether a recent cease-fire agreement in the city of Oleshky in the Kherson region will hold (or expand) or whether vessels can safely navigate through the Black Sea. Prospects for peace have pressured prices the past 2 months. I’d estimate the MM short position in CGO is approaching 70k contracts after yesterday’s trade. Export sales are expected to range from 8-18 mil. bu. while still searching for a price level that stimulates demand.
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