Good afternoon friends!
Corn 354’2’4 +8’0
Soybeans 1011’2 +12’6
Chi Wheat 415’2 +5’2
KC Wheat 417’4 7’4
Cotton 68.75 +.44
Big day of fund buying here at the CBOT as shorts look to cover ahead of what many feel could be the most volatile 24 hours in some time. November soybeans made another run at 10.00 but it fell apart into the close as cash sellers moved into the market once it looked like the palm oil rally in Malaysia was going to pause. Traders expect USDA to increase its soybean crop outlook tomorrow by 45 million bu. to 4.314 billion bushels, but demand should take a bite out of that. I would be in the camp that thinks yields will see a higher jump than 45 million, don’t be shocked if we get a full 1 bpa increase. Even though Chinese buying has been strong, China said during Oct they imported 5.21 MMT of soybeans, down 5.79% from year-ago and a bit below expectations. We may have seen peak demand for the crop year, China usually moves bids to SAM in December.
Corn and wheat were on the move as well, but those crops are going to be sold heavilly on short covering rallies. KC is taking leadership of the wheat complex while ethanol is leading corn at this point. Ethanol margins are really wide right now, which is why the basis in some parts has popped. I dont look for much follow thru in the short run over recent highs given the crop outlook in SAM, so far.
The midday forecast is little changed. Heavy rains will persist N and C Brazil while drier weather will develop in S Brazil and Argentina. Such weather is favorable for yields and production. There is no evidence of any extreme heat, but warmth will be noted across Argentina and S Brazil with highs ranging from the mid 70s to mid 80s. Planting progress is expected to accelerate across Argentina and S Brazil in the days/weeks ahead.
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