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It has been a couple weeks since our last article so to take a look back on how the grains performed might be a bit cruel, but needed to help understand where the market is now. The third week of November started by posting solid gains in most months but then slowly faded those gains to close the week pretty much lower across the board, except for corn, which closed with small gains. Wheat was the worst performer while soybeans posted small losses.
Strong demand helped support the grains early as China was in and bought 204,000 metric tons of U.S. soybeans. An unknown destination was in and bought 220,000 metric tons of U.S. soybeans later in the week. Corn had the most export interest with Mexico in buying two different jags of corn, one for 144,000 metric tons and the other for 102,000 metric tons. Japan was in and bought 102,000 metric tons of U.S. corn as well.
Soybeans were also supported by weather forecasts for Brazil. Hot and dry conditions continued to plague northern Brazil while heavy rains persist in southern Brazil. Both are causing a slow down in planting progress and will likely result in less second crop corn acres.
Dr. Michael Cordonnier released his latest production estimates for South America. His estimates for Brazil were slightly friendly and confirm some of the issues that have started to be reported. For soybeans, he lowered his production estimate by 2 million metric tons to 158 million metric tons. He also lowered his corn production estimate 2 million metric tons to 121 million metric tons. Dr. Cordonnier left both of his production estimates for Argentina unchanged with soybeans at 50 million metric tons while corn is at 52 million metric tons.
The October NOPA crush estimate continued to show strong crush demand as once again the crush pace for soybeans was at all-time record high of 189.8 million bushels versus expectation of 189.1 million bushels.
The third week of November’s Crop Progress report was a little friendly as the report put harvest progress slightly below expectations. Corn harvest was estimated at 88% complete versus 86% average. This was 2% below expectations. Soybean harvest was estimated at 95% complete versus 91% average. This was 1% below expectations. Sunflower harvest is 68% in the bin versus 72% average. Winter wheat planting is estimated at 93% complete versus 93% average. This was 2% below expectations. And winter wheat crop conditions dropped 3% to 47% good/excellent. This was 3% lower than expected. The biggest changes over the past week, Montana’s crop rating dropped 12% while Texas’ dropped 4%.
The fourth week of November was a short week due to the Thanksgiving Day holiday. There is a saying in the trading world that whoever feasts at Thanksgiving gets nothing for Christmas. Well, if that is the case, the month of December should be good for the commodities as although the first part of the short week was not all that bad for the markets, Black Friday was.
Wheat continued to take the path of least resistance. Chicago and Kansas City traded to new contract lows while Minneapolis wheat fought hard to hold above recent lows. Poor demand and expectations for improving conditions for the U.S. winter wheat crop pressured wheat. Rumors that Ukraine has a long list of vessels lining up to move grain out the Black Sea region now that there is reasonable insurance available for vessels to purchase added pressure.
Brazil is helping to support corn and soybeans.
First off, planting progress continues to be slow. As of Nov. 16, Argentina was reporting soybean planting progress at 19% complete versus 26% average. Corn planting was estimated at 34% complete versus 44% average. As of Nov. 17, Brazil had 68% of their soybeans planted versus 78% average. First corn crop planting was estimated at 86% complete versus 88% average.
The slow planting progress in Brazil is starting to cause concern for the potential acreage for the second corn crop in Brazil. The later the planting goes for soybeans the less likely producers will take the risk of following up with the second crop corn. This has the potential to drastically reduce production of the second corn crop in Brazil, which is where most of Brazil’s exportable corn bushels comes from.
Soybeans were higher to start the short week due to reports of disappointing weekend rains in Brazil. Reports of 0.5 to 2 inch rains were reported, but the northern region did not see much relief. At this point most analysts have already reduced the crop to be below 160 million metric tons, 4 million metric tons…
Read More: Brazil continues to have market influence as November comes to close – Agweek