-Added South American rain forecast weighs on grains
-No USDA sales announcements
-Argentine strike ends, another threatened
-Brazil old crop soybean exports hit USDA target with two months remaining
Added rains to the South American forecast weighed on grain markets overnight as the recent pullback from the near-continuous Sept-Nov price strength continues. Soybeans are now 50 cents off their highs and corn more than 20 cents.
Brazilian ag consultant Datagro ticked their estimate of this year’s soybean crop up to 135.0 MMT from 134.0 MMT previously, while the corn crop was bumped lower to 114.0 MMT from 114.4 MMT previously. USDA is last at 133.0 MMT and 110.0 MMT, respectively.
Brazil’s official November soybean exports were reported at 1.47 MMT vs 2.49 MMT in October and 4.95 MMT last year, putting marketing year to date (Feb-Nov) exports at 81.7 MMT vs 68.8 MMT last year. Nov corn exports were 4.90 MMT vs 5.16 MMT in October and 4.11 MMT last year, with Mar-Nov marketing year to date exports at 27.7 MMT vs 33.1 MMT last year. Total soybean exports have now reached the USDA’s annual estimate for the current marketing year of 81.6 MMT with two months remaining. Last year, Brazil exported 4.7 MMT of soybeans in Dec-Jan. While it appears very likely old crop soybean exports will exceed the USDA’s current estimate by some degree, a very limited export program is expected over the next two
months and is certainly starting off that way as Anec, the Brazilian ag exporter association, said there are no soybean vessels scheduled for leave port in the first week of December. Looking at corn, USDA currently estimates old crop exports at 34.0 MMT, which would leave 6.3 MMT left to export during Dec-Feb if correct, similar to last year’s 6.6 MMT during the 3-month period.
There were no USDA sales announcements this morning.
Yesterday’s announced “indefinite” Argentine oilseed/pork workers’ strike came to an end this morning at 6:00 AM local time as wage talks look to resume. In typical fashion at this time of the year, though, another pork workers’ union planned a strike to begin this evening.
Indonesian economic officials are indicating concern for the viability of the country’s aggressive biodiesel usage program under current subsidy rules given the widening price difference between crude palm oil and diesel prices, which has made biodiesel much less competitive and the current taxes/levies paid to support the industry falling short of needs. A $55/tonne export tax on crude palm oil is used to subsidize the biodiesel industry, but the price gap between diesel and fatty acid methyl esters from palm oil surged to around $400/tonne this year from $100/tonne last year, leaving monies collected from the export tax simply not enough to sustain the subsidy program. There have been calls to revamp the export levy rules, but so
far nothing has been enacted. At current rates, some see the biodiesel program deficit at around $865 million in 2021. On a related note, an Indonesian energy minister said 2020 domestic biodiesel consumption looks to fall roughly 13% short of the government’s 9.6 million kiloliter (2.54 billion gallons) target due to coronavirus-related demand losses.
Yesterday afternoon’s USDA Oilseeds Crushings report confirmed market expectations for record soybean crush in October of 197.7 million bushels, while soybean oil stocks were higher than expected. The Grain Crushings report showed 432.7 mil bu of corn was used for ethanol production, a bit higher than anticipated as implied ethanol/corn yields slipped from recent months’ levels. Please see our post at
https://portal.rjobrien.com/MarketInsights/Blog/Read/42252 for full details of both reports.
In an interesting, likely temporary, development China bought 100k tonnes of rice from India for the first time in at least 30 years according to Indian industry participants with 100k tonnes of broken rice purchased at around $300/tonne fob for Dec-Feb shipment. China typically imports 2-5 MMT of rice annually, coming from Thailand, Vietnam, Myanmar and Pakistan, but Indian prices are currently running around $30/tonne cheaper than from their traditional suppliers.
The first deliveries of December soybean oil were seen today with 100 contracts put out by CHS, with the last trade date at 11/17/20. Yesterday’s 100 CBOT wheat deliveries were re-issued with 10 contracts added, while KCBT wheat deliveries were 5 contracts. There were no MPLS deliveries after 93 were issued yesterday and 588 on first notice day. There have yet to be any Dec corn or SBM deliveries.
Rains of .30-.80”, with areas of .80”+, fell across most of MGDS and Sao Paulo yesterday while the rest of the Brazilian growing regions were mainly dry. Waves of showers and thunderstorms will continue to impact RGDS, Santa Catarina, Parana and the southern ½ of MGDS/Sao Paulo for the next 5 days, resulting in totals of 1-3” in Santa Catarina and Parana. Totals of .50-1.5”+ and coverage of around 85-90% look to fall in the rest of the Brazilian growing regions, which is similar to yesterday’s ideas. The 6-10 day period now sees rains of 2-4” for most of Minas Gerais and Goias, which is an increase from previous ideas. Totals elsewhere in Brazilian growing regions look to be in the .75-1.5”+ range with coverage of around 85-90%.
Argentina saw rains of .30-.80”+ across the northern ½ of La Pampa and southern ½ of Cordoba yesterday, with other areas dry. Showers and thunderstorms will produce .35-1” for Corrientes and the northern ½ of Entre Rios in the next 24 hours, with all other areas dry and remaining so everywhere then for the next 8 days. Rain chances appeared in today’s outlook for the end of the 10-day period with very early estimates being .50-1” with that activity.