The week in review
Weather conditions continue to be a frustration to producers as harvest moves along. Areas in the Western Corn Belt had ample opportunity to make some progress, as other areas were slowed by snow and rain. Near term, forecast look to be dry across much of the grain belt. The extended forecast continues to show a cool, dry pattern settling in for most of the grain belt providing producers an opportunity to make progress with harvest.
Weather forecasts are showing rains to develop in central Brazil soybean producing areas. The different models are in agreement, increasing the confidence. The USDA has Brazil’s soybean production pegged at 4.52 billion bushels. This would be 184 million bushels above last year. If achieved, this would make Brazil’s soybean production nearly a billion bushels larger than the current US production forecast.
Recently Chile was forced to cancel the APEC meeting scheduled for Nov 16-17 due to political protests. U.S. and Chinese officials were set to meet during the meetings to sign the first phase of the trade agreement. The White House still says they want to sign the agreement in November, an alternative date has not been announced yet.
The markets were also reacting to the recent changes in the government in Argentina. Argentine exporters have pulled offers for January with the election prompting concerns over the future of Argentine export taxes. The crop in Argentine, however, continues develop under nearly ideal conditions, so eventually, that corn will need to come to market. Black Sea region corn is expected to step in to replace Argentine as the lowest cost seller if Argentina does increase export taxes. All of these factors plus tight US farmer holding, added together to prompt a nice short covering rally in the corn market.
In a recent report net ethanol margins were reported to be up 4 cents and stand at 16 cents positive. That same report showed US ethanol production was up again, with weekly production at 295 million gallons. This was the 5th consecutive weekly production increase and the highest it’s been since early September. Meanwhile ethanol stocks fell to 891 million gallons, the lowest point they have been since October of 2017. Support in the market could be found from a possible increase in production with margins improving and the lowest ethanol stocks we’ve seen in multiple years.
Soybean markets have been quiet and there has been some concern in the market, as technical indicators turn south and lack of fundamental news to trade. Soybean markets recently tested seasonal highs and were unable to break through. It will take something new to spark the market, which can be tough while good harvest progress is being made. One supporting factor is that export numbers continue to be relatively strong for this time of year. Traders will look to the upcoming USDA supply and demand report which is to be released November 8th.
For more information, you may contact Regan Coyle at (515)-200-5123, or e-mail at firstname.lastname@example.org. The opinions and views expressed in this commentary are solely those of Regan Coyle. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position. Please visit our Risk Disclosure Page for more information on commodity trading.
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