11/1/18

Morning Commentary - 11/01/2018

Grain Markets Stabilize

6:30 AM CDT CBOT Prices: Jan soybeans are down 1.5 cents at $8.5025, Dec corn is up 1.0 cent at $3.6475 and Dec Chi wheat is up 2.25 cents at $5.02575.

Good Morning! Grain markets have recovered on oversold technical conditions and ahead of this morning’s export sales report. Taiwan overnight bought 100,0000 MTs of the US wheat, but other news is lacking. Weekly US export sales are expected to improve.

Macro markets offer little guidance. Palm oil futures fell 1 ringgits to stay near contract lows. European wheat futures are up slightly. Spot WTI crude is down $.45/barrel.

However, the US dollar is sharply lower this AM and is testing a short-term uptrend line. Whether the USD continues as a major safe-haven bet will hinge upon US economic growing in early 2019, beginning with Friday’s job reports. Major exporting currencies are stronger.

A host of holidays in Europe through the remainder of the week will keep interesting in EU/Black Sea grain markets limited.

The EU/Black Sea forecast has gone another day without indicating any pattern shift to needed wetter weather there. Drought in France could be erased in the next two weeks, but the remainder of the region will see ongoing dryness and abnormally warm temps into Nov 15-16. Oddly, winter wheat is not expected to enter dormancy amid the lack of freezing temps. Recall that fall weather doesn’t correlate well with yields but does correlate with abandonment.

South America’s forecast is unchanged and is still rather wet in Central and Northern Brazil. Accumulation in the 8-15 day period of 5”+ could slow planting there but there’s no indication of any excessive heat or dryness over the next month or so. Argentine soil moisture will continue to recover, albeit slowly, into mid-month. 

The Buenos Aires Grain Exchange will update Argentine planting progress this afternoon and also looks to now release crop ratings on a weekly basis moving forward. Wheat/corn ratings have been rather low amid dryness up till now.

There are 813 contracts intended to be delivered against November soybeans, up sharply from Thursday.

Data still points toward a sharp rebound in EU/US wheat export demand. Dec corn should add premium heading into the USDA’s Nov crop reports.

10-Day EU/Black Sea Precip:

10-Day South American Precip:

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