Dec corn – ½ at 4.0625
Jan beans +8 at 11.095
The DOW is UP
USD is UP
Crude oil +3.50 at 40.64
Overnight grain markets woke up to great news on the Pfizer/BioNTec vaccine large scale trial that produced better than 90% immunity response, no serious safety concerns and they will seek emergency use authorization later this month. There is some light at the end of the covid tunnel. Equities and energies rallied sharply on the news and its implications for energy demand going forward, the dollar is slightly higher while metals and bonds broke sharply to the downside. The grains feature the soy complex leading the way topside with beans and soybean oil making new highs for their rallies, including a new contract high for beans. Soybean oil is challenging its contract high from January to 36.41 while meal continues to battle with overhead in the $390 to $400 area. Corn and wheat are mixed early on.
Weekend rains in Brazil and Argentina were limited and spotty although the forecast shows better rains in the near term to support better planting and early development with the La Nina battle just getting started. AgRural sees Brazilian soybean planting at 56% up from 42% a week ago.
The USDA crop report is tomorrow at 11 cst. The avg. trade estimates for the crop report show bean yields slipping to 51.6 bpa for a crop of 4.251 bb vs.51.9 bpa and 4.268 bb in October. Analysts are projecting a bump in exports from 2.2 bb with the ending stocks forecast at 235 mb, down from 290 mb in October. On the world stage, ending stocks are est. at 87.44 mmt from 88.70 in October. In general, the trend of tightening balance sheets is expected to continue and with a stocks to use ratio on beans at about 5%, the function of the market is to ration demand through higher prices. Beans appear to be getting comfortable with $11 but our price count target remains closer to $12. Complete report ranges and estimates are posted below.
Overnight, the corn market had mixed feature, trading both sides of unchanged before finishing fractionally lower by the morning pause. No, you don’t need to adjust your quote monitor; the Dow is really up 1,700 points, Crude Oil is really $3 higher, and Gold is $70 lower. The big news of the morning came from Pfizer, who said they have a Covid-19 vaccine that is 90% effective. By contrast, the seasonal flu vaccine is 40-60% effective? The good news has an obvious ‘risk-on’ bias, though it is not clear how the grains will respond, as they were tentatively lumped in the ‘stay at home’ bucket by some. In the big picture, it should be favorable via corn’s ethanol tie, though it is important to keep in perspective that it will take months (perhaps many months) to roll this vaccine out to everyone. Stay tuned! We also have a November WASDE/production report tomorrow, which takes on unusual importance (usually Nov is a quiet affair). After the close, the USDA released its bi-annual ten year “baseline” S&D projections, which are rough forecasts used for gov’t budgetary purposes and generally do not generate much of a market response. The highlight as per usual was the acreage mix for next year (21/22); they projected 90 million corn acres, down slightly from 91 this year. The USDA did project gentle increases in corn exports moving forward, increasing roughly 50 million bushels each year starting in 22/23. On the other hand, they see ethanol usage growing 75 million bushels in 21/22 to 5.125 bil but flattening-out thereafter. Trend-line yields (198.5 bpa in 30/31!) would result in increasing carryout? Today is also Day 2 of the Goldman Roll, which may keep some pressure on Dec relative to March Corn.
Brazil Paves Way for U.S. Soybean Imports: Brazil’s agriculture ministry has issued a regulation facilitating imports of genetically modified (GMO) soybeans from the United States, it said in a statement in response to questions from Reuters. Brazil earlier suspended import tariffs on soybeans, soymeal, and soyoil from countries outside the South American Mercosur trade bloc. Since then, at least one U.S. soybean cargo was sold to Brazil but since some U.S. GMO traits lack approval in Brazil, major exports were not thought to be a strong possibility. The ministry of agriculture’s rule was published in the official gazette on Nov. 4. Brazil is poised to import 1 million metric tons of soybeans this year, according to a forecast by Brazil’s oilseeds crushing group Abiove, the highest volume since at least 2008. So far this year, Brazil imported 528,000 metric tons of soybeans, mainly from Paraguay, the most since 2014, according to government trade data.
Sweden Raises Bird Flu Risk Assessment: Sweden has raised its assessment of the risk level for bird flu to elevated from low, after outbreaks registered elsewhere in Europe, the Swedish Board of Agriculture said on Friday. The Board said in a statement that it had raised the risk level to 2, meaning all poultry must be kept indoors, from level 1, which indicates that the infection risk is low. France said on Thursday it was putting part of the country on high alert for bird flu and Sweden’s neighbor Denmark raised its bird flu risk level to high after outbreaks in Germany, the Netherlands and Great Britain.
Darren, David, and Elizabeth