Dec corn -3 ¼ at 4.14
Jan beans -4 ¼ at 11.4825
The DOW is Down
USD is Down
Crude oil +.33 at 41.78
Overnight grain markets traded lower as we work to correct overbought technicals and CIF corn and bean weakness reflect a slowdown in export demand at these elevated price levels. There were no 8 am sales announce today, weekly export sale will be released tomorrow morning due to Veteran’s Day.
Underlying concerns over South American dryness and possible production shortfalls in a La Nina growing season should continue to underpin row crop prices and limit the downside to corrective clean up trades where we are carrying not only excess, but near record fund length. The trend of tightening supply continues and if the market sense that weather is going to reduce new crop production in the southern hemisphere it would act as gasoline on the fire. Short bought end users should be looking to extend coverage on these breaks.
CIF bean bids at the Gulf continue to slip with bids down another 8 cents to +61 reflecting the slowing export interest in part as a result from higher prices, but also with China having already secured most of what they need to bridge the gap to cheaper Brazilian new crop supply. Interior bean beans are mostly steady.
Overnight, the corn market was a little easier, finishing three cents lower by the morning pause. The Goldman Roll, combined with some weakness in the CIF market, has conspired to weaken the Z/H spread, which in turn appears to have made overextended bulls a little nervous? Today is Day 5, the final day, though it is not unusual to see spread interest extend for another day beyond? Since the end of October, Z/H has moved a dime lower, half of which has taken place over the Roll. With the report out of the way, market focus shifts back toward export demand and South American weather, the latter of which has only grown in importance given the perception of tightening carryout. Over the next week to ten days, Brazil gets the better of the precip deal, with most of the country receiving at least some rain at one time or another. Argentina leans dry, both in the short-run and in the forward outlook. Some timely showers will help crops in the west and far north, while net drying in the central and eastern parts of Argentina could really stress crops, perhaps eventually forcing some replanting. The weekly EIA petroleum and ethanol report will be released later this morning, delayed one day due to the holiday. Ethanol production should continue to rebound post-maintenance, likely to the tune of a 1% wk/wk increase. Demand should also bounce back, which should keep ethanol stocks from building too much. Ethanol sold off yesterday; spot crush is still slightly positive (5-10 c/gal), while forward margins are implied at negative values for most. This has effectively been the case since May days.
Pork Processor Don’t Anticipate Return of Disruptions: A spike in COVID cases is raising concerns that processing plants could see disruptions again. Minnesota Pork CEO David Preisler tells Brownfield he’s been keeping a close eye on the situation. “From what we’ve seen so far, have there been cases? Yes. Have there been large spikes within packing plants? No, (at least) not in comparison to what we saw earlier this year.” Preisler says the pork sector—while not medical professionals–believes a certain level of immunity has been built up among packing plant workers. “So we have not seen, at least in the Upper Midwest, problems that have resulted in backups of pigs over the past couple of months.” Processing facilities added several safety measures in an effort to prevent the spread of COVID-19 within plants. Daily slaughter totals are running about 95 percent of capacity.
Darren, David, and Elizabeth