TFM Midday Update 12-05-2023

CORN

US corn exports to date are up 33% from last year, vs the USDA’s estimate of a 22% increase. So far, there have not been significant Chinese purchases. However, with the funds holding a large short position, if China begins to buy US corn or more weather issues develop in South America, it could trigger a year end rally.
Exports of corn from Brazil have been reduced due to slow farmer selling, as well as logistic issues on Amazon River ports. Low water levels on the Panama Canal are also causing problems.
Managed funds are said to be holding a net short position in corn of 212,000 contracts as of November 28. This would be the largest short position since June of 2020.
France has increased the risk level of bird flu from moderate to high. New cases of the disease were detected there, and it has reportedly been spreading through several European nations recently. Depending on the severity of the spread, and how many birds are culled, this could eventually affect demand for feed grain.

The cumulative rainfall for the drier areas of Brazil may be disappointing over the next few days, but longer range forecasts continue to show improving conditions by mid-month. With South American weather still one of the dominant fundamental factors right now, this could continue to weigh on futures prices.
Open interest in soybeans declined by about 14,000 contracts yesterday. This may suggest that the funds are lightening up on their long positions.
Brazil soybean planting has reached 85% complete as of the end of November, but that is down from 91% at the same time last year.
On a bullish note, the agricultural agency in Mato Grosso (Brazil) reduced the size of their state’s soybean crop by 3.78% to 42.13 mmt versus last year, that represents a 7% decline.

Private exporters reported sales of 198,000 mt of SRW wheat for delivery to China during the 23/24 marketing year. This is in addition to yesterday’s announced 440,000 mt (their largest purchase in three years). These sales may be triggering further fund short covering.
Stats Canada’s wheat estimate was bearish, with production coming in at 31.954 mmt, which was higher than both last month and the trade expectation.
ABARE increased their estimate of Australian wheat production to 25.5 mmt, which is 1 mmt higher than the USDA number.
India’s wheat import duty is currently 40%. However, they are considering reducing that to 15%-20% to import up to 1 mmt of Russian wheat.

Brandon Doherty