Traders wait for confirmation of export sales rumors

Good Morning from Allendale, Inc. with the early morning commentary for November 18, 2020.

Grain Markets were mixed overnight. Traders would like confirmation on rumors of further sales to China. On the other hand, there is a slight amount of renewed concern for South America’s crops into December. Additionally, widened concerns over the current virus situation have been balanced by carrots of hope for the coming vaccines.

Pfizer’s CEO indicated they were very close to submitting for US Emergency Use authorization for their COVID-19 vaccine. The official also noted they are working on a thermostable vaccine formula that will be ready mid-next year or later.

Export sales to China or Unknown have slowed. The last sale for corn was 206,900 tonnes to Unknown on 11/6. For soybeans, the last exciting sale was 123,000 tonnes to Unknown on 11/9. Traders continue to suggest consistent corn sales to China and more spaced out soybean sales in the coming weeks.

China has 10.8 million tonnes of US corn booked from us of 11/5. Unknown buyers have 5.5 mt booked as of 11/5, actually 5.7 when adding in the last 11/6 overnight sale. About half that is likely China. We estimate it is likely they have about 13.6 booked. We expect a minimum of 15 and can see the potential for up to 22.

Soybean export sales in the coming weeks should drop off as part of the normal seasonal transition of the market to Brazil. The effects of this week’s transition, to the US now $17 per tonne over Brazil, will result in a setback. Bulls argue USDA still needs to account for the significant sales already made.

South American moisture deficits continue to be discussed. Allendale estimates, using Reuters/Refinitive data, #1 producer Mata Grosso has a 60 day moisture total of 5.6″. That is 54% below normal for this period. We estimate the #2 state of Parana at 5.0″ over the past 60 days. That is 62% below normal.

Yield determination for South American soybeans is still ahead. For soybeans, flowering/pod set is in January for the vast bulk of the crop. For the very early planted crop it is December. For corn, pollination for the larger 2nd crop, 73% of production, is mid-April through mid-May. For the smaller 1st crop it runs from mid-November through mid-December.

Managed money positions reported Monday afternoon brought some interesting surprises. For corn and wheat funds were sellers yet price went higher from 11/3 to 11/10. These numbers were -9,245 contracts/+25 and -15,972 contracts/+6 1/4 respectively. Movements in soybeans were interesting as well, a moderate 10,137 contract purchase from funds coincided with a big 81 3/4 cent rally.

Open interest has declined for Chicago wheat in each of the nine trading sessions through Monday, -29,003 contracts.

Cash cattle bids were moved up to $110 on Tuesday. That is equal to last week’s ending trade and bolsters expectations for higher trade later this week. Including Tuesday’s 6.77 for choice, wholesale beef has advanced 27.77 over the past 14 days.

Cattle on Feed is ahead on Friday afternoon. Allendale estimates October cattle placements at 11.4% under last year. That should stop four months in a row of above last year numbers. We see October marketings at -1.5% year/year due to a calendar difference and November 1 COF at +1.5% year/year.

Pork processing has become erratic in recent days. Last week Wednesday through Friday…454,000, 492,000 and 477,000. Monday’s 491,000 head original estimate was revised down to 477,000 head. Will Tuesday’s rebound to normal 493,000 also be revised? For now, the market has shown little interest in this developing story.

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