Markets are higher this morning led by soybeans and wheat weather threats and strong demand.
Chinese buying continues to build ahead of tomorrow’s report. We could see another 4-6 cargoes of beans and even some corn to be reported in the next few days. The Chinese haven’t bought any corn in the past couple of weeks as their focus has been soybeans. The Chinese are said to be securing beans for December/January and corn for the April/May time frame as they monitor South American weather that is delaying planting.
The bottom line is that dry areas of Mato Grosso and surrounding districts will see showers, but farmers will be faced with a difficult decision on whether that will provide enough moisture to risk planting soybeans, with a hot dry forecast in place for the following week, or whether they will continue to wait. The final size of the Brazilian crop is not yet in question. There’s still time to produce a good crop. But the delays could significantly lengthen the U.S. export season this winter, further reducing U.S. soybean supplies, which is why we see continued buying in the U.S. market this morning.
We have had a very nice run in corn and soybeans over the last few weeks that has given producers the opportunity to lock in some positive margin. I would advise producers to continue to make sales as this market climbs because there is a limit to the upside. Ethanol margins are shrinking fast and as we head into the winter driving months’ demand for ethanol will shrink. Let’s not forget how quickly the market fell out of bed in March when COVID-19 hit. With the cold and flu season approaching fast and no end in sight for COVID we could fall again at any time.
Get sales on the books and offers in with your buyers today so that if we get a bearish surprise in tomorrow’s report you are covered.
Have a Safe Day!