Morning Grain Comments, 11/02/2015

Monday, November 02, 2015

Mixed/weaker start to a new month.  Fresh news limited.  ....But at least we got an extra hour of sleep. 


Morning Humor


Market Drivers:

· FCStone Nov Crop Survey released this afternoon.

· World weather generally leans negative. 

· Tight farmer holding of grain supplies/firming cash markets.

Recap & Soap Box

Mixed/lower market action in moderate volume totals.  Dollar slightly weaker; outsides generally all in the red.  Minimal macro fundamental updates to start the week.  .  There were 90 contracts of beans delivered overnight, almost bringing intent date current (10/29/15).  CFTC report Friday showed minimal surprises versus expectations.  FCStone November Crop Survey released this afternoon; other privates following soon.  USDA Nov WASDE on the 10th; market expecting slightly higher production.  Traders rapidly closing the door on production discussions, and starting to trade demand and light farmer selling.  Big picture ebb and flow will be dominated by "big supplies" versus "dissatisfied producers" debates all year; if you like sideways trends, this market is for you.

Despite the sideways markets, it is surprising to see the counter-seasonal action going on between the three main grain markets.  We are in the midst of a "buy soybeans, sell everything else" time of year, and this has not performed well at all recently.  Chart below shows beans as the weakest, corn as the middle, and wheat is the atypical leader.  Weather concerns and short covering have helped wheat, strong cash has helped corn, and limited weather threats in South America have prevented beans from firming.     


World weather leans slightly negative.  Argentina trending toward a pattern change and should improve the moisture situation.  Brazil will see additional rains across the north central/northwest.  Smaller crop areas in the Northeast remain dry, however.  US Plains saw good precip this past weekend, helping to improve conditions; drier weather near term.  FSU wheat regions heading into dormancy in less than ideal conditions.  Wheat is the market that is most sensitive to weather at this time.

Crop Progress tonight expected near 90% on beans and 85% on corn.  Dry stretch of weather near term should allow harvest to wrap up what is left.  On this side of harvest, traders largely disappointed with amount of farmer selling that has taken place.  Having said that, many would be surprised to know that my proprietary data suggests a relatively "normal" amount of producer selling over the past six weeks, although it is admittedly skewed to the Northwest Corn Belt.  Cash levels starting to rise aggressively, particularly in the ECB, and also particularly on corn.  NWCB corn values working into the ECB; Brazilian corn working into the US Southeast....all show that the cash market is more a function of "supply location" rather than "supply quantity" right now.

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