Soybean Morning Update & Commentary: Weekend rains weigh on row crops early on.
Overnight grain markets traded lower giving back part of Friday's rally as beneficial weekend rains reached some of the drier parts of the country. News and trading volume are both thin early on with the trade keeping an eye out for updates from the Pro Farmer crop tour this week. The weather outlook is positive for crop potential with the key question being, what is that potential due to the late planting dates on a significant percentage of our crop and slow development?
On the demand front, US beans are the cheapest in the world in large part due to surging southern hemisphere basis and exports have picked up as a result. The absence of Chinese demand due to the tariffs should temper bull enthusiasm on that front however and there are no indications that the trade war will be resolved anytime soon. It was confirmed this morning that the US would delay restrictions on Huawei for another 90 days.
Futures open interest on Friday in corn was -3.8k, srw +1.4k, hrw +993, beans +4.6k, meal +3.1k and oil +13.7k.
The COT report showed managed money fund traders through Tuesday -34.9k corn (net long 44.5k), -2.1k srw (net long 4k), -12.5k hrw (net short -33.2k), +6.3k beans (net short -66.4k), +2.6k meal (net short -36.4k) and +47.4k oil (net long 10.3k).
In the news:
• Malaysian palm oil production is forecast to rise to 20.3 million tonnes this year due to expected good weather, said the Malaysian Palm Oil Board on Monday. Malaysia recorded 19.5 million tonnes in palm oil production last year, down from 19.9 million tonnes in 2017.
• Malaysian Prime Minister Mahathir Mohamad on Monday called on Britain to engage with palm oil growers to incentivize sustainable production, rather than pursuing boycotts after its scheduled exit from the European Union (EU) on Oct. 31.
• India has initiated a probe into whether a jump in refined palm oil shipments from Malaysia has caused harm to the domestic Indian oil industry. Imports of Malaysian edible oils jumped by 727% in the first half of 2019 to 1.57 mmt vs the same period the year before.
• Euronext Paris November rapeseed futures are trading -0.50 euro lower at 379.50 euros/mt
• Dalian January vegoil futures on Monday traded lower, palm oil fell -32 yuan ending at 4,752 yuan/mt, soyoil fell -28 yuan finishing at 6,170 yuan/mt
• Dalian January soybean futures on Monday traded -5 yuan lower finishing at 3,409 yuan/mt; Jan soymeal futures rose +1 yuan ending at 2,869 yuan/mt
Early spread action:
• Soybean bull spreads mixed.
• Board crush margins up 1 to $1.03/bushel.
• Oil share steady 32.9%.
Soybean Basis: fob US Gulf soybeans are a $30/mt discount to Brazil and a $9/mt discount to Argentina fob prices.
• US CIF Gulf steady +40
• Brazil fob offers steady +145
• Argy fob offer steady +75
• Cedar Rapids steady -50
• Decatur, IL steady -15x
• Claypool, IN steady -8x
Outside markets are quiet with the dollar trading +.09 to 98.10, crude oil +.28 to 55.09 and DJIA +266. The Brazilian real is steady. Malaysian palm oil closed -36 to 2,156 ringgit.