Afternoon Corn and Soy: Happy Thanksgiving!

Afternoon Corn and Soy:  Happy Thanksgiving!

The grain/soy markets were able to battle back today after an uninspired start to the week. Corn finished 6-7 cents higher in the old crop and three cents better in new crop Dec '23, soybeans were six cents higher up-front, Meal $1-2 better, and Oil finished steady to 1% better (including 100 point gains in the Dec). Note that the CFTC will not update their report Friday; it has been pushed to Monday. Cash trade was quietly steady with some firmer overtones ahead of tomorrow's holiday.

Futures likely benefitted some today from short-covering in front of a four day weekend for many. Russia-Ukraine, Brazil elections, and China Covid uncertainty are all somewhat unresolved issues that have occasionally found themselves placed on the back-burner. There is also the continued possibility of a rail labor strike in early December. While these items aren't strictly bullish for the markets (some are bearish), they represent issues that might be uncomfortable for those with large (particularly short) unhedged positions heading into a stretch of no/low trade liquidity.

The report-du-jour today was the weekly EIA. The headline ethanol data was bearish, featuring a large catch-up inventory build. Fortunately for producers, traders remain fixated on the rail labor situation (whatever odds a strike may be), and futures virtually ignored the report, improving crush by another 2 c/gal today. In one week, ethanol producer profitability has improved by 10 c/gal and is within a few cents of their early November peak. As for the stats, ethanol production rebounded +3% on the week, which was in-line with our pre-report forecast. The resulting 1.040 mil bbl/day rate would consume 5.50 billion bushels of corn over a marketing year. Blender demand was also in-line with our predictions, falling -1% wk/wk. We fully expected an inventory build this week, but the magnitude was the surprise; it jumped a whopping +7.2% to 958 million gallons - a two month high, and the largest single week build since January.

The weekly export sales report is due out Friday morning, before the grain market open. It should be a relatively bountiful report, given last week's active 8 AM flash sales to Mexico. New corn sales should be at least 2 million metric tons (mmt), which would be a new marketing year high. Bean sales should come in either side of 1.5 mmt, while Meal should be a relatively normal 200k-300k, and Oil a nominal 0-20k. Overall, we feel the soybean market has done a good job this week fighting off the dual negative influences of expanding Chinese lockdowns and Argentine 'soy dollar' rhetoric. There was a small (110k mt) 8 AM flash sale today to China.

Elsewhere, we feel some of today's market buoyancy may be tied to 'hot and dry' in Argentina. Not a new item, but one that appears to be intensifying some after a brief respite earlier this month. Brazil conditions remain favorable overall, making weather relatively neutral from our chair at this timing. Corn end-user markets were on the defensive today; livestock finished around $1 lower, while Dec Milk ended 3% lower (later-dated positions held up better). The soy crush was firmer today. Oilshare reversed early weakness to close better; somewhat impressive, given persistent weakness in Crude Oil today.

In the options, volatility stabilized after an ugly sell-off yesterday. Friendly reminder that December options (huge open interest for corn) expire Friday and futures First Notice Day for corn and the soy products is next week. Markets are closed Thanksgiving Thursday and feature a Friday morning re-open (with a 12:05 close). On the charts, Corn established $6.50 as major support for CZ last week, which has held so far this week, too. "Old support" just below $6.80 now becomes tough overhead, which also looks like a difficult barrier in the short-term. Jan Beans remain stuck in the middle of their four month long, roughly $1 wide, trading range. Jan Meal features psychological support at $400 and resistance at $420. Oil caught on initial support at 68 cents; recent highs near 75 stands as initial (yet meaningful) resistance.