Gap Lower Trade in Soybeans Overnight

MORNING AG OUTLOOK

Gap lower trade in the soybeans overnight was triggered by surprise election results in Brazil.  Leftist Pres. Luiz Inacio Lula da Silva won an unprecedented 4^th term securing nearly 52% of the vote.  Brazil’s stock market is expected to plunge while the Brazilian real slumped to a 10-month low vs. the US $$$. Conservative candidate Bolsonaro has refused to concede defeat as voting was extended by over 2 hours on Sunday.  Energy prices are lower with WTI Dec-26 crude oil down $2.10 per barrel at $101.15, spot RBOB is up $.01 per gallon while HO is steady.  Mostly dry across the nation’s midsection this weekend.  Light to moderate rain in the plains and WCB is pushing north into the NC Midwest today.  The central and ECB will remain dry this week with the potential for scattered showers next weekend.  Harvest delays are now likely limited to NE and SE SD.  Above normal temperatures look to hold across the Midwest through the first full week of November with above normal precipitation in week 2 of the outlook.  Widespread rains this weekend stretched from EC Argentina to the S. half of Brazil.  Isolated flooding likely in the interior south.  Good rains this week across central and northern growing areas of Brazil, while drier to the south.  Rains in Argentina will favor the south.  The US $$$ is moderately higher US stock indices are slightly higher.

Corn:

Dec-26 is $.02 ½ lower at $4.53 ½ trading to a fresh 3 ½ month low overnight.  Money managers dumped another 85k contracts of corn in the week ended Tues. Oct. 20^th, reducing their long position to 146k.  Likely down to 135k as of Friday’s close.  I look for US harvest to have reached 60% this weekend.  Cattle on feed as of Oct. 1^st at 11.372 mil. head were slightly below YA at 11.418 mil. and below expectations of 11.441 mil.  Placements were down 12% vs. expectations of down 8.3%.  Marketings were off 7%, in line with expectations.  The path of least resistance remains lower until US demand improves and/or a more threatening SA forecast.

Soybeans: 

Nov-26 beans are $.18 ½ lower at $12.38, trading to a 2-month low.  Next support is at the 100-day MA at $12.29 ¼.  Dec-26 meal is down $6.50 at $339.60.  Support rests at the 50% Fibonacci retracement at $337.90.  Dec-26 oil is down 34 points at 66.49.  Crush margins are down $.05 at $2.40 bu. with bean oil PV improving to 49.5%.  Chinese purchases of US beans are near 18 mmt while Sinograin will auction off another 512k mt of soybean tomorrow.  MM’s unloaded another 30.5k contracts of soybeans, 19.5k meal and nearly 1.5k oil.  Their combined long position at 481,487 contracts is at a 2-month low.  The USDA attached in Brazil is forecasting their 2026/27 productions at 184 mmt, just below the official USDA forecast of 186 mmt.  US harvest likely reaching 80%+ this weekend.

Wheat: 

Prices are $.01-$.03 lower in 2-sided trade.  CGO Dec-26 is $.01 lower at $6.24, Dec-26 KC is down $.02 ½ at $6.62 while Dec-26 MIAX is $.01 ½ lower at $6.40.  All 3 classes are holding near their respective 3-4 month lows.  Hopes for peace in the Black Sea combined with trying to find a price that attracts demand has pressured prices this month.  At Friday’s close I’d estimate the MM short position in CGO wheat at 60k contracts, the largest in 3 months.  Trilateral talks between US, Russia and Ukraine are slated for Nov. 10^th, meanwhile the fighting continues.  US exports are down 33% YOY vs. the USDA forecast of down 17%.  The Russian Govt. is set the begin purchasing grain on Oct. 29^th in a effort to support domestic prices.

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