November Rain

When soybean yields were in fact decreased, this caused market participants to scramble to reposition.  The immediate reaction was beans jumping 58¢/bu but moderated into the close to finish up 23¢/bu.  This move may be an aberration in the short term, as bearish themes for beans remain in place.  But with La Niná hanging about for another year, beans should find some support.

Corn was largely as expected and building stocks did nothing to excite the bulls.  Big crush margins and the expectation of increasing ethanol demand will add support to corn as well as speculation that Chinese demand will remain strong on the back of surging domestic prices.

Wheat continues to march to the beat of its own drum.  Major export stocks were again tightened – now 12.5% stocks to use – down another 1.9mmt to 50.1mmt.  Concern around Aussie wheat quality will add further strength to the already tight milling wheat stocks.

From an Australian perspective, prices should remain supported at least until early (March/April?) in the new year after which time, consumers will likely switch focus to the imminent Northern Hemisphere harvest.  Quality premiums will come into focus as much of the trade will be banking on filling milling grade tenders.   The rain event appears to have largely been wrung out over SA with much of NSW missing the catastrophic falls that were being predicted.  It will take another week until we know what impacts (if any) there has been.  I think it important to note that feed and milling demand remains strong, consumers simply don’t have the options to chase, and as such this will underpin prices.