South American Weather Is The Bullseye. The Corn & Ethanol Report 11/27/2023

We kickoff the day with Building Permits final and Building Permits MoM Final at 6:50 A.M., New Home Sales and New Home Sales MoM at 9:00 A.M., Dallas Fed Manufacturing Index at 9:30 A.M., Export Inspections at 10:00 A.M., 2-Year Note Auction and 6-Month Nill Auction at 10:30 P.M., 3-Month Bill Auction and 5-Year Note Auction at 12:00 P.M., and Crop progress at 3:00 P.M.

A good way to start the week is to report open interest on call fell 24,549 contracts, wheat 10,861 contracts and soybeans 5,205 contracts. Soybean Meal open interest fell 12,193 and Soybean Oil fell 11,645 contracts. Look For additional falls CBOT open interest ahead of First Notice Day against December futures Thursday. Limited to no deliveries are expected in soy products, while moderate deliveries are forecast in the grains. There is a risk-off mentality in macroeconomic markets due to China’s industrial companies failing to generate better profits and Beijing’s resolve to clamp down on speculation. China is trying to control further weakness in its property sector while making sure that a new round of speculation does not get out of hand. China’s banking system announced late Monday that it will fend off systematic financial risks to support expanding domestic demand. Also, OPEC+ has announced a draft agenda for a Thursday meeting that is expected to hold production steady with increased supply targets for Nigeria and Angola. The biggest question for OPEC+ members is whether the Saudi’s will continue its 1 million barrel per day (bpd) cut beyond December 31^st. Whispers this morning is the Saudi’s would prefer and may seek further production cuts. World energy prices are sliding on fear of lower demand and supply surpluses in Q1 2024. South American weather is key and crunch time is coming soon with disappointing forecast in the weather models. The key will be after December 4^th with the models hinting at better rainfall in the week 2 forecast. Traders will closely follow the extended range forecast for better confirmation

Brazilian farmers have more than 25-30% of their soybean crop to plant which is 8-10 days behind the historical average. The latent soy seeding will adversely impact winter corn seeded acres in February and March. Values will correct to the upside with the weather factor ahead of Thursday’s First Notice Day on December CBOT futures. US, Brazilian, and Argentine farmers have no interest in new cash sales due to unfavorable weather and political uncertainty. In the overnight electronic session the December corn is currently trading at 457 ¼ which is 6 cents lower. The trading range has been 465 ¾ to 455 ½.

On the Ethanol Front no one was injured at an explosion in the Shell Rock, Iowa POET ethanol plant. An unconfirmed source said the cause was “combustible dust explosion,” All employees are accounted for and the plant is back to normal operations. There were no trades or open interest in ethanol futures.