11/16/2023 Forecast for Brief Rainy Spell for Central Brazil Puts Temporary Damper on Market Rally

On the Grains:
Grains are taking a breather from recent strength on forecasts for a brief rainy spell in parched central Brazil. That alone overshadowed a bullish October crush report. It set an all-time monthly record and beat expectations by 2.6 million bushels. Reflecting very strong soybean oil demand, SBO stocks came in well below expectations and at a 9-year low.
 
However, the longer-term forecast is for hot, dry conditions to return to central Brazil before the end of the month and remain so through December. Further, the excessively wet weather plaguing southern Brazil just won’t let up, causing further delays in planting and threatening yield potential of what has been planted.
 
Switching to corn, the break in prices is also expected to prove brief. Harvest is wrapping up and yesterday’s ethanol stats were constructive. Ethanol production was up again from the prior week. It’s been running 6% ahead of last year vs. USDA’s current forecast to rise less than 3% for the year. Better yet, despite the rising production, stocks declined again, consistent with data showing improved gasoline demand.