Brazilian Real Depreciation: The real pushed to a new highest close of the 2024 Brazilian real one week ago on Friday. That value was 6.0894 real to equal 1 US dollar. That marks a 26% depreciation since the end of 2023 when it took 4.851 to equal 1 US dollar. This is a significant hindrance to US soybean export sales. Current pricing, 6.0277, is not far off from that peak.

US Export Sales Hold: The fact we are still getting export sales right now, even with Brazil's price advantage, is important to note. USDA's export goal for the year, 1.825 billion bushels, is -7% vs. the prior five year average. Year to date sales are -2%. The remainder of the year can fall to -20% and meet USDA's goal. Each of the past nine weeks has met this goal. We are building a light insurance policy as long as we can ship it out before any cancellations. We are currently -25 million bushels on our balance sheet from USDA.

Positive Overnight Sale Again: Another overnight export sale, 200,000 to unknown, now puts the week's total at 534,000. It is good but we'll need it. This week is typically the last big sale for the US of the season. For next Thursday's report we'll be compared against a five year average sale of 1,705,037.

Export Cancellation Risk: We are not saying there will be large cancellations ahead. But when we get into January, when yields begin to be determined in Brazil, there may be some. Of the sales we currently have on the books 507 million bushels have yet to be shipped out. Positive, that is under the five year average for this point, 585. 132 of that is scheduled for China, 310 to Unknown (mostly China).

NOPA on Monday: The monthly National Oilseed Processors Association will release November soybean crush data on Monday. The trade expects 196.713 million bushels. That would be +4.1% from last year. September was +7.2%. October was +5.4%. Q1 crush would then wrap up at +5.5% from last year. That is still over USDA's whole-year goal of +5.4% that comes from their 2.410 billion goal. We are going to beat USDA's goal. Also keep in mind November had all of it shadowed by the six week shutdown of the second largest plant in the US. If the remainder of the year runs +7.0% we'll end up exceeding USDA's goal by 21 million. It helps but does not offset the export risk story.

USDA US Supply/Demand: US ending stocks were left unchanged from last month at 470 million bushels. There were no changes for any demand category. The easy argument for demand changes should have been higher domestic crush. The harder question is exports. It is true year to date export sales are ahead of USDA’s goal. But many could argue this is procurement ahead of changing US trade policy. Another hindrance, different than corn, is that Brazil already has a clear price discount. That discount is set to widen even further in the coming months. Given clear concerns over future US policy we can see why USDA left their prior view unchanged. Our models imply a 470 stock level could imply $10.60 for futures pricing. We fully expect prices to trade below that value measurement until we see concrete trade policy established. That could be several months away.

USDA World: World old crop ending stocks were raised from 131.7 million tonnes last month to 131.9. Argentina’s production was raised by 1 million to now 52.0. Brazil’s estimate was left unchanged. The rising competition story remains in place. These two countries are set to produce +19.8 million tonnes over last year. USDA left their prior views for China unchanged, production at 20.7 and imports of 109.0. The Chinese government itself is 20.7 for production. A significant difference remains on import views though. China is at 94.6. This difference is also still in place for the completed old crop season with USDA at 112.0 and China itself at 102.3. The net world story remains in place. A 32.7% stocks/use estimate is the largest in six years.

Cash Soybeans: Soybean basis has appreciated $0.29 from the major seasonal harvest low as of Friday 12/6. In heavy supply years there is typically another $0.06 in tightening left into January.

Mississippi River: Current levels have fallen to -6.3 feet stage height. Over the next two weeks it will increase to +1.2 then fall to -5.0. Barge restrictions kick in at -5.0 and below. Let's get these sales out of the country before any further river declines and before China has a chance to cancel any procurement that is on the books.

Tariff Talk: President Trump announced on social media that on his January 20 inauguration he would, “… sign necessary documents to charge Mexico and Canada a 25% tariff on all products coming into the United States.” He noted this would remain in place until the two countries clamp down on hard drugs entering the US as well as illegal immigration. He also separately noted the US will be charging China an additional 10% tariff, above any additional tariffs, on all of their many products coming into the US.

US Soybean Imports: A minimal 21 million bushels of soybeans was imported into the US last year. 41% of that low amount came from Canada, 1% from Mexico and zero from China.

US Soybean Exports: At this time there are no retaliatory tariffs to discuss. We are a significant exporter for soybeans, 1.695 billion bushels last year. Zero went to Canada, 11% to Mexico and 54% to China.

US Soybean Yields After November Reductions: The drop in USDA's soybean yield estimate in November was astounding, 53.1 bpa to now 51.7. Of the past 25 years they lowered yields in November 9 times. Of those 9 years, there were reductions again in January 6 times. The average of those January declines was -0.8%. A 51.31 bpa yield would lower US production by 35 million bushels. In most years with lowered November yields, another cut was seen in January.

Brazilian rains since September are -21% from normal. The next two weeks are now set to run 2.4 - 7.5 inches for most areas. The average over two weeks ahead is 2.8. Yield determination, when weather really matters, is in January and February.

The Buenos Aires Grains Exchange estimates soybean planting at 65% complete.

Drew Lerner, Allendale's favored long term meteorologist, gave a light warning regarding Argentina. "There is still need for timely rain in the coming weeks to maintain a good environment not only for late-season planting and establishment, but also long-term crop conditions."

Argentine rains since September are -5% from normal. The next two week rains ahead will run 0.2 - 1.2. The norm for these two weeks is 2.2. Yield determination is in January and February.

Pricing: USDA currently estimates 470 million bushels for ending stocks, Allendale 478. Allendale's pricing models suggest 400 million ending stocks implies 1110 futures, 450 implies 1080, 500 implies 1040, 550 implies 1005 and 600 implies 975. We have strong concern that this balance sheet is quite fluid. Exports could be reduced by 100 million. We expect pricing to remain under valued for several weeks until trade policy is clarified.

Chart: Chart action remains weak. The prior early November rebound failed to post a close back above 50% retracement of the recent three month sideways trade, 1030 ½. Bulls would like to point out the price break after that failed rally also failed to take out major 973 ½ lows from 8/14. However, we are not really rebounding strongly from that test. Let's see if there is a minor upside attempt next week. January left an unfilled gap at the 12/12 close, 995 3/4...Rich Nelson

‍