- Chicago prices are weaker at midday with wheat sagging to new contract lows on continued technical selling amid large world supplies. Favorable weather in the Black Sea is allowing Russia to export record tonnages of wheat, which is stealing “sales thunder” from the rest of the world’s exporters. The drop in wheat is pressuring corn, with wetter forecasts for Argentina and S Brazil producing liquidation in soybeans. The market expects that WASDE will raise their end stock forecasts for soybeans and corn due to sagging US export forecasts. The mentality of the markets is bearish, with most pointing to world weather as offering the only hope for a lasting recovery. Our research and belief continues to suggest that at these price levels there is minimal benefit or profit potential in taking short positions. Patience is advised with uncertainty surrounding S American weather forecasts. Cash basis levels are again starting to gain as farmers shut their barn doors.
- Brazil’s CONAB will be out in the morning with their updated corn and soybean crop estimates for Brazil. The data will be ahead of the USDA report. The trade is looking for a modest increase in crop size to 109-110 million mt of soybeans. The corn crop is expected to change little based on the importance of safrinha production. Limited progress was achieved between the Argentine Government and the US Commerce Department last week. The Argentines are trying to negotiate a lower duty or a complete end of the duty on their soyoil based biodiesel imports into the US. A final 5 year ruling is expected from the US Dept of Commerce in early February.
- The bearishness in Chicago is thick this morning as wheat values push to new contract lows. Almost everyone expects a bearish report from USDA on Tuesday. It is the market’s reaction to the report that will be the most interesting. This is not a place to join the bears in our opinion, and we await additional weather rallies with La Niña forecast to persist.