- Low volume and mixed has been the tone of early Chicago trade with the grains trading either side of unchanged while soybeans have traded mostly in the green. Volume has been extremely light and for now, Chicago does not appear to be paying much attention to the sinking world financial markets.
- The US DOW is reflecting a 330 point loss amid the weakness in Asian markets and talk from a prominent hedge fund that the potential Chinese banking crisis could be five times worse that the US subprime loan crisis of 2008/09 based on all of China’s leverage and lack of credit diligence. They (hedge fund) noted in a letter to investors, that Chinese loans are made as political favours not on sound banking/credit diligence! Do not underestimate the potential impact of this looking forward.
- WTI crude oil prices have fallen back near their prior lows at $26.19/barrel. Currently, WTI March Crude oil is down $1.18 at $26.27/barrel and traders are holding their breath that the recent lows hold. A close in new contract lows would set a downside price target of $20/barrel and further pressure the CRB Index, and expand the talk of deflation. With US ethanol stocks at record levels, this new drop in crude will not bode well for the biofuels with unleaded gasoline trading at $.95-.98/gallon.
- Additional rain is forecast to drop across Argentina and S Brazil in the next few days as the soybean harvest speeds ahead across N Brazil. Following another 1-3.00” of rain across the drier areas of Argentina, soil moisture should be in good shape for corn pollination and soybean bloom/podding. The rains return in the 11-15 day period across N Brazil which would be ideal for just planted winter corn.
- Soaking rains are forecast to fall across the S Plains late next week and weekend. The moisture would maintain high rated crops and provide an added boost to soil moisture. Climatologists are no longer is expecting La Niña in 2016 as the Equatorial Pacific remains historically warm.
- S American markets will slowly return today with soybean/corn hedge pressure expected into the US’s three day weekend. US financial markets are closed on Monday for the President’s Day holiday as the Brazilian harvest advances.
- European fob wheat is steady with a weak undertone while palmoil values could be peaking from the bearish undertow from crude oil. If crude oil falls to new lows, we fear that Chicago grain and soybean futures will follow.