• HEADLINES: Chicago markets rally ahead of three-day weekend; Higher crude lends support; Fresh news absent.

• Chicago ag markets are mixed but mostly firm at midday, with March soy scoring a newer two week-high, corn falling from session highs and wheat struggling amid weakness in the European market and as fresh importer tenders this week were again filled with Russian origin. Logistic challenges and insurance uncertainty pose questions over the future pace of Black Sea loadings, but for now there is no indication that exports will be disrupted in the near term. Larger than expected US winter wheat acreage expansion lingers in the background. Surprisingly large seedings expansion has weighed on Chicago wheat most heavily. Macro guidance leans modestly supportive. Crude has extended its overnight rally $1.05/barrel. The Dow is flat following morning weakness.

• Breaking news is absent. FAS’s daily reporting system was void of new US export sales this morning. Key over the weekend is whether model guidance maintains at least a temporary improvement in Argentine rainfall Jan 21-23, and as a three-day weekend lies ahead for the US, there is limited enthusiasm in establishing new positions.

• Otherwise, changing world price relationships favour a seasonal uptick in US corn export demand, flat wheat demand, and waning interest in soy February onward. Interior Russian wheat prices have failed to move, with replacement costs in southern Russia this week quoted at $185/mt. Brazilian soybeans’ discount to US Gulf origin widens to $0.65/bu in April. But there is hope for corn export improvement Feb-Jun amid the lack of Brazilian offers and rising Argentine premiums.

• Yet, corn export sales in the week ending Jan 5 were a pitiful 10 million bu, the lowest since September, and despite the USDA’s downward revision to annual exports, weekly sales still must average 30 million bu to meet the USDA’s forecast. It is critical that export sales data shows a shift in demand from S America/Ukraine to the US in February. Otherwise, the market will assume global demand is being destroyed at high prices.

• The release of bullish US stocks data Thursday implies closer attention will be paid to Argentine weather in February, Chinese demand in spring (as Covid’s impact wanes), with weekly export sales to be the best measure of changing global corn, soy, and wheat trade flows. The addition of risk premium has been warranted as moisture deficits in Argentina reach multi-decade highs, but demand, not just supply loss, is critical to sustain bull runs. This is especially true as spot corn and soy prices sit at rarefied levels for mid-winter.

• The midday GFS weather forecast is little changed from the morning solution. A much wetter pattern develops across the southern half of Argentina’s crop belt beyond Jan 20, with cumulative totals of 1.0-2.5” offered to important regions of Cordoba, Buenos Aires and La Pampa in the 8-11 day period. Yet, widespread showers are not indicated the GFS hints at the return of dryness in Argentina Jan 23-28. Argentine’s forecast is expected to be more dynamic moving forward as La Niña fades. We note that extreme heat and dryness continue in Argentina into late next week.

• Needed rain falls across the northern half of Rio Grande do Sul in southern Brazil this weekend. The remainder of Brazil stays wet/mild into late month.

• A broadly neutral price trend will be extended into spring following US production cuts made on Thursday. It is still tough to overly bullish of ag markets in the long run amid the lack of a demand driver and improving soil moisture in the US and Europe.

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