17 December 2021

Posted on by
  • HEADLINES: March corn rallies to highest price since July; Russia wheat export quota to drop 1 million mt to 8 million; S Brazilian/Argentine forecast dry.
  • Chicago futures are higher at midday with the exception being meal/oil spreading on the pre hedge index fund rebalance that is pushing soyoil values downwards. The volume of trade has been active with buy stops triggered as March corn futures rallied above its November high at $5.9675. Resting orders are lacking and exacerbating corn/soy wheat price movement. However, we hear that US farmers do have resting cash sales orders near $6.00 in March corn and $13.00 in March soybeans. Both could act as “speed bump” to this developing S American weather bull market. The Southern Brazilian/Argentine forecasts are hot/dry for next week with numerous days of 90’s to lower 100’s. S American crop totals are in retreat with a good soy crop in Northern Brazil will be unable to make up the losses in Southern Brazil. We look for a higher Chicago close into the weekend, remember, Fridays are trend days.
  • Chicago brokers estimate that funds are buyers of 1,900 contracts of soybeans, 9,500 contracts of corn, and 7,200 contracts of soybeans. In the products, funds have bought 2,000 contracts of soymeal and 1,200 contracts of soyoil. Algo funds were active soyoil buyers this morning on the Indian purchase.
  • USDA/FAS announced that China secured 133,000 mt of US soybeans and 33,000 mt of US soyoil to India. This was the second sale of US soyoil to India in as many days. India is now the largest US soyoil buyer in taking 110,000 mt on a known basis (242 million pounds), with cash vegoil traders arguing that India’s buy program is not yet completed. India has already exported 30,000 mt of US soyoil with the shipment of recent purchases said to be January-February.
  • China has now secured 22.8 million mt of US soybeans on a known basis with half of the unknown destination business of 5.1 million mt likely heading to China. We would peg total China purchases of US 2021/22 soybeans at over 25.0 million mt. We forecast that China will take 29-31 million mt of US soybeans in 2021/22.
  • The damage from the exceptional windstorm across the US Plains and W Midwest is still being measured. Gusts over 100 MPH were reported in KS, NE, and OK that caused considerable plant blowout. Roots are exposed and rainfall now needs to be immediate. The next 2-3 weeks of weather will help determine the viability of some of the wind-blown wheat.
  • Russian troops are still massing along the Ukrainian border which is causing greater worry throughout Europe. No one knows what the intention is of Russian President Putin, but he shows no intention of backing down from economic sanction threats from a host of European nations and the US. A military conflict between the world’s first and third largest wheat exporter would be exceptionally bullish. One must closely follow Russian/Ukraine developments.
  • Reuters is reporting that Russia will cut its wheat export quota from Feb 15- July 1 to 8 million mt, down 1 million mt from the previous forecast. If true, we calculate that it will be difficult for Russia to export more than 31 million mt of 2021/22 wheat, down 5 million mt from the December WASDE. Who is going to fill that demand depends largely on availability? The US, Argentina/Australia are likely sources. We see no evidence that world wheat demand is being rationed.
  • The midday GFS weather forecast is consistent with the overnight run.  Limited rain is offered for the crop areas of S Brazil and Argentina over the next 10 days. A ridge of high pressure produces heat/dryness with high temperatures ranging from the mid 80’s to the lower 100’s. Northern Brazil stays well-watered with rainfall 3.50-8.00”. Unfortunately, S American crop yield risks are rising with excessive rains in N Brazil and a deepening drought for S Brazil/N Argentina. This is concerning.
  • Adverse S American weather opens the upside in the marketplace for both corn/soy and wheat. Chicago will add weather premium to price if the forecast is correct. A weekly close above $5.92 March corn and $12.95 Jan soybeans turns the charts bullish. It is all about S American weather into yearend.
To download our weekly update as a PDF file please click on the link below: