- Chicago summer row crop futures are higher at midday on fresh speculative buying and a lack of resting sell orders overhead. March corn is testing its November 30 high at $4.30 while the soy complex has scored new contract highs with January soyoil futures rising to 40.28 cents and March soybeans reaching $12.23. March soymeal futures have exceeded the 2018 top at $404.90 with the 2016 high the next upside target at $432.00.
- Chicago has a bullish feel with traders noting that if the market settled at midday values, bullish breakouts will have occurred on the weekly and monthly charts. We look for a higher Chicago close with S American and US farmers show no interest in selling today’s Chicago rally.
- Wheat is the midday laggard with Chicago and KC futures slightly Lower. Unmoved Russian fob offers, and the availability of E European wheat has capped an early rally. Wheat is being used as a short leg vs. soybeans/corn this morning now that the Russian tax is decreed. March Chicago has been unable to break a key chart point which is Monday’s reversal high at $6.22.
- FAS/USDA did not announce any new daily sales of corn, wheat, soybeans, or soy products this morning. Active interest continues for US corn amid its competitive position in world trade. We should be aware that next week’s USDA Weekly Export Sales report will be released Wednesday due to the Christmas holiday and everyone should be prepared for its early release.
- US exporters are reporting a daily interest in the switching of soy product and corn cargoes that are caught up in the Argentine crush/port strike. Already, it is being estimated that the Argentine soybean crush rate has been cut by nearly 2 million mt through today. We hear that Argentine exporters are looking for prompt US Gulf soymeal, soyoil or corn to replace Argentine cargoes that are being held hostage by the 10-day crush and port stevedore strike. The longer the strike goes on, the greater the US export interest will be.
- US exporters report that China has started switching Brazilian cargoes for February back to the US on the doubt that Brazil will be able to fulfil sales on a timely basis due to dry weather which has delayed the development of the 2021 N Brazilian soy crop. Estimates vary, but exporters suggest that the US could pick up an additional 750-900,000 mt of Chinese soybean demand for February. The problem is that the US can ill afford to sell soybeans to anyone with US end stocks nearing zero based on record large crush and export rates through the end of December. The marketplace must reach price levels that really starts to cool US crush/soy export demand.
- The midday GFS weather forecast is little changed from the overnight run. Spotty showers will impact Central Argentina on the weekend while heat and abnormal dryness persist through Northern Brazil. The rains will start to fall across the Mato Grosso, Goias and Bahia on Tuesday with daily shower chances forecast into yearend.
- The extended forecast maintains a classic La Niña pattern, in which complete dryness resumes across Argentina Dec 20-January 1. The models offer warming temperatures to the mid 80′s to the mid 90′s late next week. The weekend Argentine rain does not look to be plentiful enough to reverse the acute drying trend that has prevailed since October 1. Argentina/S Brazil drought concern is rising amid the arid weather pattern and a warm pool of Atlantic Ocean to the east of Argentina that could produce a high-pressure ridge.
- Chicago has started a demand rationing rally to slow crush and exports. However, based on the Argentine port and crusher industry strike, US nearby demand is increasing. There is an acute need to curtail record large US soybean demand. Moreover, Argentine and S Brazilian weather forecasts look drought-like into early January which makes rain in the FH of January critical to finish seeding and for filling corn. Our concern for Argentine weather is rising.
To download our weekly update as a PDF file please click on the link below: