- HEADLINES: Chicago bounces after early fund selling; Brazil weather forecast stays wet, Argentina dry.
- Chicago grain markets have been mixed through the morning, with large fund selling noted immediately following the morning open. Once that selling was filled, Chicago grain markets staged a recovery that has continued into midday, leaving corn, wheat, and soybean markets unchanged or a couple cents higher.
- The soy product markets have been mixed with a burst of fund buying in soybean meal after the morning open, which was accompanied by similar selling in soybean oil. Meal has held just below unchanged through the morning, and soybean oil has given back some of Wednesday’s gains.
- Market news remains limited, and Ag markets continue to struggle from a mix of technical damage left from last week’s USDA reports and another holiday short week. Outside market influences have been supportive, with US stock indexes, crude oil, and gold all trading with good gains. Treasuries have been weaker, and the US Dollar Index continues to recover.
- Chicago brokers estimate that following a burst of selling at the open, funds have been flat to light buyers of 1,000 contracts in the corn market, with similar trading in the wheat market, and have bought 2,000 contracts of soybeans. In the soy product markets, funds have been flat in soybean meal and have been light sellers of 2,000 contracts of soybean oil.
- China has approved a genetically modified soybean variety that was developed by a Chinese seed company and has been sold in Argentina since 2022. China also approved a glufosinate resistant seed variety developed by Corteva that was approved in the US in 2021. Additionally, the Agriculture Ministry approved 6 varieties of GM corn, 2 soybean, and 1 cotton varieties for domestic production.
- Weekly ethanol production on Friday is expected to show a slower weekly production rate amid bitter cold temperatures and slowed deliveries last week. Blender inputs likely bottomed the first week of January and are expected to move higher in the first half of the year. Board crush margins are near break-even, while average estimated cash crush margins are showing modest profits. Estimated soybean cash crush margins are holding at $1.60-1.90/bu.
- The midday GFS weather forecast maintains good rains for much of the Brazilian crop-growing regions over the next 10 days. Widespread cumulative precipitation amounts will reach 2-4” across much of the country with some isolated local forecast totals stretching up to 5-7”. It is the key growing regions of Southern Brazil and Argentina that look to be short on rain into the end of January. Limited rains are forecast in Southern Brazil, while the GFS forecast projects virtually no rain for vast areas of the Argentine crop-growing regions. It is unlikely that Argentina will fall into back-to-back devastating droughts, but rains are needed for young and recently planted crops.
- The bearishness of the January USDA reports looks to be fully digested, and market focus will be directed towards S American weather and crop potential, as well as US old crop exports. Corn and soybean futures are the most oversold since last May, while the latest CoT report shows that commercials now hold a rare net long in the corn market.