- Corn cash and futures prices continue to do very little, but at the same time other grain markets are inching higher. Corn has solidified itself as the cheapest feedgrain, in both the US domestic and world export markets. The question ahead is whether abundant corn supplies act as a weight on rallies in other markets, or whether rising wheat, sorghum and world barley prices act as a boost for corn. At the least, 2018 planting intentions, in the Plains especially, are much less certain than they were 45 days ago.
- Tuesday was a slower, but lower day of trade in the soybean and meal markets, that left January soybeans 5.5 cents lower at the close. Funds sold 7,000 contracts in soybeans and 4,500 in meal, and were buyers of 2,500 contracts in the soyoil market. While soybeans and meal have been down this week on fund liquidation, soyoil has traded firm on spreads. Uncertainty over upcoming biofuel demand continues to frustrate the soyoil trade. The USDA’s balance sheet shows that if their soybean crush rate is met, that the soyoil balance sheet will be fine, while a number of analysts contend that the USDA’s biodiesel forecast is still too low. While the USDA has done a good job forecasting biodiesel demand in recent years, the cancellation of soyoil receipts in Chicago has become concerning. Quieter Chicago trade is expected to unfold in the rest of the week, with attention to S American weather forecast.
- March corn traded in just a 2-cent range, unable to rally or break amid competing fundamentals. The trade is also debating the accuracy of even the near term forecast in Argentina, and as of this evening the EU and GFS models are still very much at odds regarding rainfall there in the next 5 days. The midday GFS was very wet; the afternoon run of the EU model is nearly completely dry in Buenos Aires, La Pampa and Cordoba. We have detailed in recent reports how soil moisture deficits persist in Argentina, and follow up rain is needed. Otherwise, in spite of weather, S American cash corn continues to rally. Fob basis in Argentina in just a matter of weeks has doubled from $.25/bu in early Oct to $.52/bu currently. Without renewed weakness in S American markets, which isn’t expected until February, we doubt much downside risk exists in Chicago futures. A close above $3.51, March, is mildly supportive.
- Spot Chicago wheat nearly touched its 20-day moving average at $4.26 but ended just short and settled the day a bit weaker. Kansas futures ended higher, and very modest premium to Chicago is noted there. Wheat-specific news is lacking, and like corn S American weather will be the market’s primary driver, but a close eye wil be kept on US temperatures next week. Snowfall expected prior to next week’s cold event. Trace amounts are possible in E CO, W KS and NE, but otherwise complete dryness will continue across the Plains into early Jan. The EU and GFS models are in general agreement that overnight lows in OK, KS, NE and CO will fall into the single digits in the period December 24-26, with another round of possibly colder readings due December 29. It is impossible to quantify winter damage, but such temperatures amid lacking snow cover is far from ideal. However, abnormally warm temperatures will persist in the Black Sea, exports will be ongoing and Russian fob offers are unchanged for an 6th consecutive week at $191-192/mt, vs. comparable Gulf HRW at $198.