- HEADLINES: Chicago weaker in correction with key chart support near; domestic soyoil end users add forward coverage.
- Chicago futures are weaker at midday with US wheat futures giving back early gains as the Russian Prime Minister has not yet signed the new €50 euro duty proposal from the Economy Minister. The debate has left Black Sea Russian wheat exporters guessing as to what the Government is considering. Sources report that the Russian Government could be contemplating an even more restrictive export policy that includes the €50/mt tax along with a quota on the exact amount of wheat tonnes to be exported. So far, the Russian export tax just raises world wheat prices, but has yet to push the Russian farmer into new sales or cause a slowdown in Russian grain exports.
- Corn and soybean futures are enduring a corrective break with the weekend rains helping to stabilise Argentine crops. However, there is an expectation is that world vegoil prices have had a large enough of a correction to engender a fresh round of forward coverage by end users. The world vegoil outlook stays bullish with stocks/supply shortages developing. Soyoil futures has been able to shake off early losses on the expectation that the world most plentiful vegoil, palmoil, is close to a seasonal bottom. SE Asian palmoil production stays seasonally constrained into May when yields start to increase
- Chicago brokers estimate that managed money has sold 10,500 contracts of soybeans and 12,600 contracts of corn along with 4,300 contracts of soymeal and 3,100 contracts of soyoil. Funds have been net buyers of 2,100 contracts of wheat. The funds were more aggressive early buyers of wheat, with midday sales pushing prices back near unchanged.
- The USDA/FAS announced that the US sold 132,000 mt of 2021/22 soybeans to China, along with 128,000 mt of 2020/21 US corn to Japan and 100,000 mt to Israel. China continues to ask for US offers on US corn from May into July.
- Weekly export inspections for the week ending January 14 were; 34.5 million bu of corn, 75.6 million bu of soybeans, and 18.9 million bu of wheat. Last week’s US soybean export estimate was revised upwards by 2.5 million bu to 67.9 million. This was one of the smallest weekly revisions since early September.
- For their respective crop years to date, the US has exported 572 million bu of wheat (down 15 million or 2.5%), 680.1 million bu of corn (up 306.8 million or 82%), and 1,578 million bu of soybeans (up 690 million or 78%). It is remarkable that the US will have exported more soybeans through January than the entirety of last year. China continues to quickly export its soybean purchase commitments from the US
- The Algerian wheat tender will be interesting, and is widely expected to be filled by EU wheat. The EU cannot keep selling/exporting wheat to North African nations without causing an acute feedgrain shortage by late February/ March.
- The midday GFS weather forecast is consistent with the overnight forecast. Limited rainfall occurs across Argentina over the next 5-6 days before showers return to Santa Fe and Corrientes on Monday. The southern half of the Argentine crop areas will stay dry for the next 10 days. High temperatures will reach the 90′s to lower 100′s late this week.
- Northern Brazilian rainfall totals will be just 50-70% of normal with acute drying noted over NE Brazilian crop areas. The need for rain will build across Minas Geri as and Sao Paulo if they hold in an arid weather trend into late January. High temperatures are forecast to range from the mid 80′s to the mid 90′s.
- A correction was needed following the USDA January Report which caused futures to become technically overbought. We doubt that March corn will be able to fall too far below $5.20 or March soybeans too far below $13.85 before a trading low is established. KC March wheat has support below $6.35 awaiting the final Russian decision on export taxes. Research stays bullish as there is no statistical evidence of demand rationing or a slowing of Chinese demand. As they say; “Bull markets always let you in.”