- Chicago futures have traded mixed in low volume morning trade. Wheat futures have leapt above key moving averages/chart resistance while soybeans/corn have held in the red. The market lacks new inspiration with no one wanting to be too bearish of corn/soybeans with the US/China trade talks resuming next week while 25% of the US Government remains closed amid a budgetary dispute. Other than weekly US export inspections, the markets are “flying in the dark” on demand. We look for a mixed Chicago close with the market’s focus remaining on a US/China trade resolution and S American weather forecasts. We would continue to advise against a bearish stance in the grains or a bullish stance on soybeans.
- Chicago brokers estimate that funds have sold 4,300 contracts of corn and 1,200 contracts of soybeans, while buying 2,800 contracts of wheat. In soy products, funds have sold 900 contracts of meal and bought 2,400 soyoil.
- US weekly export inspections for the week ending January 17 were; 43.6 million bu of corn, 40.8 million bu of soybeans and 18.9 million bu of wheat. All were above trade expectations. For their respective crop years to date, the US has exported 514.5 million bu of wheat (down 60 million or 10%), 810 million bu of corn (up 307 million or 61%), and 717 million bu of soybeans (down 469 million or 40%). The odds of the US making up the soybean export differential is fading with Brazil now offering new crop soybeans below the US on a similar quality basis. In 2-3 weeks, Brazilian weather will be of decreased importance for their soy and of increased importance for corn yields. The 2019 Brazilian soybean harvest has advanced to 11% completed through Sunday with many more fields reaching maturity in the next 20 days. If the NC Brazilian drought is to keep having an adverse impact on production, it will have to be in this timeframe. Farmers are planting their winter corn crop right after soybeans and concern is building about the lack of soil moisture. Initially, the corn crop has enough moisture for germination, it is the vegetative growing stage that when improved soil moisture will be demanded during the last half of February. The corn market will pay close attention to the Brazilian weather pattern beyond Valentine’s Day.
- Russian interior wheat prices are rising almost every day as exporters and millers fight for remaining supply. Some domestic millers complain that Russia has overstated production/stocks which will maintain price rises into spring.
- The midday GFS S American weather forecast is drier in Brazil and wetter in Argentina than the morning run. The long-held pattern persists with a high-pressure ridge across Brazil and a low pressure vortex across Argentina. This is the same pattern that has existed since November. The jet stream is displaced southward and heavy rains dropping across Central Argentina. This is farther south from the saturated Northern Argentine crop area. The heavy Argentine rains need to be followed, so that rain does not fall across the same area for weeks. The key going forward is to see of the overall S American weather pattern shifts to the north or south.
- The world wheat cash market is pushing to a new four year high on tightening supplies in the Black Sea and Europe. World wheat demand is being pushed to the sharply discounted US marketplace. US soy prices are down on sliding export demand with Brazil highly competitive. Corn will likely follow soybeans until its clear there is a winter corn weather problem in Brazil. Everyone hopes for a US Government reopening before month end to gauge US January export demand.