- Chicago corn, soybean and wheat futures are lower at midsession as China is starting to celebrate their Lunar New Year Holiday and traders are less fearful that Chinese buyers will step forward with new purchase orders.
- Soybeans have been the downside leader with open interest for the week rising a net 35,000 contracts, suggesting new sellers coming forward on the record large Brazilian soybean crop. Corn and wheat selling have been more tentative, but there are just not a lot of resting buy orders below the market in either grain. We note that February options go off the board today. It appears that March corn futures are targeting the $3.90 strike and March Chicago wheat the $5.70 strike, and March soybeans the $9.00 strike.
- Chicago brokers estimate that funds have sold 3,000 contracts of corn, 3,800 contracts of Chicago wheat and 7,000 contracts of soybeans. In soy products, funds have sold 4,000 contracts of oil while buying 1,400 contracts of soymeal. End user pricing is noted in March soybean under $300/ton.
- FAS reported that for the week ending January 16, the US sold 25.6 million bu of wheat, 39.6 million bu of corn and 29.0 million bu of US soybeans. The wheat sales total was above trade expectations.
- The US sold a massive amount of US soymeal last week at 642,000 mt with US soyoil sales at 56,000 mt. US soymeal sales are soaring on Argentina’s absence with EU importers turning to the US. US soyoil sales at 520,000 mt are up 28% from last year on the US’s competitive sales position vs palmoil.
- For their respective crop years to date, the US has sold 745 million bu of wheat (up 87 million or 13% above a year ago), 800 million bu of corn (down 471 million or 37% below last year) with US soybean sales up 30 million bu or 3%. WASDE is expected to trim US corn exports in the February 11 WASDE while holding US wheat and soybean export estimates at least steady. Unknown is whether WASDE will add to US old crop exports in the wake of the US/China Phase One Trade Deal.
- We cannot confirm and doubt reports that Australia has sold 300-500,0000 mt of wheat to China at an expensive $274/mt. China does not need the wheat nor we see no reason why they would buy the world’s most expensive class.
- Argentine fob corn, wheat and soymeal offers keep rising amid tightening supplies. This will force additional world demand to the US. It is estimated that 4.2% of the Brazilian soybean harvest is completed as of today, right at the 5-year average.
- The midday weather forecast is consistent with the overnight run. The 10-day NE Brazilian rainfall forecast includes rain totals of 5-8.00″. Argentina will be dry for much of the 10-14 day forecast with soil moisture in sharp decline. The falling soil moisture profile will introduce the potential for heat with highs ranging from the upper 80′s to the lower 100′s. The coming dryness in Argentina must be closely monitored.
- Based on the Chinese coronavirus, it has been “risk off” for Asian traders. However, we would caution against becoming bearish Mar beans below $9.00 as Argentine dryness will develop for the first half of February. Moreover, one cannot rule out that the Chinese Government could issue duty free import licenses during the holiday amid diminished media coverage.
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