- The reopening of the US Government has NOT sparked a big bounce in Chicago or in other financial markets. It was hoped that getting back to normal in terms of Government data/statistics would be a boost for Chicago market confidence. But, the threat that the US Government will close in three weeks (again) and the weakening Chinese economy has taken away some of that thunder. Opening Chicago selling has traders attributing to the sharp losses in energy/ equity valuations. Funds were aggressive early sellers of soybeans, which dragged the grains lower. The selling ebbed at mid-morning. We look for a slightly lower Chicago close as the weakness in crude oil caps a recovery effort.
- Chicago brokers estimate that funds have sold; 4,100 contracts of wheat, 5,300 contracts of corn, and 3,700 contracts of soybeans. In soy products, funds have sold 1,500 contracts of soymeal while being flat in soyoil.
- US weekly exports for the week ending January 24 were; 35.1 million bu of corn, 34.1 million bu of soybeans, and 13.3 million bu of wheat. For their respective crop years to date, the US has shipped out 846 million bu of corn (up 303 million or 56%), 751.8 million bu of soybeans (down 475 million or 39%), while US wheat exports rest at 528 million bu (down 67 million or 11%). The USDA 2018/19 US soybean export estimate appears to be overstated by at least 150 million bu. Some sort of downward adjustment is expected in the February WASDE report.
- Traders hope that FAS will release four weeks of US grain sales data on Thursday. However, there has been no confirmation that FAS will be able to tally a month of sales data that fast. Confirmation of what will be included in Thursday’s weekly sales report is being closely monitored by traders. The CFTC will also release Chicago/CME positions as of Tuesday. We hope that the CFTC will just release positions as of January 29, without going backwards and trying to piece together industry positioning.
- Russian fob grain prices are tough to uncover this morning. Few fob offers exist beyond March, and most exporters really do not want to discuss the Russian grain market. Interior Russian wheat prices keep rising and the trucker’s strike shows no sign of ending. No one knows what the Government will do next. As an aside, we note that the soft export licensing program that started in November does not appear to be working very well.
- The midday GFS S American weather forecast is slightly wetter than the overnight run. The pattern of a high-pressure ridge across NC Brazil and a low-pressure vortex across Argentina persists this week. However, a weakening and eastward progression of the ridge does offer for a pattern change in early February. The jet stream lifts northward and confidence in better N Brazilian rainfall and less Argentine rain is growing beyond Feb 5. The forecast shows that better rains seep into Mato Grosso Du Sol/Parana beyond the next six days. Soil moisture here has been diminished as replenishment will take at least 3-4 weeks. The drier trend favours Argentine corn and soybean crops.
- The morning Chicago break is being tied to the sharp fall in crude oil and US equity prices. US and world cash wheat prices are stout this morning with Russian interior prices rising (again). The rise in world wheat prices limits the downside in US/European wheat futures. March corn has support below $3.75. Soy futures should struggle above $9.25 March amid slowing US export demand and the advancing Brazilian harvest.