- HEADLINES: Choppiness continues amid lack of breaking news.
- Chicago values at midday are similar to the overnight session amid a lack of news. Energy values worldwide are firm amid hope that Covid in China can be controlled moving forward. More attention is being paid to extended range forecasts in Argentina, which maintain a pattern of unwanted heat and dryness into the middle of December. Landslides caused by heavy rain in Southern Brazil have blocked road access to the port of Paranagua. The port today is operating normally, but the arrival of new supplies will be sluggish. Otherwise, volume is thin, and enthusiasm is lacking.
- There is growing talk surrounding infrastructure issues in Australia following inundating rainfall in eastern Australia, including key portions of New South Wales. The worst of quality and yield issues will be avoided via recent and upcoming dryness there. But Australia’s ability to ship 25-26 million mt does require seamless logistics. Aussie vessel line-up data will be watched closely in late Dec/Jan to measure the impact on physical grain flows.
- Negotiations continue over Mexico’s planned ban on GMO corn imports in 2024 and beyond. Following the US’s threatening of legal action on Monday, Mexican President Obrador stated that the ban of GMO corn would apply to supplies used for food consumption, not animal feed. Still, there remains a lack of clarity, and just as important will be the expansion of Brazilian corn output over the next 2-3 years. Mexican imports of US corn scored a new record in 2021/22, but US corn export commitments to Mexico as of Nov 17 are down 11% year on year at 342 million bu.
- Brazilian corn futures remain unmoved and have traded in a range of $7.00-7.10 since early November. Guidance from international markets is lacking.
- Chart patterns may have an outsized influence on daily price determination as the market awaits news regarding China’s Covid protocols and December weather in S America. Strong resistance lies just above the market, with a close above $6.73, basis March Chicago corn, needed to attract new buying bulk. January soybeans’ ability to trade above its 200-day moving average on Monday lends support, but the contracts have been unable/unwilling to breach $14.70 since mid-September. Substantial technical healing is needed in US wheat futures before meaningful short covering occurs.
- The midday S American GFS weather forecast is consistent with morning output. Moderate rainfall will impact western Cordoba but otherwise warmth and dryness will be in place across Argentina into Dec 12-13. Max temperatures in Argentina will exist in the 90s and low 100s beyond the next 48 hours. Rapid soil moisture loss lies ahead. The Brazilian outlook remains nearly ideal. Moisture will be replenished across the drier areas of Mato Grosso. Brazilian temperatures will be within a few degrees of normal, with highs in the mid/upper 80s and low 90s.
- The bears will struggle for leverage until/unless a wetter/cooler pattern shift occurs in Argentina. The bulls require significant improvement in US export demand, which is highly unlikely given current world price relationships. Brazilian soybeans are quoted below the US market for delivery as early as late January.