- A higher morning Chicago trade uncovered some modest cash related selling in US corn which pressured the grains into the midday hour. Soybean futures have held strong on concerning Argentine weather. The Argentine forecast can change, but limited rainfall totals over the next few weeks is likely to cause stress to developing summer row crops. Argentine temperature are seasonal for this week, but look to warm next week and into early February. Corn is being the crop that is being impacted and yield estimates are in decline. Research argues that for a 2018 Argentine corn harvest of 36.5 million mt (and in decline) vs. the January USDA forecast of 42.0 million mt. Soymeal is the commodity being most impacted by drought like weather, but we would remind that corn is the crop that could see the steepest yield/production losses. Argentine nearby fob corn is offered at $165/mt today, the highest fob price offer in nearly a year. New crop Argentine corn offers have risen to $163/mt. This is no place to sell corn or indulge in bearish fantasies!
- Chicago brokers report that funds have sold 4,400 contracts of corn and 2,300 contracts of wheat, while buying 4,100 contracts of soybeans. In soybean products, funds have sold 3,200 contracts of soymeal and sold 1,800 soyoil.
- The US Senate is likely to approve a two week stopgap measure to re-open the US Government and the flow of ag information. The US$ has started to rally back with the Brazilian Real and the Russian Ruble gaining. The Argentine Peso has been weaker at 19.1:1, but farm sales have not been large as inflation is starting to become more engrained in the mind of the Argentine farmer. In Peso terms, their corn prices are at an all-time record high today.
- Seasonal price trends are up and funds are too short of corn, wheat and soybeans amid concerning S American weather. Our hope is that NAFTA negotiations can make progress this week. The Argentine corn crop is in fast retreat and crop condition reports are not good. The S American weather pattern looks to be static with concern growing for Argentine crops in February. Funds are too short of Chicago corn/soybeans and the risk vs the reward is tilted to the bulls.