- The sharp DOW recovery amid drier Argentine weather forecasts offered early Chicago support with corn, soybeans and wheat trading in the green. The volume of trade is active and a higher close is expected. The USDA Crop report is Thursday and some covering ahead of the report is occurring. Historically, the February report does not offer much excitement. Traders will be focused on changes in S American crop sizes and the amount of increase in the 2017/18 US soybean balance sheet due to a decline of 50 million bu of US soybean exports and a 25 million bu bump in the crush rate. US domestic meal and DDG demand is very strong, with rising basis levels, even amid the record large US soybean crush pace. Research expects a modest reaction to the USDA report with trader’s then returning their focus on S American weather and the potential for US competition in the months ahead.
- Chicago brokers report that funds have bought 3,700 contracts of soybeans, 6,500 contracts of corn, and 3,200 contracts of Chicago wheat. In soy products, funds have bought 3,800 contracts of soymeal and 1,700 contracts of soyoil.
- IMEA raised their estimate of the Mato Grosso soybean crop to 30.98 million mt vs 30.6 million in November. The increase was less than expected. CONAB will be out later this week and we are expecting a 1-1.50 million mt increase in soy production to 110.5-111.4 million mt. Such production is just below last year’s record at 114 million mt. CONAB will be reluctant to forecast a record large Brazilian crop until more harvest data is available. We see the Brazilian soybean crop at 111.7 million mt. There is no evidence of moisture for the parched Central Plains for 2 weeks.
- It has been a day of short covering ahead of the USDA February report on Thursday with the forecasts offering less Argentine rain following the weekend. Meal and corn should be the upside leaders on declining Argentine crop yields. The US equity market has stabilised, for now, but we doubt any rally can be sustained.