- Soymeal continues to pace the Chicago advance on declining Argentine crop prospects amid threatening weather forecast amid months of declining soil moisture. Chicago traders have been stung before on just in time rains, but with the Argentine soy crop in the reproductive stage, the time for rain is immediate, and a needed soaking rain is not in the offing. Private Argentine soy crop estimates range from 45-47 million mt on soybeans and 34-36.5 million mt on corn, which is slowing producer cash selling (along with Carnival). Also, there is talk that RGDS soybean yields could also be impacted via the dryness while Parana soy yields, are less than last year in the early stages of harvest. Too much rain and too little sunshine is the reason for yield shortfall across Parana. However, Brazilian traders are now discussing a 114-115 million mt final crop estimate from CONAB. We maintain that Chicago summer row crop futures have reached a new point in where the losses in the Argentine crop surpasses the gains in Brazil, tipping the balance in favour of the bulls.
- Chicago traders report that funds have bought 1,900 contracts of wheat, 3,300 contracts of corn, and 4,500 contracts of soybeans. In soy products, funds have bought 2,400 contracts of soymeal while being flat in soyoil. The US NOPA crush report will be out Thursday with a strong December crush rate of 166.5-168 million bu and soyoil stocks of 1.629 billion lbs. The report will confirm strong domestic crush of US soybeans and the best board crush margins at $1.36/bu since mid 2016. The US crusher is seeing strong domestic and export interest for soymeal and short bought end users chase the rally. These users are going to have to get covered into late spring or early summer before a top is set. The next upside price target for spring meal is $171-176 basis March futures. Argentine crushers struggle to secure cash beans from bullish Argentine farmers. The USDA Outlook Forum starts next week with WASDE to release their new and updated 2018/19 Balance Sheets on Friday morning. We look for WASDE to adjust their 91 million acre corn and soybean balance tables from their initial November estimates, but to hold on their bullish view on 2018/19 US soybean exports amid the Argentine soy crop shortfall. Russia has shipped out a record 3.0 million mt of all grain for their ports during January. This was up 26% from last year, and included 2.2 million mt of wheat. The export pace for Russian wheat to date calls for a 2017/18 full year exports figure of 36-36.5 million mt.
- A close above $10.045 March soybeans turns the trend upwards on the charts with an upside target of $10.40, last summer’s high. Corn and wheat look to follow amid parched Plains weather. December corn futures will find resistance as it nears the $4.00 level as US farmers look to advance new crop sales. Note that meal spreads are tightening on demand.