- Once again ag markets have crawled off session lows (10 cents in the case of March soybeans) as end users take advantage of breaks. Soybean crush margins have surged since late January. US ethanol margins are profitable, and concern over world weather patterns persist. US exporters this morning sold two cargoes of old crop corn to Japan, and close attention will be paid to Saudi Arabia’s barley tender over the weekend to gauge global minor feedgrain prices.
- The midday GFS weather forecast has again failed to include any pattern change in S America or the US, and temperatures this weekend in La Pampa and Buenos Aires are forecast a bit higher, and high readings Sat-Sun should reach 96-97℉.
- There is also talk of early harvested soybeans in Brazil yielding less than expected, particularly in Goias and Mato Grosso, which historically combine for 40-45% of total Brazilian bean production. Also, white mould has been reported in the state of Parana. Harvest in Mato Grosso is just under 30% complete, and so more data is needed, but new yield results will be followed closely, and perhaps this year’s Brazilian bean crop won’t much exceed 112-113 million mt, vs. private estimates as high as 116-117.
- Argentine soybean crop estimates are now centered at 44-46 million mt, vs. the USDA’s 54 million, which aligns well with previous La Niña based drought years. As such, it is possible that S America’s total soybean crop is no bigger than 156-159 million mt. This is down 7-10 million from the USDA’s forecast and down 13-16 million from last year. The point is that we caution against turning bearish beans until there’s much more clarity on Brazilian potential.
- This afternoon’s CFTC report is expected to show a managed fund short in corn worth 55,000 contracts, down 28,000 from the previous week; a fund short in wheat worth 80,000 contracts, down 3,000; a fund long in soybeans worth 14,000, vs. a short position of 10,000 the previous week; and a net long in meal of roughly 77,000 contracts, up 25,000 on the week and the largest since 2012. Meal spreads need close watching, but until Argentina’s crop size is better known, end users look to stay anxious.
- The best chance for rain in Argentina exists next Tues-Wed as scattered showers work across Central and Northern Regions. However, totals next week in Cordoba and Santa Fe, both major producing provinces, are pegged at/below .25”, and thus not nearly enough to alter soil moisture. Thereafter, complete dryness resumes into March 2-3, after which confidence in any outlook is low. Brazil will be favorably dry for the next 48 hours, but above normal rain returns next week. Harvest is Central Brazil has been a bit slower than normal.
- The trade is well aware how important Monday night’s S American weather forecast is. We doubt that forecasts will change much, and climate work suggest dryness and above normal temperature will persist in Argentina well into March.