- Soybeans extended weekly gains and finished 5-6 cents higher. With daily/weekly USDA sales data being withheld via the USDA’s partial closure, the trade is reacting to drier conditions in Brazil for price guidance. Rain across the key growing regions of Brazil has largely been behind normal for the last several weeks, and the forecast does not show a significant pattern change. The Buenos Aires Grain Exchange estimated that as of Jan 2, Argentine soybean planting progress had advanced to 90% complete versus 88% last year and the 5-year average of 93%. Additionally, the Exchange reported that 41% of the soybean crop was rated as good/excellent versus 51% a year ago. Too much rain held back condition ratings. Just 7% of Argentine soil moisture was rated as dry/poor versus 26% a year ago. The problem this year is excessive soil moisture. March soybeans are aiming for the 200-day moving average near $9.30. If the forecasts remain dry in Brazil and wet in Argentina, March soybeans could rise to $9.50-9.75 for a seasonal top.
- March corn settled 4 cents higher has recovered half of its losses of late December. A higher close Friday foreshadows a range of; $3.80-3.95. Spot corn continues to follow its normal seasonal trends, which are positive heading into late winter. The EIA is scheduled to release its weekly energy report Friday morning. Ethanol margins have recovered from their lows but remain weak. US ethanol production through the week ending Dec 28 should total 305-308 million gallons, near unchanged on the prior week. Weekly ethanol stocks and stocks/use are expected to decline. Otherwise, there is a dearth of fresh news. But world cash basis remains firm. EU corn futures are back testing 4-month highs at €180/mt ($5.60/bu) on the need for any greater imports. There is a decent correlation between Dec-Jan dryness in S Brazil and first-crop corn yield, and it is unlikely Brazil’s pattern flips before late January.
- US and EU futures rallied amid firm global cash markets and general concern about S American row crops. The world oilseed balance sheet will stay well supplied, but importers demand a record/near record Brazilian corn crop. Gulf wheat is competitive despite the rally. Focus in the near term will remain on interior Russian wheat and flour prices and the US$ performance. We have previously highlighted that the rally in other world wheat markets has outpaced the US. Even lesser-followed markets such as Indian wheat have found new multi-year highs. The Indian cash market’s premium to spot CME futures rests at $130/mt, vs. $115 a year ago. Cash markets are better accounting for this year’s collapse in world exporter production/stocks. Pakistan is looking to export 100,000 million mt of subsidised supply. But other wheat input remains bullish. A close above March KC’s 50-day moving average at $5.08 turns the charts bullish.