- Chicago futures have largely maintained overnight strength. There is little fresh to report other than a modestly supportive weekly EIA energy report. The GFS weather forecast maintains spotty showers in Brazil over the next 6-7 days, but projected accumulation will not keep pace with evaporative losses. And recall the EU solution this morning keeps Brazilian rainfall rather limited in the next 10 days. The EU’s afternoon solution is awaited. Through the week ending Jan 11 the US produced 309 million gallons of ethanol, up 15 million on the week and near unchanged from mid-January last year. Ethanol stocks were up a modest 4 million gallons, with weekly stocks/use slightly above average. Futures-based ethanol production margins have neared breakeven, while actual cash margins have turned positive in parts of the Midwest.
- US crude stocks, less reserves, were down 2.6 million barrels and since mid-November crude stocks have declined 13.4 million barrels. The worst of energy data is in the past. A more neutral price trend is expected into spring. WTI crude at midday is down $.30/barrel at $51.80.
- Brazil’s soybean harvest is underway, with progress reaching 10% complete in Parana and nearly 6% complete in Mato Grosso. Harvest will inch along through the week ahead, aided by hot/dry weather, and will accelerate rapidly in late Jan/early Feb. Vegetation health maps continue to erode. There is an otherwise lack of fresh input.
- The midday GFS weather forecast has maintained a relatively warmer pattern in the US. Sustained bitter cold t temperatures will be confined to the N Plains and Canada. A more seasonal temperature pattern unfolds elsewhere beginning this weekend, but readings in the teens and below are not expected across the primary winter wheat belt. Model uncertainty continues with respect to accumulated snowfall between now and late Jan. A few storms are certain, but the intensity of these events will only become clearer in the next few days.
- European grain markets are firm. Matif corn futures have again found support at €180/mt ($5.20/bu). Ukrainian corn basis has rallied some $.40/bu following harvest. Europe’s corn needs are massive.
- The midday GFS S American weather forecast is little changed from prior runs. 10-day totals across the primary crop belt will range from 0.75-2.50”, with heavier regional totals possible. Any rain is welcomed, but such totals won’t reverse the trend in soil moisture declines. Even assuming the GFS’s outlook, Jan 1-30 rainfall will total 40-60% of normal. High temperatures in Brazil over the 48 hours will reach into the mid-90s, a few degrees above normal for mid-Jan. Soaking rains continue across the northern fringe of Argentina’s ag belt.
- Several fundamental models suggest corn and wheat are undervalued while beans are overvalued. Much depends on US-China trade negotiations in late Jan.