- CBOT markets started the day on the offensive after the extended US weekend with support coming from talks of Russia lifting its grain import duty, which was later denied, dry conditions and winter kill across key global grain growing regions.
- Once again we place a degree of focus on technical signals as the corn and soybean charts begin to build a degree of a “base” from which upward momentum may take place. It is early days but, a close above last weeks highs would provide a solid signal to those of a bullish persuasion. Bullish enthusiasm has to be tempered following denials from Russia that they are about to lift their 5% grain import duty at this time. Some suggest that the real issue is one of time rather that whether it will or will not be lifted. We believe that the continued upward movement in their domestic grain and flour prices coupled with early export volumes, intervention sales, talk of physical grain imports and import duty suspension all conspire towards one conclusion – time will (as always) tell.
- Current weather conditions in S America suggest that the southern regions of the continent are struggling due to a dominant high pressure ridge which is blocking rainfall and leaving atmospheric moisture levels extremely low. Soil moisture, particularly topsoil, levels are reducing rapidly at a time when crop demand is growing. Further north, the Matto Grosso region, which accounts for nearly one third of Brazil’s soybean output, is experiencing better rains after a very dry December and first half of January.
- In contrast, Argentina has experienced planting delays as a result of prolonged rainfall, leaving many acres of both soybeans and corn to be planted late in December and January. These late planted crops are, understandably, shallow rooted, and appear to be succumbing to the rapidly drying soils in the second half of January. Forecasts remain drier that normal offering little immediate respite to crops.
International Agri Trading Ltd
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