• HEADLINES: China books 2.1 million mt of US corn, largest US daily corn sale since October 1989. Southern Brazil stays wet.

• Chicago futures are mixed at midday with corn/wheat higher while soybean futures trade violently on both sides of unchanged. Soymeal futures retreated to test last week’s low on active oil/meal spreading. Research expects that March soymeal will hold $420/ton support on active US meal export loadings and that March soybeans has solid support below $13.40. We look for a higher close across Chicago.

• FAS/USDA announced another 2.1 million mt of US corn to China (second largest daily sale on record surpassing a sale of 2.0 million made to the USSR back in October of 1989). This morning’s sale takes this week’s China corn purchases of US corn to 6.0 million mt (240 million bu), a weekly and annual record.

• We hear that China is working another 2 million mt of corn for a total purchase package of 8 million (315 million bu). This purchase package amounts to 18% of last year’s US corn exports. China has secured an estimated 20 million mt of US corn to date, with a projection that total will reach 24-26 million mt. The nearly 1 billion bu of China demand for US corn has accentuated corn’s already bullish outlook. The new demand argues that spot Chicago corn futures can reach $6-6.25 which would argue for spot soybeans to advance to $15.50-16.00.

• Including this week’s China sales announcements, the US has now sold a remarkable 4,350 million bu (combined) of US corn/soybeans for the crop year to date. Last year the US exported 3,460 million bu of corn/soybeans. The point is that 2020/21 US corn/soybean sales commitments are already 890 million bu more than a year ago, with 7 months (more than half) of the crop year remaining. The US corn/soy demand bull market is alive/well.

• Chicago brokers estimate that funds have bought 12,000 contracts of corn and 4,300 wheat, while selling a net 3,400 soybeans. In soy products, funds have sold a net 1,900 contracts of soyoil and 4,300 contracts of soymeal.

• Mato Grosso’s IMEA lowered their estimate of their soybean crop to 35.48 million mt from 35.87 million at the end of November. Yields were lowered just over 1.0% with a downward bias on the dry weather for January. The Mato Grosso soybean harvest is extremely slow to start with progress limited this week. Some cutting will start around February 5, but the bulk of the Mato Grosso soybean harvest will hold off until after February 21, which means that Brazil’s soybean export season will be largely pushed back to March.

• Producers report that a lack of sunshine and excessive rains is taking a toll on the Parana, Santa Caterina and SE Mato Grosso do Sul soy crops. No harvest has taken place, and none will start for another two weeks. Unfortunately, the forecasts offer additional wet weather for the next 10-14 days. Crop woes look to worsen which is harming yield potential.

• The midday GFS weather forecast is wetter in Mato Grosso and EC Brazil into February 8. The forecast remains wet for Parana and the southern third into February 14 which will raise the risk of yield losses and seed degradation with another 3-6.00″ of unwanted rain.

• Drier weather is offered for Argentina with rainfall totals of just 0.25-1.25″ over the next 10 days. The diminished rain will cause a further reduction in soil moisture. Argentine and Southern Brazilian high temperatures hold in the 70′s to 80′s which is some 8-12 degrees below normal. Excessive wetness across Southern Brazil remains a high concern heading into February.

• The Chinese buying of 6-8 million mt of US corn has shifted corn’s outlook to ultra-bullish as this demand led bull accelerates. Soybean futures will follow corn on acute need for demand rationing along with new crop November fighting with corn for 2021 US acres. There are over 9 million mt of vessels waiting to load cargoes in Brazil (up 3.2 million mt in the past week) with harvest still 2-3 weeks away. The price risk stays to the upside with Chinese demand so large the US might have to feed considerable amounts of wheat. Stay bullish, the entire Chicago complex appears to be priced too cheaply relative to fundamentals following China’s massive US corn purchase.

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