- HEADLINES: Midday forecast is wetter for the second week in Parana/MGDS; Midwest cash moving in soybeans; Deral crop ratings fall.
- Chicago futures have rallied into the midday hour on threatening S American weather and diminished concern regarding the Omicron virus, and that the Biden Administration will not shut down the economy. Soybean futures have pushed to new rally highs with March futures reaching $13.17 while corn/wheat follow. The corn market should be the upside leader on potential crop loss as the Southern Brazilian crop is in pollination, but US producer selling near $6.00 is acting to cap the advance. US/S American hedge related selling is modest in soy futures. We look for a strong close with the market adding weather premium for the threatening S American forecast.
- Soybean/corn futures are either at or above key chart-based resistance. A close above $13.00 in March soybean futures will argue for test of $13.50-14.00 in early 2022 while the weekly corn chart turns up with a second close above $5.90 spot futures resistance. The more bullish chart patterns in soybeans, soyoil and wheat should allow for additional investment flows into yearend. January options expire on December 23 Thursday with Chicago closed on Friday.
- Chicago brokers estimate that funds have bought 9,700 contracts of corn, 3,900 contracts of wheat, and 10,400 contracts of soybeans. In the products, funds have bought 2,300 contracts of soyoil and 5,200 contracts of soymeal.
- India has reduced its import duty by 5% to 12.5% for refined palmoil to calm inflationary food prices. The cut makes refined palmoil more economic that crude palmoil for import. The refined palmoil would be able to flow immediately into India and will boost demand. If food inflation does not subside, India could lower import taxes on crude palmoil/other vegoils in 2022.
- Some analysts have lowered Brazilian corn and soybean production estimates due to the worsening drought with Brazilian first corn crop estimate down to 23.7 million mt (down 4.8 million) with the soybean crop pegged at 141 million mt (down 3 million). The total 2022 Brazilian corn crop is estimated at 113 million mt. A deeper reduction is possible in early 2022 if the static weather pattern persists.
- Iran has tendered for another 180,000 mt of world wheat following a recent purchase of 500,000 mt last week. Cash traders expect that 400-500,000 mt will be purchased in this tender for January/February shipment. Iran has said that it needs to import 8 million mt of world wheat to meet demand in 2021/22. However, Iran has struggled with payments amid existing US economic sanctions.
- Parana’s Deral lowered their weekly crop condition ratings for corn/soy crops. Deral dropped good/excellent soy condition ratings by 14% to 57% and corn ratings by 14% to 63%. The weekly ratings drop was the largest in years and in both cases, crop condition ratings are the lowest in years. Without rain, next week’s Deral crop ratings could be record low for late December.
- Chicago will not close early for the New Year’s Day holiday as has been past tradition. Chicago will trade 5 days and hold normal hours next week. The trade-off is that Chicago has added a 2022 holiday, Juneteenth, on June 20. The Juneteenth holiday allows for a 3-day Father’s Day weekend.
- The midday GFS weather forecast is wetter than the overnight run with 1.00” plus totals offered for Parana/MGDS in the tenth day of the forecast. Otherwise, limited rain is offered for the crop areas of S Brazil and Argentina. High temperatures ranging from the mid 80’s to the lower 100’s this week. Northern Brazil stays well-watered with rains of 3.50-8.00”.
- Fund buying on chart considerations amid dry Southern Brazilian/Argentine weather has sparked a strong rally. We hold to a bullish view. However, the rain for Parana and MGDS 9-10 days from now has to be closely monitored. It could produce a correction following the Christmas holiday. Coming forecasts will help in this determination.