- HEADLINES: Row crops stay weak; Wheat corrects on US acreage data; GFS weather forecast adds rain to Argentina in early January.
- Chicago corn and soy futures are trading similar to the overnight session while wheat turns lower following the release of updated RMA insurance enrolment data that validates ideas of enlarged US winter wheat seeded area in 2022/23. Total winter wheat acreage enrolment as of Dec 19 sits at 12.3 million, vs. 10.7 million last year. US winter wheat planted area is likely to have expanded 1.2-1.5 million acres year on year and the years-long contraction in US wheat stocks will stabilise assuming normal spring weather. The GFS weather forecast features a boost in Argentine rain chances beyond Dec 30, with dryness to persist nearby. The Argentine forecast remains rather changeable. But corn/soy markets are reacting negatively to rainfall of 0.30-0.75” across the drier areas of northern Argentina over the weekend. The unwinding of long meal/short soyoil contracts continues.
- Spot WTI crude is up $1.20/barrel at $75.50 at midday. The Dow is down 70 points. Paris milling wheat futures unchanged, and outside/international market guidance is lacking. However, we do note that crude below $80 acts as a weight on ethanol production, and it has been the relative trimming of domestic corn usage ideas in recent weeks that has allowed chart-based resistance to stay intact.
- US export inspections through the week ending Dec 15 included 29 million bu of corn, vs. 20 million the previous week, 11 million bu of wheat, vs. 8 million the previous week, and 60 million bu of soybeans, vs. 69 million the previous week. Physical corn exports will rise seasonally into spring; soy shipments begin their seasonal downturn. It is important that weekly soy export disappearance stays above 50 million bu/week into late winter to validate USDA’s current annual forecast. Certainly, new demand is increasingly shifting to Brazil as fob premiums for March onward are quoted $0.80/Bu below the US Gulf.
- For their respective marketing years to date, the US has shipped 311 million bu of corn, down 30% from last year, 420 million bu of wheat, down 2%, and 920 million bu of soybeans, down 9%.
- Frigid Central US temperatures are assured Dec 23-26, with sub-zero lows projected as far south as W OK/KS/MO. It remains that no meaningful snow cover is offered to the Southern Plains. Winterkill risks stay elevated.
- Logistics will be challenged at across the Upper Midwest, where in IA, MN, WI, IL and MI snowfall of 8-15” is forecast Thurs-Sat.
- The midday GFS weather forecast is wetter in Argentina and Southern Brazil beyond Dec 30 but is otherwise similar to the morning run. Below normal precipitation will continue across the core of Argentina’s Ag Belt over the next 10 days, but fortunately for producers there, temperatures will moderate beyond the next 72 hours. Max Argentine temperatures this week will reach the mid/upper 90s. Temperatures in the 6–15-day period will exist in the 80s and low 90s. Model guidance has struggled in recent days, but it is clear they are trying to increase rain changes in Argentina. Close attention must be paid to late Dec/early Jan outlooks.
- Corn, soy, and wheat have struggled at chart resistance, and only Mother Nature and Dec 1 US stocks stand in the way of a neutral/bearish pattern into mid-2023.