• HEADLINES: Rains better than expected across southern Argentina; US weekly export sales support CBOT, but US corn sales historically lag.

• The CFTC will release their CoT data today. Normally in a holiday shortened week, the CoT data is delayed. The US Government was closed for the MLK holiday on Monday, but the CFTC will be keeping to their normal schedule.

• Chicago grain futures are mixed at midday. US weekly export sales were better than expected with US soybean/soymeal sales being larger than expectations. The solid soybean/meal sales and China’s purchase of 3 cargoes of US sorghum produced some Chicago buying. Wheat/corn spreading is also being witnessed.

• However, China’s being on Lunar New Year holiday and wet weather forecasts for Argentina with needed rain falling across Buenos Aires and Cordoba sparked selling as the bulls look to take profits on rallies. If the CFTC CoT data shows that funds hold large net long position, the risk is for liquidation grows as Brazil starts to harvest its record soybean crop, and as Argentine crop conditions stabilise/improve. We loo for a mixed to lower Chicago close as traders position for improving Argentine/Southern Brazilian crops.

• Chicago brokers estimate that funds have bought 4,100 contracts of wheat, while being flat in corn and selling 3,300 contracts of soybeans. In the products, funds have sold 2,200 contracts of soymeal and 4,400 contracts of soyoil. The index fund buying of corn/wheat in the past 3 days appears to be subsiding.

• US weekly export sales for the week ending January 12 were 17.4 million bu of wheat, 44.6 million bu of corn, and 36.2 million bu of soybeans. The sales were on the top end of trade expectations. For their respective crop years, the US has sold 571 million bu of wheat (down 36 million or 6%), 910 million bu of corn (down 765 million or 46%), and 1,668 million bu of soybeans (up 84 million or 5%). Chinese demand for their soybean reserve along with sales of optional origin via the Argentine drought have helped support US soybean sales. However, with nearly 5 million mt of US soybean sales held in the unknown destination category, there is the risk of cancellations with Brazilian soybeans $0.85/bu cheaper landed basis into China in March/April.

• The corn export commitment chart shows that as of mid-January, there is only one other year when US corn sales as a percentage of the annual forecast were lower, 2005/06 at 44%. We would argue that US 2022/23 corn exports should be cut another 100-150 million bu.  US corn is losing market share to feed wheat.

• The midday forecast is wetter than the overnight run with rainfall totals more like the EU model. Moderate to at times heavy rain continues across Cordoba/Buenos Aires from a slow-moving storm cell with rain totals to date range from 0.4-2.50”. This rain has been far heavier (from this system) than expected. And the GFS forecast maintains a wetter pattern across Argentina for the next 10 days with an additional 1.50-4.50” of rain from the passage of 2 systems. One of the storms on January 25 is a very slow mover which will produce meaningful rain over 2-3 days. We see Argentine rainfall risk as “above normal” for the next 2 weeks.

• Near normal rain drops across N and C Brazil which is ideal for late podding soybeans. There will be enough dry slots for N Brazilian farmers to advance their harvest and the seeding of winter corn. No extreme heat is forecast. The weather pattern stays favourable for Brazil.

• Solid US export sales helped underpin Chicago values early day. But the market is always forward looking, and it is the above normal Argentine rain and ongoing discussions of record soy yields being cut in Mato Grosso/Goias that will direct Chicago prices. Paris wheat futures are unmoved suggesting that the Chicago wheat rally is just short covering.

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