- HEADLINES: Mixed session with meal rising on new fund buying/dry S Argentine weather; March corn sags to $6.70 support.
- Chicago corn, soybean and wheat futures were unable to hold the early rally and values are lower at midday. Soymeal is holding its overnight gains on meal/oil spreading, regardless that US soymeal export sales are not showing much improvement from Argentine soy crop losses. S American fob soymeal for March/April is offered $20-35/mt below the US Gulf which limits US export competition. Yet, we doubt that March soymeal can push above recent resistance at $495-505/ton, a range that is the historical resistance on the weekly/monthly price charts. Cash soymeal in Decatur is offered at +3-4/ton over Chicago on the rail with their being no meal registrations for delivery on first notice day. Today’s meal rally is about chart-based momentum with little fresh fundamental news available. Southern Argentine weather is drier than desired, but crop condition ratings later today are expected to be steady from last week. We look for a mixed Chicago close with the bears needing a a few good rains to take the pressure off the crop. Most in the industry are using a 2023 Argentine soybean crop of 37-40 million mt and a Brazilian soybean crop of 153-154 million mt. Early Northern Brazilian soybean yields are solid to record large.
- Chicago brokers estimate that funds have sold 1,500 contracts of wheat, and 2,000 contracts of corn (9,000 contracts of buying early in the session) while being flat in soybeans. In the products, funds have bought 5,400 contracts of soymeal while selling 6,100 contracts of soyoil. Managed money is being protective of a near record net long position in soymeal.
- Rumours abound that the ICE Exchange is experiencing IT problems that may prevent it from providing its position data to the CFTC. So far, the CFTC has not announced whether Friday’s Commitment of Traders report will be released. The industry hopes for a CoT report but worries that it could be delayed for another week.
- US Weekly Export Sales data held few surprises. For the week ending February 2 the US sold 4.8 million bu of wheat, 45.7 million bu of corn, and 16.9 million bu of soybeans. For their respective crop years to date, the US has sold 599 million bu of wheat (down 38 million or 6%), 1,055 million bu of corn (down 745 million or 41%), and 1,753 million bu of soybeans (up 36 million or 2%). The US corn sales pace continues to lag well behind USDA annual corn export forecast calling for a cut of 75-125 million bu.
- US soymeal sales stand at 7.21 thousand tons vs 7.72 last year or a decline of 500,000 tons or 6.5%. There is no evidence that US soymeal sales are likely to pick up steam vs Argentine crop losses with Brazil and Argentine offering meal through June at price levels that are $15-40/mt below the US Gulf.
- The midday GFS weather forecast was drier at midday with limited rains for the southern half of Argentina over the next 10 days. The model has pulled the rains northward into N Argentina and S Brazil early next week. The only good news for Argy crops is that the heat will abate with seasonal 80’s to lower 90’s returning for high temperatures.
- Near normal rainfall exists for Northern and Central Brazil for the next 6-8 days with near to above normal rains returning for the week 2 forecast. The rain favours already seeded winter corn, but it will hinder the soy harvest.
- The market focus nearby is on Argentina and the placement of rain from Sunday through Wednesday of next week. The GFS model has a history of being too dry since mid-January, we will see if the drier forecast is correct.
- US corn export demand is below expectations and no demand bump is being offered as Brazil focuses its exports on new crop soybeans. Soymeal is being supported by drier Argentine weather forecasts, while Northern Brazilian soy yields argue for a crop boost in coming WASDE reports. We are bullish of Chicago soyoil while being neutral to bearish of corn, soybeans, and wheat.