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Lower grains start expected in slow news morning
A slightly lower start is expected this am, 1-2 lower wheat, corn and beans following similar overnight losses in a slow news morning. The $ is a little higher, which is a little negative for the grains. More talk that China is switching bean purchases from US to South American origin or outright cancelling US bean buys could weigh on beans today. There isn't any other fresh news of consequence so far today to drive prices strongly in either direction.
Mostly dry weather was seen in Brazil the last 24 hours except for light, scattered rain in parts of Parana and Rio Grande states. Mostly dry conditions are forecast today-Wednesday in the south. Scattered, light rain is predicted in Mato Grasso today through Sunday with dry weather moving in the first half of next week. Argentina was hot and dry again yesterday with temps up to 108 degrees in some parts of the grain belt. More of the same is forecast today. Scattered weekend rain, up to 1/2", and cooler temps are expected, favoring Cordoba and Buenos Aires provinces. More scattered rain and cooler temps are expected Tue-Thur next week. The forecast for the latter half of next week calls for cooler, wetter weather in Argentina with hotter, drier weather in Brazil, which would be welcome in both countries.
Slightly higher grains start expected
A mostly slightly higher start is expected this am, unchanged to 2 better in wheat, corn and beans. The $ is barely a little higher, not enough to impact the grains.
Yesterday afternoon the Federal Reserve Bank was guardedly optomistic about the US economy, which could lend some support to grain prices as an economic recovery would boost equity prices and perhaps pull grain prices modestly higher as well. President Obama sounded a similar tone in his State of the Union speech, as expected, but perhaps more importantly, he moderated his tone regarding bank derivative trading. This could reduce the pressure that most commodity markets, including grains, have been under ever since the President said his administration would crack down on bank's derivative risk taking.
The Census Bureau Dec crush report this am was in line with 173.1 million bushels crushed. Oil stocks were about 140 million lbs less than expected, however, at 2.935 billion lbs. Meal stocks, in contrast, were 80,000 short tons higher than expected at 571,600 short tons. Weekly export sales were all either in line or better than expected: 661,000 tonnes of wheat; 902,000 tonnes of corn; 674,000 tonnes of beans for the 2009-10 crop year and 184,000 tonnes for the 2010-11 crop year; 254,000 tonnes of meal and 46,000 tonnes of oil.
There is some talk this am that Chinese buyers switched two cargoes of US origin beans for Feb shipment to South American origin but this isn't confirmed.
Scattered, light rain is forecast in Brazilian grain areas the next several days but amounts and coverage are forecast to be much less than has been the case lately. The Argentine grain belt will stay hot and dry the next couple of days with temps as high as 104. Scattered rain is forecast tomorrow night or Saturday, up to 1/2", along with cooler temps. It won't be as hot nor as dry early next week and the longer term forecasts continue to show a significant pattern change the second half of next week with cooler temps and rain still forecast then, which will be very welcome.
Lower grains start likely, traders await Pres speech
A mostly lower start is likely this am, 6-7 in beans, 1 in corn and steady/easier wheat. Egypt is in the market for wheat but they probably won't buy any from us as other origins, such as the Black Sea, are much cheaper. The $ is steady this am, not providing any direction for the grains.
There is some trepidation on the part of the bulls in the market ahead of President Obama's State of the Union speech tonight (7 pm, US Central time). The President might pursue his previously mentioned proposal to limit bank's derivative trading activity, which might reduce the buying power of hedge or index funds in various commodities, including grains. Traders will be listening closely to the President's speech for more information about this plan.
Brazilian weather remains very favorable with scattered rain expected the next several days, favoring the northern half of the belt. Argentina remains hot and dry with temps over 100 degrees in some parts of the belt. More of the same is forecast the next 3 days. Cooler temps and scattered rain of up to 1/2" is forecast Saturday, mainly in Cordoba and northeast Buenos Aires provinces. Light, scattered rain is possible Mon-Tue next week. A pattern change appears in the long range forecast starting the second half of next week with wetter and cooler conditions currently predicted. This would be very welcome following the recent hot and dry spell.
Lower grains start expected
A lower start is expected this am, roughly 3-5 in wheat and corn, 6-7 in beans. The $ is higher while crude oil and gold are lower, a bearish combination for all the grains.
Further signs of Chinese government-directed credit tightening via the implementation of higher bank reserve ratios, which will reduce banks lending ability, were a major bearish influence in most commodity markets overnight. The fear is that a slowdown in the rapaid expansion of the Chinese economy will slowdown demand for many commodities that China imports, such as metals, ore, grains, etc, which would be bearish for these commodities. The Shanghai equity index fell almost 2.5% in response to this latest credit tightening move.
Some bullish traders are also fearful ahead of President Obama's State of the Union speech tomorrow night (7pm US Central time) in which he could continue arguing for restrictions on bank's derivatives trading activities. This could reduce demand by hedge or index funds for various commodities, including grains, which would have a bearish impact on these markets.
The Brazilian Vegetable Oils Industry Assoc raised their guess on the size of the Brazilian bean crop to 65.2 million tonnes vs 63.4 million early last month. Last year Brazil produced 57.2 million tonnes of beans. The USDA announced this am the sale of 118,000 tonnes of US corn to an unknown destination for the 2009-10 crop year.
Brazilian weather remains near ideal with ongoing rain across the main grain growing areas with the exception of the far southern state of Rio Grande do Sul. This beneficial pattern is forecast to continue through the weekend. The situation in Argentina is much less sanguine with hot and dry weather forecast to remain in place until the weekend, when some widely scattered rain and cooler temps are now predicted. In the meantime, temps could reach over 100 degrees in parts of the belt. Hot and dry weather is forecast to return early next week before rain and cooler temps arrive again the second half of the week. Traders will continue watching this situation closely - little damage is thought to have been done to Argentine corn or beans so far but this could change if rain doesn't arrive by the second half of next week.
Mixed grains start expected in absence of news
A mixed start is expected this am, 1 better in wheat and corn, 1-2 weaker in beans. The $ is about unchanged currently, not enough to impact grain prices this am. There isn't a lot of fresh market moving news yet this am so we could have a quiet early session trade.
Brazil had scattered rain over the weekend of up to 1.25" except in Rio Grande state. A similar pattern is forecast this week. Argentina was mostly hot and dry over the weekend with temps up to 100 degrees. More very hot and dry weather is forecast most of this week with temps up to 102 in some parts of the belt. Light, scattered rain is possible Fri-Sat with cooler temps over the weekend. Hot and dry weather is forecast to return early next week but there is a chance for by then much needed rain mid next week according to this morning's long term forecast.
Colder temps are forecast in the Midwest and southwest winter wheat belts this week but not cold enough to cause any winter kill threat to the dormant wheat crops. Winter kill occurs when temps fall sharply below freezing for several hours and a protective snowcover is lacking. Most years there is at least some winter kill damage so it isn't unusual unless it is much worse than normal.
Proposed banking restrictions contribute to overnight losses
A mostly lower start is likely this am, roughly 2-4 in wheat and corn, 1-2 in beans. The $ is just a little higher this am, probably not enough to influence the grains very much.
Informa is expected to estimate US grain acreage at 10:30am US Central time. Many traders think they will raise their corn acreage guess due to the lower than expected USDA winter wheat acreage estimate earlier this month. I don't think the Informa estimates will have any long lasting impact on prices and maybe not even a short term one. The next major acreage report will not be until Mar 31 when the USDA will put out its Planting Intentions report.
Feb options expire today at the close.
President Obama's proposal to restrict bank's trading activities in derivatives, including commodities, is being blamed for some of the overnight losses in a variety of commodities including as grains, metals and energy. This could contribute to further commodity losses today, again including grains.
Weekly export sales were very good, much higher than expected, in some cases and should lend support to the market this am. Only oil failed to beat trade ideas, coming in at the low end of trade estimates at 10,000 tonnes. Wheat was at 826,000 tonnes, corn at 1.610 million tonnes, beans at 929,000 tonnes and meal at 416,000 tonnes. Look at a chart of any of these grains and you will see a very steep sell off so far this month. These much lower prices generated a lot of fresh export interest, showing once again the cure for low prices is - low prices!
More rain is forecast in northern Brazil today through Sunday with mostly dry weather in southern Brazil. Rain is forecast in both southern and northern areas the first half of next week. While this rain is generally welcome, it will further delay early bean harvesting in the northern part of Mato Grasso state. Argentina is forecast to remain hot and dry today through mid next week with temps up to 100 degrees. This hot and dry spell could extend all the way to next weekend, stressing corn and bean crops if it lasts that long. Traders will continue to watch this situation closely.
There is still no severe cold threat for the Midwest or southwest winter wheat belts in sight so winter kill worries remain low.
Mixed grains start indicated
A mixed start is indicated this am, steady wheat and corn, 3-5 higher beans. Weekly export sales will not be out this am, delayed until tomorrow am by Monday's holiday. Some traders think grains are oversold and overdue for a technical bounce after falling around 60 cents a bushel in wheat, 50 cents in corn and $1.10 in beans just since the start of the year! This may be the case but I think it is dangerous to try to predict a bottom. In my view, it is better to wait until the market has actually turned around or at least given some sign of this before abandoning the ongoing lower trend. In other words, I think it is better to react than to act.
Argentina was dry the last 24 hours with above normal temps. More of the same is forecast the rest of this week until around Tuesday next week, if not longer. This could stress developing corn and bean crops so traders will keep an eye on developments in Argentina. Brazil continues to enjoy very favorable weather with more scattered rain the last 24 hours and additional scattered rain forecast over the next 5 days or more. Rio Grande state in southern Brazil will be the exception to this wet pattern as mostly dry weather is predicted there during this time. The wet weather in Mato Grasso will delay early bean harvesting.
Favorable conditions continue for dormant winter wheat in the US Midwest and southwest with no extreme cold weather threat in sight.
Lower grains start forecast with strong $
A lower start is forecast in all pits, around 5-10 in wheat and beans, 3-5 in corn. The $ is very strong this am, which is bearish for all the grains.
There are reports out of China this am that the government is once again tightening credit, asking banks to restrict lending for at least the rest of this month. This is another apparent attempt to combat perceived overheating of the economy, which could slow down Chinese commodity demand, including grains. Most commodity markets, not just grains, are substantially lower as a result this am, such as metals and energy, while Malaysian palm oil fell 46 ringgit.
One potentially bullish note this am is reports of record high corn prices in northeast China, where most Chinese corn is grown. Jilin, one of the largest Chinese corn growing provinces, suffered from drought last summer, reducing their corn crop. Prices are now 25% higher in Jilin than a year ago due to the much lower output. The official Chinese corn production estimate is 163 million tonnes but private estimates range as low as 140 million. This much lower crop could force China to import large amounts of corn for the first time in years but don't expect this to happen for several months or more, if then. This is something that could have a bullish impact on our corn market in the long term but shouldn't have any impact at all in the short term.
Argentina was generally dry the last 24 hours and more of the same is forecast today through Monday, along with hot temps. This hot and dry pattern could extend into late next week and if it does this will start stressing corn and beans so the market will watch weather developments in Argentina closely, especially after last year's severe drought sharply reduced the bean crop. Brazil remains a garden spot with widespread, frequent rains forecast to continue today in the south, today through Monday in the north. Actually, less rain would be welcome in the north so early bean harvesting could speed up.
Conditions remain very favorable in the Midwest and southwest US for the dormant winter wheat crop with no cold weather threat in sight.
Lower grains start forecast
A lower start is forecast this am, roughly 10 in wheat, 3-4 in corn and beans. The $ is higher, a negative background influence for all the grains.
Prices were lower Friday but that didn't stop open interest from rising, especially in corn, up around 15,000 with wheat and beans up several thousand each as well. You'd think recent losses would represent long liquidation but rising open interest suggests new positions in these markets instead. This could be a combination of new spec shorts as well as buying by end users, taking advantage of the big price drop to lock in supplies at relatively cheap levels.
The USDA just announced the sale of 116,000 tonnes of US corn to an unknown destination and 100,000 tonnes of US beans to China, both for the 2009-10 crop year, which started Sep 1.
Saudi Arabia bought 440,000 tonnes of wheat, thought to be mostly EU and Russian origin, nothing from the US due to our uncompetitive prices as well as our higher freight (shipping) cost.
Up to 2" of rain was scattered across northern and southern Brazil over the weekend. Yesterday, up to 1" fell in the north, up to 1 1/2" was seen in the south. More is forecast in the south today and tomorrow, followed by drier weather through the weekend. More rain is predicted in the north starting tomorrow or Thursday and continuing through the weekend. Argentina was hot and dry Fri-Sun. Scattered rain fell yesterday, up to 1.5", in parts of the grain belt. More hot and dry weather is forecast today through Sunday, increasing concern about a change from beneficial to bad weather, as happened last year, devastating the bean crop. One year ago, Argentina was expecting a roughly 50 million tonne bean crop but the drought cut the actual harvest to just 32 million tonnes. The current USDA Argentine bean guess is 53 million tonnes.
Lower grains start indicated ahead of holiday
A mixed to mostly lower start is indicated this am, 3-5 off in wheat, 1-3 down in corn and steady/mixed in beans. There isn't a lot of fresh market moving news so far this am and with a long three-day holiday weekend ahead of us trading could be relatively subdued with evening up likely late.
The index fund rebalancing is over with the possible exception of corn, which could see one more day of buying, mostly late in the session.
The USDA announced the sale of 116,000 tonnes of US corn to an unknown destination for the 2009-10 crop year, which started Sep 1. Saudi Arabia is in the market for 500,000 tonnes of optional origin wheat although they probably won't buy any US origin. Results of this tender are due Sunday.
There is a rumor that one of the largest commercial grain companies, with extensive operations in South America, is estimating the Brazilian bean crop at 67 million tonnes, 2 million higher than the current USDA guess.
Only light, scattered rain fell in parts of Brazil the last 24 hours. Southern growing areas will see up to 1.5" this weekend with more forecast the first half of next week. Northern areas will see scattered rain today-Wednesday. Argentina was dry the last 24 hours with more of the same forecast today-Sunday. Hot temps are predicted this weekend before up to 3/4" of welcome rain falls Monday. Hot and dry weather is then forecast to return Tue-Fri next week. Conditions remain very favorable in South America currently but this turn to hotter and drier weather in Argentina will need to be watched.
Steady $ not a factor at grains opening
A lower start is expected this am, roughly 4-5 in wheat and corn, 2-3 in beans. The $ is steady, not providing any guidance for the grains.
Jan bean, meal and oil futures expire today at noon, US central time and the CFTC is expected to announce their energy market position limit policy at the same time. The big question is will the CFTC exempt index funds from these limits? If they don't, it could have a bearish impact on grain futures, as I explained previously.
The NOPA Dec crush was out this am. It was higher than expected at 164.4 million bushels with oil stocks also higher than expected, 2.594 billion lbs, as a result of the higher crush.
Weekly export sales were slow for wheat, 182,000 tonnes, and corn, 327,000 tonnes. Bean sales were in line, 754,000 tonnes but product sales were much higher than expected, 357,000 tonnes of meal and 50,000 tonnes of oil.
Today will be the last day of index fund buying at the close with the possible exception of corn, where index fund buying could also be seen late tomorrow since they didn't buy any on Tuesday, the day corn was locked limit down.
Argentina was mostly dry yesterday and this pattern will continue through Sunday before scattered rain falls Monday. Warmer and mostly dry weather will then resume Tue-Sat next week. This warmer, dry pattern needs to be watched. Conditions are very favorable now but that could soon change if a dry pattern persists along with warmer than usual temps. Brazil saw up to 1.5" of widely scattered rain the last 24 hours. More of the same is forecast in the northern state of Mato Grasso the next 3-5 days. The southern states of Parana and Rio Grande will be dry today-Saturday with rain expected to return Sun-Tue.
Lower grains start expected following yesterday's major break
A lower start is expected this am on followthrough selling from yesterday's major break. The early call is 5-7 down in wheat, 15-20 off in corn and 3-4 down in beans. The $ is modestly weaker this am, which could temper losses somewhat in the grains.
Corn will have an expanded 45 cent limit today due to yesterday's 30 cent limit losses. Much larger than normal corn volume was seen in overnight trading with 56,000 Mar alone trading. Surprisingly, open interest increased yesterday despite massive long liquidation with corn open interest up 6000, beans up 4000 and wheat up almost 4000.
The index funds were late buyers again yesterday with the exception of corn but they are expected to be buyers again on the close in this pit today, unless it is limit down, which would be highly unlikely given the 45 cent limit. Since the index funds didn't buy any corn yesterday, they will make up for this by buying on Friday's close (or buy twice as much on today's close, according to some traders).
Egypt is in the market for optional origin wheat but they probably will not buy any US wheat as our prices remain non-competitive in the world market. The USDA announced this am the sale of 116,000 tonnes of US corn to an unknown destination and 107,000 tonnes sold to Japan, both for 2009-10.
Jan futures expire at noon US Central time, Thursday.
Favorable weather is forecast to continue in the southwest winter wheat belt with no extreme cold weather threat in sight. Argentina will be mostly dry today through Sunday with scattered rain forecast to return early next week. Brazil had up to 1 1/2" scattered rain the last 24 hours and more of the same is predicted the rest of this week into early next. Conditions remain very favorable in most of Argentina and Brazil.
Outside markets negative for grains
Ahead of the what will probably be the main event of the day, the USDA report: the $ is steady but crude oil and gold are lower, a negative combination overall for the grains. Corn open interest jumped 30,000 contracts yesterday with index funds estimated late buyers of over 7000. They were also buyers of roughly 2500 beans, whose open interest jumped about 6000. Traders expect more late session index fund buying today through Thursday in wheat, corn, beans and oil. Prices were lower in all the grains overnight but this means little ahead of the USDA report. I will update my comments as soon as I have a chance to examine the USDA numbers, due out starting at 7:30 am, central time.
Argentina saw up to 1.75" of scattered rain in the main growing areas the last 24 hours and lingering showers are forecast today before dry weather moves in Wed-Sun. Brazil saw up to 1.5" of scattered rain in the main growing areas yesterday with the exception of Rio Grande state in the south, which was dry. Widespread rain is forecast the rest of the week in the northern growing areas with more rain forecast in the south today-tomorrow. Up to 1.5" is forecast. Overall, conditions for bumper crops remain in place in both Argentina and Brazil, one of the main reasons for the sell off over the last week in our bean market.
Higher grains start expected: $ weak; gold, crude posting gains
A slightly higher start is indicated this am, up 3-4 in wheat, 1-2 in corn and beans. The $ is weak this am, supporting most commodities markets. Gold and crude oil are posting good gains so far this am. There will probably be a lot of evening up today, especially in the latter part of the session, ahead of tomorrow's big USDA report. Traders also expect a repeat late today of the closing minutes of trading Friday, when index funds were large, aggressive buyers in most pits, pushing prices to new highs for the day in some cases.
This Thursday the Commodity Futures Trading Commission is expected to announce its decision regarding position limits in some markets, such as energy (crude oil) and metals. It would be negative for grains if index funds are subjected to position limits. The index funds, which are always long, need to keep a certain percentage of their money in each commodity to keep their portfolio balanced. If position limits restricts fund buying in particular markets, they can't expand their long positions in any markets including in the grains or their percentage would become unbalanced.
It was a mostly dry weekend in Argentina but up to 1.5" of scattered rain is forecast today-tomorrow before dry weather returns Wed-Sun. Up to 1.5" of fairly widespread rain fell in Brazil over the weekend. More of the same is expected all this week.
There is a lot going on this week which should make for interesting trading opportunities.
China policy affects grains overnight
A mixed start appears likely this am, roughly 1-2 lower wheat, 2-3 higher corn and 5 down in beans. Followthrough selling was seen in beans overnight due to fears China's tighter monetary policy will slowdown their bean import demand. The $ is falling this am and if this continues the opening could be higher in corn than currently expected with wheat and beans closer to steady so keep watching the $ as we get closer to the grains opening for last minute guidance.
Deliveries this am were 1000 beans, 2500 oil and 0 meal.
The index fund rebalancing (buying) is expected to start in earnest late in the session today and this could cause a lot of shortcovering later in the session, especially in corn. Many traders think there will be a late rally in most pits as a result of this fund buying, which could cause sellers to withdraw from the market late and encourage buyers.
Argentina will be mostly dry the next 3-4 days but scattered rain is forecast to return late Monday into Tuesday, bringing up to 1.5" of moisture. There was scattered rain in northern Brazil the last 24 hours and more of the same is predicted the next 7 days with up to 1.5" forecast the next 3 days alone. Rain is forecast in southern Brazil Sat-Thur with up to 1.5" forecast. Overall conditions in South America remain very favorable.
China raises interest rates
China shook up world commodity markets today with its Central Bank raising interest rates for the first time since mid August. This had an immediate and bearish impact on all commodity prices: from Malaysian palm oil to crude oil, gold, grains, etc. The fear is that higher interest rates and a tighter monetary policy in China will slow their demand for a variety of commodities, which would of course, be bearish. This was reflected in large overnight losses in the grains, led by beans falling 18 cents. China is by far the largest customer for US bean exports so any slowdown in Chinese bean import demand would have a big negative impact on this market. Longer term tighter Chinese monetary policy will be accomodated by the market but this was a surprise this am so it caused a sharp bearish reaction.
China isn't the only bearish news the market has to contend with this am. Conab, Brazil's version of the USDA, increased their bean production guess to 65.16 million tonnes from their Dec guess of 64.6 million. They raised their corn guess sligthly to 50.5 million vs 50.15 million last month but cut their wheat crop guess sligthly, to 5.03 million vs 5.10 million. It is likely the USDA will follow Conab's lead on Jan 12 and increase their Brazilian corn and bean production guesses also when they put out their Jan crop report.
The $ is higher this am, a negative influence for all the grains. One bullish item this am was the Census Bureau Nov Fats and Oils Report, which shows oil stocks of just 2.904 billion lbs, much lower than the preliminary estimate on Dec 23 of 3.156 billion. Methyl ester (biodiesel) production consumed 232 million lbs of bean oil in Nov, slightly lower than the 246 million in Oct. Weekly Export Sales were mostly poor this am: just 93,000 tonnes of wheat, 365,000 tonnes of corn, 62,000 tonnes of meal and only 3500 tonnes of oil. Bean sales were in line, 726,000 tonnes. The bulls are counting the minutes until late tomorrow, when large scale index fund buying is expected to start, continuing through Thursday next week. This could rally the grains although some traders think it has already been at least partly discounted by the market.
Argentina was dry yesterday and will stay mostly dry until early next week, when up to 1.5" of scattered rain is forecast to return. Brazil saw up to .6" of scattered rain in the south yesterday. More of the same is predicted the next week or so in both southern and northern parts of the grain belt. Up to 1.5" is forecast in the north in the next 3 days alone.
Fund rebalancing to start Friday
A mixed start is expected with very little fresh news of consequence developing overnight, which could result in a slow, desultory trade today unless the funds become more active. The $ is a shade better, not enough to have any impact on the grains.
Deliveries were 800 lots in beans, 4800 oil and 0 meal. There was a modest amount of fund buying late yesterday which might have been index fund rebalancing but it now appears the bulk of this rebalancing won't start until late Friday and continue through Thursday next week. This could have a significant impact on prices. The other big potential market mover is the USDA report Tuesday morning. I should have trade estimates for this report tomorrow.
Argentina had up to 1.5" scattered rain the last 24 hours. It will be mostly dry today-Sunday but more scattered rain of up to 1.5" is forecast Monday. In many areas this moisture will be welcome but in areas that are flooded this will only cause more planting delays and possibly damage already planted corn and bean fields. Brazil saw light rain of up to 1/2" in Rio Grande state yesterday with dry weather elsewhere. Up to 1 1/2" of rain is forecast in Rio Grande and Parana today with another round of up to 1 1/2" forecast Sat-Tue. Mato Grasso state, in northern Brazil, was dry the last couple of days but scattered rain of up to 1 1/2" is expected Fri-Tue.
Overnight grains activity indicates mixed start
A mixed start is indicated this am by overnight activity, steady wheat, 1 lower corn and 4-5 higher beans. The $ is a little lower this am but probably not enough to strongly influence the grains, as is the case in crude oil and gold, which are mixed currently.
There were no meal deliveries this am, as expected, along with 1000 beans and 5800 oil. Dreyfus took delivery of small amounts of both.
Some traders think the index fund rebalancing will start today but most think it won't begin until Friday on a large scale. Spec buying in anticipation of this pushed prices higher yesterday and lifted open interest 4000 in wheat, 27,000 in corn and 5000 in beans.
Brazil and Argentina remain garden spots with very favorable conditions continuing to benefit the crops. Scattered rain with no extreme heat is forecast in both countries over the course of the next week or so, which will further help crop development.
Very cold temps in the US Midwest are forecast to continue the rest of the week but milder weather is predicted next week.
Grains may start new year with a bang
Grains look to start the new year with a bang - Up roughly 15 in wheat and beans, 10 in corn following similar overnight gains. The $ is lower, crude oil is up almost $2 a barrel and gold is sharply higher, up over $20 currently. All this is bullish for grains.
The index funds, which are always long, are expected to rebalance their portfolios starting as soon as tomorrow, a process that is expected to extend into next week. They are expected to buy tens of thousands of contracts of wheat, beans and especially corn. Additionally, fresh spec money is expected to flow into the commodities markets, including grains, over coming days and weeks as commodities are now looked upon favorably as a way to diversify outside of equities, reducing systemic risk. Of course, if all this widely heralded fund buying doesn't materialize, prices will fall sharply and quickly as the fundamentals do not justify even current prices, let alone higher ones.
South American weather remains very favorable and Chinese demand for US beans is expected to shift soon to South American origin. For now, however, go with the crowd and assume there will be large scale fund support to drive prices higher, but it remains a dangerous game.
Morocco will be in the market Jan 14 for a total of 350,000 tonnes of US wheat. Deliveries this am were 1000 beans and 5800 oil with no meal.
Argentina had a mostly dry weekend with more of the same forecast today-tomorrow. Up to 1.5" of beneficial rain is forecast Wednesday before dry weather returns the rest of the week. Brazil had up to 2" of helpful rain in Mato Grasso over the weekend with only light, scattered rain elsewhere. Scattered rain of up to 2" is forecast in Rio Grande today through Wednesday with up to 2" predicted in Parana later in the week. Up to 1.5" is forecast in Mato Grasso late this week. Overall, conditions remain very good in South America weatherwise.
Very cold temps in much of the US will increase livestock feed demand, which is friendly mainly for corn and meal.
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