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Higher grains start following overnights
A slightly higher start is likely this am, 1-2 wheat, 2-4 corn and 1 beans following similar overnight gains. The $ is a bit lower this am and crude oil is slightly higher, a friendly combination for the grains.
Deliveries were 1300 lots in wheat to Feb 5, 2000 corn to Feb 11, 430 beans to Feb 12 and 4900 oil to Feb 23. There were no meal deliveries. Oil and beans were at the high end of trade ideas, wheat at the low end, corn and meal about as expected. There isn't much fresh news otherwise so far this am.
Argentina will be mostly dry the next 5 days or longer, which will be welcome as this dry period will help too wet areas dry out and keep corn and bean prospects in very good shape. Brazil is forecasting scattered rain from Parana north through Mato Grasso today through Wednesday with mostly dry weather likely in Rio Grande. Rain in Mato Grasso will slow bean harvesting, which remains ahead of normal despite all the wet weather there recently.
No cold weather threats are in sight for the soft or hard red winter wheat belts in the US Midwest or southwest, respectively.
Long list of bearish news ahead of grains open
The early call is lower in all pits, 5-7 wheat, 3-4 corn and 7-10 beans. The list of bearish news this am is a long one: The $ is higher while crude oil, gold and equities are all lower; weekly export sales were slow for corn at 401,000 tonnes, and meal at 82,000 tonnes; wheat sales were roughly in line at 376,000 tonnes, as were beans at 239,000 tonnes; only oil sales were strong at 40,000 tonnes; the Census Bureau Jan crush was over 3 million bushels less than the trade expected, coming in at 167.2 million bushels; despite this lower crush, product stocks were higher than expected at 3.239 billion lbs of oil and 630,000 short tons of meal, making oil stocks around 125 million lbs higher than trade ideas and meal stocks over 100,000 short tons above trade estimates.
Argentina was mostly dry the last 24 hours and more of the same is predicted today through Monday with little chance of any rain until mid next week. This should allow saturated fields to dry out. Brazil had up to 1" of scattered rain in northern Parana state the last 24 hours but mostly dry weather was seen in Rio Grande and Mato Grasso during this time. Rio Grande and Parana will be mostly dry the next several days with the exception of northern Parana, where some scattered rain could fall today-tomorrow. Scattered rain is also forecast in Mato Grasso today-Saturday but heavier rain is indicated Sun-Tue, which could slow bean harvest efforts.
Higher grains start indicated, concern for snowpack
A mostly higher start is indicated this am, 3-4 corn and beans, steady wheat. The $ is a shade lower but not enough currently to impact the grains very much. There isn't a lot of fresh market moving news this am.
Some traders are concerned about the record snowpack in much of the Midwest, especially the northwest quarter of the region. Spring is already forecast to be cool and wet and when the snowpack melts, flooding could be relatively widespread, especially in the northwest. This could delay spring planting, especially corn, which is planted before beans. This possibility is supportive for the corn market, especially the new crop (Dec) but bearish for beans, especially the new crop (Nov) as farmers will plant more beans this spring if wet fields cause corn planting delays.
At least one climatologist, Al Dutcher, state climatologist for Nebraska, is already warning about the possibility of spring flooding in the northwest quarter of the Midwest. On the other hand, we had a very wet spring last year, with planting delays as a result, and yet we still had a record corn yield and a huge crop. Also, it is still early and the weather could turn out to be fine by the time planting starts.
First notice day for March deliveries is Friday and traders are looking for roughly 3000-5000 contracts of wheat, 500-1000 corn, 0-300 beans, 0 meal and 3000-5000 oil.
Argentina was mostly dry the last 24 hours and more of the same is predicted the next 5 days, which will be welcome as it allows very wet fields to dry out. Brazil saw up to 1.5" of rain in parts of Rio Grande state in the south the last 24 hours with mostly dry weather in the rest of the country's grain areas. Light rain is predicted in Parana state today-tomorrow followed by mostly dry weather there Fri-Mon. Mato Grasso in northern Brazil, the largest bean producing state in the country, will see scattered rain tomorrow through Sunday, which isn't welcome as it could slow bean harvesting.
Turn around Tuesday in the grains?
As I have mentioned many times in the past the market seems to have a tendency to reverse course on Tuesday from Monday, especially when prices moved sharply on Monday. The early call is 5 down in wheat, 1-3 lower corn and steady/mixed beans. The $ is a little higher but not enough to mean much as far as the grains are concerned. Crude oil, however, is down triple digits and this could put some pressure on corn and bean oil because of their alternative fuel connection with crude oil: roughly 1/3 of the US corn crop is used to make ethanol while just over 10% of US bean oil is turned into bio diesel fuel (methyl ester). There isn't a lot of fresh market moving news so far this am.
Argentina saw up to 1.5" of rain the last 24 hours in northern and eastern Buenos Aires province while up to .6" was scattered across the rest of Buenos Aires, Cordoba and Santa Fe provinces. Mostly dry weather, which will be welcome, is forecast today through Sunday, allowing wet fields to dry out. Up to 1.5 rain fell in southern Brazil the last 24 hours and more is forecast today-tomorrow, . Northern Brazil was mostly dry the last 24 hours with more of the same forecast today-tomorrow. Scattered rain is predicted Fri-Sun.
Higher grains start expected despite lack of fresh news
A higher start is expected this am, around 3 in wheat, 5 corn and 8 beans. There isn't a lot of fresh market moving news so far today. The $ is slightly lower, providing some modest encouragement for buyers in all the grains.
China is back from its week long lunar new year holiday so some fresh export business could be done with them. However, China is in the seasonal process of shifting the bulk of its bean buying to South American origin rather than US so their return from the holiday might not result in more US bean export business. On the other hand, the bulls would argue the wet weather in various parts of South America is delaying early harvest efforts there and this could keep China buying US beans longer than would normally be the case this season.
Reports continue circulating about possible damage to Argentine bean and corn crops as a result of recent heavy rain. Excessive rains of up to 4" were reported in Cordoba, Santa Fe and eastern Buenos Aires provinces this weekend. Up to 1" of weekend rain was seen in southwest Buenos Aires province during this time. These are the largest bean producing provinces in the country, in the order listed above. More unwanted, scattered rain is forecast today before dry weather moves in the rest of the week but the damage might already have been done in the form of flooded fields and reduced yields. It was a dry weekend in southern Brazilian bean fields but northern Brazilian beans saw up to 1.5" of weekend moisture. More is forecast in the north today-tomorrow and again Thur-Sat, slowing or halting bean harvesting. Moderate to heavy rain is forecast today-tomorrow in Rio Grande state and in Parana state Tue or Wed, both in southern Brazil. Additional rain is forecast in Parana Thur-Fri while conditions turn dry in Rio Grande.
Lower grains start anticipated
A lower start is anticipated this am, roughly 2-4 wheat, 1 corn and 6-8 beans.
Weekly export sales were in line for wheat at 409,000 tonnes, higher than expected for corn at 975,000 tonnes, meal at 242,000 tonnes and oil at 47,000 tonnes. Bean sales were a marketing year low, just 204,000 tonnes. (The marketing year for beans started Sep 1.)
The US Federal Reserve Bank surprised investors late yesterday by raising its discount rate a quarter point. This rallied the $ sharply overnight and weighed on a variety of commodities, including grains. This morning, however, crude oil has managed to recover to slightly higher levels, offering a ray of hope to the bulls in grains that they might be able to do the same.
India is now expecting an 82 million tonne wheat crop vs previous estimates of 80.3 million due to ongoing favorable weather.
Talk continues about the poor quality of the US corn crop following bad weather conditions last season, including last fall, which seriously delayed harvesting. There has been talk this week that Japan will buy over 1 million tonnes of South American origin corn this year as a result of the poor US corn quality. This would be Japan's largest buy of South American corn in over 10 years.
More numbers from the USDA outlook conference were out this am. Some of the highlights were: ending wheat stocks of 940 million bushels; ending corn stocks of 1.654 billion and ending bean stocks of 330 million for the 2010-11 crop year. 2.8 billion lbs of bean oil will be used to make biodiesel fuel in 2010-11 vs the previous estimate of 2.4 billion and the 2.2 billion lbs estimated for 2009-10. Estimated oil exports were cut sharply to just 2.000 billion lbs vs the previous guess of 2.700 billion so ending stocks were left almost unchanged at 2.097 billion lbs for 2010-11 vs the previous guess of 2.109 billion.
Argentina had scattered rain overnight and more is forecast today-tomorrow across the belt. Amounts could be heavy in some areas before dry weather returns Sunday. Northern Brazil was dry the last 24 hours but scattered rain is predicted the next couple of days before dry weather resumes the first half of next week. Southern Brazil was mostly dry the last 24 hours with more dry weather forecast today-Sunday. Possibly heavy rain is forecast Mon-Wed in Rio Grande state but Parana state is expected to remain dry.
Outside markets negative for grains
A mixed start is indicated this am. The $ is higher again while crude oil, gold and equities are all lower, a negative influence for the grains.
Egypt is in the market for optional origin wheat this am but they probably won't buy any US as our prices remain uncompetitive in the world market.
Weekly export sales will be out tomorrow am instead of today due to Monday's holiday.
The USDA Outlook Conference started this am in Washington and will continue through tomorrow. The USDA has released the following numbers so far: 2010 corn planted acreage 89 million acres vs their previous estimate of 88 million released about a week ago in their "baseline" estimate; bean planted acreage 77 million vs 76.5 previously in their "baseline" estimate; wheat planted acreage 53.8 million vs 55 million previously in their "baseline" guess. Corn production for 2010-11 is guessed at 13.2 billion bushels vs 12.96 billion before; bean production was put at 3.26 billion bushels vs 3.23 billion before. The USDA raised their estimate of the amount of corn that will be used to make ethanol in the 2010-11 crop year from 4.400 billion bushels to 4.500 billion.
Mar options expire tomorrow at the close.
The Argentine Agriculture Ministry put out their initial estimate of the 2009-10 corn crop at 19-21 million tonnes. This compares with the current USDA guess of 17.2 million tonnes. In 2008-09, Argentina only produced 13.1 million tonnes.
Very favorable conditions continue to benefit crops across most of South America. Argentina was mostly dry the last 24 hours. Rain is forecast today-Saturday with more forecast Mon or Tue. This later rain is expected to be heavy in the northeast growing areas but light in the southwest areas. Brazil saw up to 1.25" in Parana state the last 24 hours with Rio Grande state dry and mostly dry weather in Mato Grasso state. Dry weather is forecast today through Saturday in Rio Grande and Parana but heavy rain is likely Sun-Tue in Rio Grande while Parana remains dry during this time. Mostly dry weather is forecast in Mato Grasso state today through Tuesday, which will allow for increased bean harvest progress.
Grains rally overdone?
A slightly lower start is indicated this am, 1-3 wheat, 1 corn and 3-5 beans. Some traders think yesterday's rally was a bit overdone and prices need to correct or consolidate this am. The $, which was very weak yesterday and the main driver of the big gains in the grains, is slightly higher this am, a negative influence for the grains. Traders will continue watching the $ all day for guidance in the grains.
The Jan NOPA crush was slightly better than expected at 162.4 million bushels. Oil stocks were in line with trade ideas at 2.695 billion lbs.
There isn't a lot of fresh news this am but tomorrow and Friday the annual USDA outlook conference in Washington will reveal what the USDA is thinking for with regard to production, demand, carryover, etc.
Argentina was mostly dry the last 24 hours. Some scattered rain is forecast tomorrow in parts of Buenos Aires province. Rain is forecast in the northern growing areas this weekend, in the southern areas early next week. Brazil saw up to 1.5" of rain in northern and central areas the last 24 hours with mostly dry weather in the south (Rio Grande). Mostly dry weather is forecast in Parana and Rio Grande states today-Saturday but scattered, light rain is forecast Sun-Mon. Rain is predicted in central and northern areas (Mato Grasso) today-Friday, up to 1.5" followed by light, scattered rain this weekend into early next week.
Higher grains start indicated
A higher start is indicated this am, around 5-10 wheat, 2-4 corn and 10-12 beans. The $ is a little lower while crude oil and gold are sharply higher, a friendly combination for all the grains.
China is on its lunar new year's holiday all this week so they will likely be out of the market during this time.
The National Oilseed Processors Association, NOPA, was scheduled to release its Jan crush report this am but this has been delayed until tomorrow am. Traders look for a crush of 161.9 million bushels with oil stocks of 2.701 billion lbs.
The USDA annual outlook conference will take place Thur-Fri in Washington, revealing what the USDA is looking for this coming year in terms of production, supply/demand, etc for US grains.
The spec funds continue to add to their already very large short position in wheat, according to Friday's Commitment of Traders report. This potentially makes wheat subject to a large shortcovering rally at any time.
Too much rain has fallen lately in parts of Argentina's main grain growing areas but crops remain in good condition overall. Scattered rain was seen the last 4 days, up to 2.5" in Cordoba and Santa Fe provinces, up to 1" in Buenos Aires province. Dry weather is forecast today-tomorrow, followed by rain spreading from south to north across much of the belt Fri-Sat. Brazil had up to 4" of rain the last several days in Rio Grande state, up to 2" in Parana state and up to 1.5" in Mato Grasso state. More rain is forecast this week.
China tightens monetary policy
The early grain call is 7-10 lower wheat and beans, 2-4 down corn.
China is tightening its monetary policy again, increasing commercial banks reserve requirements, which will reduce bank lending. This is being done to combat the threat of overheating of the Chinese economy and could slow Chinese demand for a variety of commodities, including grains. This is rallying the $ and weighing on world commodity and equity markets this am with metals, energy, grains, etc all lower.
Starting Tuesday, May corn will replace Mar as the top month and the same will happen in beans.
Weekly export sales were good for wheat at 548,000 tonnes, and oil at 45,000 tonnes. Corn was in line, at 743,000 tonnes but beans were slow at only 313,000 tonnes, as was meal at just 103,000 tonnes.
China will be on its annual lunar new year's holiday all next week so our biggest bean customer will be absent from the market.
Argentina was mostly dry the last 24 hours and more of the same is forecast today. Weekend rains are expected to bring up to 1" of moisture over much of the grain region but mostly dry weather is forecast again most of next week. Brazil continues to see much rain with more of the same predicted over the next week or so in all the major growing areas. Conditions in both countries remain very favorable.
Higher grains start indicated; outside markets friendly
A mostly higher start is indicated this am, 5-10 in beans, 1-3 corn, 30 points in oil and 20-40 cents in meal. Only wheat is called lower, 2-4. The $ is a little higher but crude oil, gold and equities are all higher, a friendly combination overall for the grains unless the $ rallies further.
The cash bean market has been strong lately due to a lack of farmer selling amid strong ongoing demand from processors and exporters. This helped push bean prices higher yesterday and could well do so again today. There are early reports this am that over 100 contracts of bean receipts, probably located in Chicago, have been cancelled. This means a commercial, probably a processor, took these beans out of storage since they couldn't buy these beans from country elevators. This is another reflection of strong demand in the cash market and will lend additional support to the bean market this am.
Additional support could continue from the fact the conventional funds no longer have a huge long position in the corn and bean markets, meaning these funds are free to buy again. The upturn in corn and beans so far this week could induce fresh fund buying, as was the case yesterday, and also help drive prices higher.
Up to 1" of rain fell in Parana state in Brazil the last 24 hours with up to 1 1/4" in Mato Grasso state, leaving only Rio Grande state dry among the three largest Brazilian bean producing states. More rain is forecast in all three states over the next several days, extending into early next week. Argentina was generally dry overnight with more of the same predicted today. Scattered rain is then forecast the next several days as temps cool significantly by early next week. Conditions remain very favorable in both Brazil and Argentina.
Colder temps in the Midwest and southwest over the next several days or longer are not expected to get cold enough to harm the dormant winter wheat crop.
Grains remain mixed
A mixed start is expected this am, up 1 in wheat, down 1-2 corn and beans, up 20-40 points in meal and down 30-35 points in oil. The $ is slightly higher this am, probably not enough to impact the grains very much.
South Korea is in the market for 165,000 tonnes of optional origin feed wheat today and Iraq is in the market later this month for 100,000 tonnes of optional origin wheat, but they often buy substantially more than their tender amount.
The USDA said the weekly export sales report, usually out on Thursday morning, will be delayed until at least Friday, maybe even into early next week due to the new major snowstorm in Washington.
Indian sources report they expect a record wheat harvest there this season of 82.6 million tonnes, due to recent favorable weather and a larger planted area. Reports out of Australia suggest Australian farmers will plant less wheat in the 2010-11 season due to low world prices and large world supplies.
It is hard to know which way the market is heading today, especially beans, after recent choppy trading. The friendly USDA report yesterday for beans and the much lower $ failed to keep beans from selling off as trader fears of an ever larger South American bean crop continue to hang over this market. It appears there was some profit taking in the oil/meal spread overnight as oil traded lower while meal edged higher. Mar oil share ended this am at 41.26% after closing over 41.5% yesterday.
Argentina will only see light, scattered rain the rest of this week but conditions remain mostly favorable after recent beneficial rains there. Southern Brazil will be on the dry side the next several days but rain is forecast to return to the region by early next week. Northern Brazil saw scattered rain the last 24 hours and more of the same is forecast the next 2-3 days. Conditions remain favorable overall.
Market yawns at USDA report
Prices were higher overnight, 1 in wheat, 3 corn and 9 beans, encouraged by the weak $, which remains lower this am. We expect a higher start, roughly similar to overnight gains, this am: 1-2 wheat, 3-5 corn and 10 beans. Short term, the market finally appears to have found a bottom and is headed higher.
The Jan USDA crop report was a major bearish shock to the market. In sharp contrast, this morning's Feb USDA report only elicited a yawn from the market. Most of the numbers were either in line or close enough so as to not cause much of a reaction. In general, the report was mostly neutral wheat, friendly corn and beans. There are no major surprises. The US carryover estimates are a little lower than expected for corn and beans, a little higher than trade ideas for wheat. The world numbers are almost unchanged for wheat and beans, lower for corn. The USDA raised their estimate of China's bean imports for the 2009-10 crop year from 42 million to 42.5 million tonnes. They hiked their estimate of the amount of US corn used to make ethanol in 2009-10 from 4.2 to 4.3 billion bushels but left unchanged the amount of bean oil used to make bio diesel fuel (methyl ester) at 2.2 billion lbs.
Conab, a division of the Brazilian Agriculture Dep't, estimated Brazil's bean crop at 66.7 million tonnes today vs their Jan guess of 65.1 million. Last year, Brazil produced 57.1 million tonnes of beans. According to Reuters newswire, Conab raised their corn guess from 51.4 million tonnes in Jan to 50.5 million now. Reuters either transposed these two numbers or put out incorrect ones. I will let you know as soon as I see a corrected version. Conab's wheat guess was unchanged from before at 5.0 million tonnes. Last year, Brazil produced 5.9 million tonnes of wheat.
Argentina was dry the last 24 hours with more dry weather forecast today. A few light, scattered showers are forecast tomorrow-Thursday with better rain predicted over the weekend. Brazil will remain wet most of this week with rain continuing into next week in the south. Conditions remain very favorable overall in both Brazil and Argentina.
Colder temps in the US Midwest and southwest will not be cold enough to damage the dormant winter wheat crop.
Snowfall closes USDA
The USDA is closed today due to the 2' weekend snowfall in Washington. We don't know at this time if the USDA report will be issued tomorrow am or if it will be delayed until Wednesday am. All the other USDA reports, such as weekly export inspections and weekly export sales, will be delayed at least one day. We will let you know as soon as we find out when Tuesday's supply/demand and world production report will be released.
The $ is a little weaker this am, which could lend modest support to the grains. The early call is higher, 4-5 wheat and corn, 10-15 beans, based on similar overnight gains. There will probably be some evening up today if the USDA announces their monthly report will be out Tuesday am. If it isn't released until Wednesday am, this evening up will take place tomorrow.
Index funds will continue moving their long positions in the March grains into May by spreading May/Mar late in the session today through Thursday.
Argentina saw up to 2" of widespread weekend rains which was welcome after their recent hot and dry weather period. Mostly dry weather is now forecast until light, scattered rain arrives mid-week with dry weather forecast again the latter part of the week. Southern Brazil (Rio Grand and Parana) was mostly hot and dry over the weekend but up to 3/4" fell in the north (Mato Grasso). Scattered rain will spread from the south to the north in southern Brazil today-tomorrow with more rain predicted the rest of the week. The long term forecast has rain in the south the first half of next week also. Northern Brazil will see more rain all this week with more forecast the first half of next week also. All this moisture in the north will slow bean harvesting.
Goldman Roll expected in grains today
A mixed start is indicated this am, 3-4 lower wheat, 2-3 down corn but 2-4 higher beans, following overnight trading. The $ is a little higher but not enough currently to influence the grains.
Index funds are expected to start moving their long positions from March to May today in wheat, corn, beans and oil. They will be late session spreaders for the next 5 days of May/March in these pits, which could pressure March relative to May. This activity is commonly refered to as the "Goldman roll" because Goldman Sachs has the largest index fund and this is when they will be moving or rolling their long positions forward.
Stats Canada estimated all wheat stocks as of Dec 31 at 21.7 million tonnes, durum wheat at 5.6 million, oats at 2.8 million and canola at 8.8 million. These numbers were considered a little friendly for all wheat and oats, neutral for canola and a little negative for durum wheat.
The Mar oil share lost slightly overnight and is now 40.58%.
Argentina had light, scattered rain the last 24 hours. More of the same is forecast today through Saturday or Sunday. The first half of next week is expected to be mostly dry with hotter temps. Brazil was mostly dry the last 24 hours. More of the same is predicted in the north (Mato Grasso) today through Monday with light, scattered rain Tue-Wed. The south (Rio Grande and Parana) will be dry today-Sunday with , up to 1" rain spreading south to north the first half of next week. More rain is likely the second half of next week. Conditions in both Argentina and Brazil remain very favorable overall, fostering ideas of increasingly large corn and bean crops.
Higher grains start expected in choppy markets
A higher start is expected this am as the market continues its choppy pattern, alternating between higher and lower days. The early call is 3-5 better wheat, 2-4 up in corn and 5 higher beans. The $ is up and working higher this am, which is a negative influence for all the grains.
Egypt is in the market for wheat but they probably won't take any US origin due to too high US prices relative to the competition.
Weekly export sales were in line for wheat at 418,000 tonnes, and corn at 923,000 tonnes. Oil was much better than expected at 59,000 tonnes but meal was slow at 135,000 tonnes, as was beans at 381,000 tonnes. The US comsumed 209 million lbs of bean oil to make biodiesel (methyl ester) fuel last month, the same amount as Nov '09. In Dec '08 we used 195 million lbs.
Iraq bought 100,000 tonnes of US wheat along with 300,000 tonnes from Canada, 100,000 tonnes from Russia and 200,000 tonnes from either Australia or Germany.
Yesterday afternoon the Obama administration encouraged the use of more biofuels such as bean oil-derived biodiesel fuel and corn-derived ethanol. The EPA yesterday afternoon approved the use of bean oil to make biodiesel fuel under their revised Renewable Fuel Standard or RFS2. The EPA said bean oil based biodiesel fuel meets all clean environmental requirements for biofuels, such as greenhouse gas reductions compared with conventional gasoline and diesel fuels that biofuels will replace. The EPA ruling could sharply increase the use of bean oil to make biodiesel fuel this year and even more over coming years. Of course, the next step is for Congress to reinstate the $1 a gallon tax subsidy for the production of biodiesel fuel and until this is done, hopefully later this month or early next, production will remain very slow. Overall, the Obama administration policy on biofuels such as ethanol and biodiesel is friendly for corn and bean oil.
Expect oil to continue gaining on a spread basis vs meal.
Stats Canada will estimate grain stocks tomorrow am as of Dec 31. Trade averages are 22.7 million tonnes for all wheat vs 22.0 million Dec 31, 2008. Durum is forecast at 5.4 million vs 5.0 million a year ago. Oats are projected at 3.0 million vs 2.7 million and canola 8.8 million vs 9.15 million.
Brazil will stay hot and dry the next several days but relief in the form of cooler and wetter weather is forecast to return early next week. Argentina had up to 2" of welcome rain the last 24 hours in all three of the main growing provinces with more forecast today through Sunday. Conditions remain very favorable in both countries.
Mixed grains start indicated
A mixed start is indicated this am, steady/easier wheat, 1-3 lower corn and 1 better beans. The $ is a little higher currently, a slightly negative influence for all the grains.
Informa will release its US and world supply/demand estimates at 10:30 US Central time this morning, which could modestly influence the market.
The Obama administration is expected to outline its policy for biofuels and the EPA is expected to announce a revised Renewable Fuel Standard, dubbed RFS2, as soon as today. More dependence on biofuels is expected to be encouraged, which is long term bullish for bean oil and corn. However, until Congress renews the $1 a gallon subsidy for biodiesel fuel, mostly made from bean oil, little increase is expected in demand for bean oil to make bio diesel fuel.
The long overdue technical correction finally was seen yesterday. If the market can consolidate or, better yet, add additional gains today, then there is a good chance a bottom has finally been made and prices could work higher from here, at least in the short term. Of course, the fundamentals remain bearish for the longer term picture but that doesn't mean prices can't work higher in the short term.
Brazil has turned hotter and drier and this pattern is expected to continue through at least Monday. If this hot and dry weather extends well beyond that, it could stress the corn and beans but for now conditions remain very favorable. Argentina saw up to 1.25" of welcome rain the last 24 hours in much of the grain belt with the major exception of Cordoba province. More welcome rain is predicted today-Friday with up to 1.5" forecast. Additional rain is forecast this weekend, all of which will be helpful.
Has technical bounce in the grains arrived?
Has the long overdue technical bounce finally arrived? Prices were fairly strong overnight, gaining up to 9 1/2 cents but so many times lately shortcovering, technically inspired bounces have proved ephemeral, including yesterday, when Mar beans were 10 cents higher early in the session only to end several cents lower. While recent rally attempts have faltered, it could be argued the longer the market goes without a lasting technical correction, the stronger the need for one, an outcome that can't be delayed forever. There is little in the way of fresh market moving news to push prices strongly in either direction this am. The $ is just a shade lower, not enough to impact the grains very much. Crude oil and gold are higher, which might lend modest support to the grains. The early call is 7-10 higher wheat, 3-4 better corn and 5 up in beans.
Brazil was mostly dry the last 24 hours and more of the same is predicted the rest of this week, with only a few light, scattered showers expected in the south. Argentina saw a few light showers in Santa Fe province the last 24 hours and some light, scattered rain is predicted today in a few parts of the main grain growing areas. More widespread, significant rain is forecast Wed-Thur, spreading from south to north with up to 1" expected. Additional rain is forecast Fri-Sun, improving conditions considerably in all the main growing provinces.
No winter kill threat is seen in the Midwest or southwest winter wheat belts.
Mixed grains start indicated
A mixed start is indicated this am, about 2 better wheat, steady corn and 1 lower beans. The $ is lower while crude oil and gold are higher, which could bring some support to all the grains. There isn't a lot of fresh market moving news so far this am but the main background features remain in place and they are mostly bearish: decreasing demand, at least in the case of beans, as China switches or is about to switch most of their bean buying from US to South American origin; and increasing supplies with continued mostly favorable weather increasing crop prospects in South America.
Additional pressure has come from the recent sell off in the value of the Brazilian currency, the Real. Just as a weak US $ increases US grain export competitiveness vs other countries, so does a weaker Real increase Brazilian grain export competitiveness. Brazil is a huge exporter of corn and beans but an importer of wheat.
On the bullish side, grains are oversold and overdue for a significant technical bounce but all efforts so far to do this have failed. Mar beans, for example, fell around $1.35 a bushel last month and all recovery attempts so far have been weak. Eventually we will see a more robust technical rally but I think it is better to wait until it is actually underway than to try and anticipate it ahead of time.
Southern Brazil was mostly dry over the weekend and more of the same is forecast this week, along with hotter temps. Northern Brazil had scattered weekend rain and more is predicted today before hot and dry weather moves into the region Tue-Fri. Brazil has had so much rain a period of hot and dry weather should be readily tolerated by the well watered crops. Argentina had up to 1.5" of welcome weekend rain in parts of Cordoba and Buenos Aires provinces with up to .7" in parts of Santa Fe province. Temps were cooler over the weekend also after very hot and dry weather most of last week. More welcome rain is forecast all this week. The Argentine provinces named above are the largest grain producing provinces in the country so rain there will keep the outlook for very large crops in good shape.
No winter kill or extreme cold weather threat is forecast for the US southwest or Midwest winter wheat belts.
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