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Today’s Prices
Grain prices finished mixed today as bearish outside influences offset bullish influences from supportive South American weather.
Grain Market News
Observed Surface High Temps
This map shows the high temperatures for Sunday Dec 19th. Argentina was in the mid to upper 90’s and a few 100’s in the north. That heat extended into portions of Paraguay, western and southwestern Brazil, and eastern Paraguay as well. Most of Brazil was in the upper 80’s and lower 90’s but heat is definitely starting to build the western and southern portions of South American growing regions.
Monday’s High Temperatures
Unfortunately for farmers in Argentina and adjacent areas of Paraguay and Uruguay, today’s highs again 90’s with quite a few 100’s and that heat just starting to inch its was into western and southwestern Brazil. It’s not all bullish news in South America, central and northern Brazil continue to be wet with temperatures in the 70’s and 80’s. If there is a complaint in northern areas of Brazil like in Mato Grosso it would be too much rain and not enough sunshine. But in between the very wet areas and hot dry areas we should see record type potential for portions of central Brazil.
SA 2-Week Precipitation Forecast
The forecast continues to call for below normal precipitation in southern Brazil, Argentina, Paraguay, and Uruguay. And that pattern continues into the second week of the forecast into early January with below normal precipitation for much of the same area. Although there is one area of rain in portions of southern Brazil in the second week of the forecast. We’ve seen this a few times where there has been a little bit more rain forecasted in southern Brazil. But for the most part those better rains have not developed over the past 3-4 weeks.
Temperature Anomaly
Temperatures from now through Dec 28th will be above normal based on today’s forecast for Argentina, Paraguay, and Uruguay and those above normal temperatures extend into areas of southwestern Brazil as well. Bottomline, if the current forecast verifies crop stress which has already begun will continue to increase and the area of dryness and concern will be expanding as well. We view today’s forecast for South America as lightly supportive or lightly bullish U.S. corn and soybean prices.
Grain Market News
Corn: Weekly Export Inspections
Corn export inspections improved to 31.904 mb. That’s the second-best level of the marketing year and we do expect this to continue. First of all, there is a seasonal trend for exports to increase now all the way through March or even into April. Secondly, the U.S. has huge export sales on the books and China is starting to ship. In fact, 22% of our corn export inspections went to China. Export inspections at 31.9 mb are still well below the level needed to reach USDA’s export forecast but as we mentioned, we expect this number to improve significantly over the next 3-5 months.
Soybeans: Weekly Export Inspections
Soybean export inspections are declining seasonally, just 61.7 mb. That is still over double the level needed to reach USDA’s export forecast. If soybean inspections would continue to decline at a seasonal pace it will continue to press the level needed to lower levels and at this point we believe soybeans can reach USDA’s export forecast.
Wheat: Weekly Export Inspections
Wheat export inspections were probably the most disappointing number at just 7.7 mb, less than half the level needed to reach USDA’s export forecast. We are expecting our export sales and inspections to improve as we get into the Jan, Feb, Mar timeframe but at this point exports have been quite disappointing for about the last 2 ½ months.
Potential Feed Demand
Into 2021 feed demand overall was fairly close to the previous year we combined beef, pork, boilers, and turkey. We also had increases in demand from the egg and milk sector. USDA is currently projecting for 2022 a reduction in beef animal consuming units, pork down just a fraction but poultry improving with the total red meat and poultry down just fractionally on the year. Eggs and milk look to increase. And with this in mind, feed demand although it may be down slightly is still going to be fairly close to record large. This should allow demand from the livestock sector to remain strong for corn and soybean meal.
Global Covid Data
Global cases of Covid are on the increase. This is the 4th significant increase in Covid cases over the last year and a half. The good news, if there is any, is that weekly deaths have remained about steady. Since the Omicron variant doesn’t appear to be as severe, even though cases are increasing significantly, deaths are holding steady. In the U.S. we have somewhat of a similar pattern. Cases have ramped up significantly while deaths are holding generally about steady. But the fact that some states and some areas are having significant outbreaks of Covid, it has added some concern even fear to the outside markets today.
March Corn Chart
Corn prices continue to be in a gradual uptrend. The recent highs were posted on Friday at $5.98 per bushel and although we were lower today we still have a gradual uptrend in place. Technical indicators basically chopping back and forth near overbought levels. The corn market is certainly not a runaway to the upside but the gradual uptrend is still intact.
January Soybean Chart
Soybean prices didn’t take out Friday’s high but we did close higher and we’re knocking on the door of the $13 level in January soybeans. The trend is certainly up and the technical indicators are pointed upward as well. They are starting to get in the overbought range. But there is no sign of topping action from the chart or technical indicators and South American weather will likely be the primary driver going forward. Although outside markets can have influences from time to time, keep in mind the South American weather forecast at this time is quite threatening.
March KC Wheat Chart
Wheat prices continue to show some signs of bottoming action over the last week and a half. Technical indicators also looking pretty good. If we can get the outside markets to calm down and maybe corn and soybeans to rally on South American threatening weather than wheat can push up into the $8.40-$8.50 level. Where we had some consolidation on the way down recently and on the way up previously. That would be the next target for Mar KC wheat.
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