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Today’s Prices
Grain prices finished mostly lower today as investment funds are liquidating some of their long positions ahead of Wednesday crop report and also with South American weather looking to improve next week.
Grain Market News
Surface High Temps
This map shows the high temperatures yesterday, Sun Jan 9th. Temperatures in the mid to upper 90’s and even 100’s for almost all of Argentina. While Brazil saw more favorable 80’s across much of their growing region. But Brazil has had dry conditions developing over the past 60 days and crop estimates are already declining. Now over the last 4, going on 5 and 6 weeks, conditions are starting to become more severe in Argentina where drought is developing and significant heat is causing significant crop stress.
SA 2-Week Precipitation Forecast
The forecast continues to show dry conditions for southern Brazil and Argentina in the first week of the forecast, that’s today through Sun Jan, 16th. But as we look ahead to next week, Mon Jan 17th forward, extreme southern Brazil could get 1-2” of rain, isolated heavier. Argentina could get 1-2” of rain and maybe more in the northeast and maybe less in the southwest but this is a significant rain event that needs to be monitored. It is still a week out but the forecast models have been fairly consistent in calling for this rain even next week. It could signal the possibility of a pattern change. This is what made the funds nervous today and got the corn and bean markets off to a weak start.
Temperature Anomaly
We’ve been discussing the heat in Argentina and adjacent areas of Paraguay, Uruguay, and extreme southern Brazil but keep in mind the markets have been monitoring this. They are aware that it is going to be hot and dry for another week and crops will endure additional stress but with the funds long and the possibility of rain and maybe even ending the drought next week, the funds have been liquidating some of their longs in today’s trade.
Grain Market News
Corn: Weekly Export Inspections
Today’s weekly export inspections report showed corn exports at 40.2 mb. That’s the largest estimate since mid-Oct and the second largest of the marketing year. Unfortunately, it is still below the level needed to reach USDA’s export forecast of 58.5 mb. The good news is that from here forward, the seasonal trend is for exports to increase all the way into April and then maintain a fairly strong pace right through summer.
Soybean: Weekly Export Inspections
U.S. soybean export inspections disappointing at 33.2 mb but last week’s total was updated and increased by 15 mb and we suspect this week’s total will see a significant increase as well. Typically the U.S. has an opportunity to see pretty decent exports through Jan and most of Feb before we really start to see a sharp decline when South American production come online in Mar, Apr, and May. We only need 26.8 mb per week for the rest of the marketing year and we expect that number will come down as the Jan and Feb exports are likely to be above the 26 mb level. It does appear that we’ll be able to reach USDA’s export forecast.
Wheat: Weekly Export Inspections
Wheat exports are extremely disappointing, just 8.5 mb. That is less than half the level needed to reach USDA’s export forecast. We expect that our exports will increase in the first quarter, Jan, Feb, Mar but unfortunately, we’re falling far enough behind that it does look like it’ll be difficult to reach USDA’s export forecast for wheat unless we see a dramatic improvement start fairly soon. We wouldn’t be surprised to see USDA lower its export forecast for wheat by 10-20 mb in this week’s Jan crop report.
U.S. Yield and Production
U.S. and World Ending Stocks
South American Production
March Corn Chart
Corn prices did trade lower today but really didn’t make a big change on the chart. The intermediate and short-term charts are still pointed higher. Although over the last week or two we’ve been chopping in somewhat of a sideways range but at the upper end of the range. The choppiness has the technicals chopping in the middle of a neutral range as well as the trade waits for updated weather information in South America and the crop report coming out on Wednesday.
March Soybean Chart
Soybean prices made new highs on Friday but pulled back today. But it did not make a major impact on the chart. The chart is still pointed upward. Moving averages are all pointed upward, the 10, 20, and 40-day moving averages. One caution sign on the soybean technicals is that they are overbought, and today’s lower prices did turn them lower. But as we’ve mentioned many times, in a weather market the weather forecast will trump the technical signals and the USDA crop report on Wednesday could also trump any technical signals.
March KC Wheat Chart
Wheat prices actually bounced and had an outside day up taking out the highs from Friday. The trend on wheat is still down but we want to note that a reversal day Friday followed by an outside day today is hinting that the wheat may have found a major bottom and the technical indicators did turn upward from extremely oversold levels. There is not solid evidence of a reversal in the trend but there are settle hints that the wheat market maybe in the process of making a significant chart and technical bottom.
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