** Markets are Closed for Presidents Day on Monday. Weather & Opening Calls will be Released on Monday Evening **
Once again ag markets have crawled off session lows (10 cents in the case of March beans) as end users take advantage of breaks. Soybean crush margins have surged since late January. US ethanol margins are profitable, and concern over world weather patterns persist. US exporters this AM sold two cargoes of old crop corn to Japan, and close attention will be paid to Saudi Arabia’s barley tender over the weekend to gauge global minor feedgrain prices.
The midday GFS has again failed to include any pattern change in South America or the US, and temps this weekend in La Pampa & Buenos Aires are forecast a bit higher, and high readings Sat-Sun should reach 96-97.
There’s also talk of early harvested soybeans in Brazil yielding less than expected, particularly in Goias & Mato Grosso, which historically combine for 40-45% of total Brazilian bean production. And white mold has been reported in the state of Parana. Harvest in Mato Grosso just under 30% complete, and so more data is needed. But new yield results will be followed closely, and perhaps this year’s Brazilian bean crop won’t much exceed 112-113 MMTs, vs. private estimates as high as 116-117.
Argentine soybean crop estimates are now centered at 44-46 MMTs, vs. the USDA’s 54, which aligns well with previous La Nina-based drought years. As such, it’s possible that South America’s total soybean crop is no bigger than 156-159 MMTs. This is down 7-10 MMTs from the USDA’s forecast and down 13-16 MMTs from last year. The point is that we caution against turning bearish beans until there’s much more clarity on Brazilian potential.
This afternoon’s CFTC report is expected to show a managed fund short in corn worth 55,000 contracts, down 28,000 from the previous week; a fund short in wheat worth 80,000 contracts, down 3,000; a fund long in soybeans worth 14,000, vs. a short position of 10,000 the previous week; and a net long in meal of roughly 77,000 contracts, up 25,000 on the week and the largest since 2012. Meal spreads need close watching, but until Argentina’s crop size is better known, end users look to stay anxious.
Midday GFS South American Weather Forecast Discussion: The best chance for rain in Argentina exists next Tues-Wed as scattered showers work across Central and Northern Regions. However, totals next week in Cordoba and Santa Fe – both major producing provinces – are pegged at/below .25”, and thus not nearly enough to alter soil moisture. Thereafter, complete dryness resumes into March 2-3, after which confidence in any outlook is low. Brazil will be favorably dry for the next 48 hours, but above normal rain returns next week. Harvest is Central Brazil has been a bit slower than normal.
AgResource Market Comment: The trade is well aware how important Monday night’s S American weather forecast is. ARC doubts that forecasts will change much, and ARC’s climate work suggest dryness and above normal temps will persist in Argentina well into March.
