AgResource Daily Farm Marketing Advice for Thursday: 1/ Corn Producers: Sell 10% of the estimated ‘18 corn harvest at $4.01 basis Dec ‘18 futures. 2/ Corn Producers: Sell 10% of estimated ‘19 corn production at $4.17 basis Dec ‘19 futures. 3/ Corn Producers: Sell 15% if the 2017 corn crop if March ‘18 corn futures reach $3.72.
6:30 AM CST CBOT Prices: March soybeans are unchanged at $9.55, March corn is up .25 of a cent at $3.4925, and March Chi wheat is down 1.75 cents at $4.325.
Good Morning! Markets overnight were mixed but uneventful in low volume. CONAB and the Malaysian Palm Oil Board have released new supply and demand figure, and weekly US export sales are due later this AM. And of course Friday’s USDA report, uncertain South American weather and even the CFTC’s commitment of traders report will all make for choppy trading and possibly an increase in volatility.
CONAB raised its soybean production estimate to 110.4 MMTs, vs. 109.2 in December and 114 MMTs a year ago. The boost was largely expected and a private trade estimates this week seem to center on a range of 110-112. CONAB raised its corn production figure a marginal 200,000 MTs to 92.3 MMTs, vs. 97.8 last year, based on some improvement in first crop corn potential. A full breakdown of CONAB’s data will be in this evening’s wire.
Malaysian palm futures are down 60 ringgits, due partially to strength in currency and as inventories continue to build there. Palm oil stocks at the end of December totaled a new multi-year high 2.7 MMTS, vs. 2.5 in November. The Malaysian palm oil balance sheet has nearly fully recovered from El Nino-based damage, and seasonally production will rise further in the spring months.
This morning’s export sales data should be much improved from last week’s paltry numbers, which even for a holiday shortened week were disappointing. US corn is cheap, Gulf SRW is cheap relative to comparable EU origin, and the US is still the only reliable origin for beans. Better sales, however, are demanded to satisfy current USDA forecasts.
But perhaps priority number one, at least just after the USDA’s flood of new numbers Friday, is what appears to be a lasting period of dryness in Central & Northern Brazil. The models are still in decent agreement on this, and have trended drier overnight. A 3-4 day period without rain may actually be beneficial to areas of Mato Grosso & Goias following too much rain and cloud cover, but in the context of dry climate forecasts (16-30 day and February’s outlook) the extent of soil moisture declines there need close monitoring. And recall moisture reserves in Feb are highly important for safrinha corn development, as rain thereafter can be a bit spottier. Argentina’s forecast also features only regionally beneficial rainfall through late Jan, the point being it’s far too early to count on above-trend soy yields in S America.
The market will be digesting a host of new and important data in the next two days, but amid rising feedgrain basis and less than ideal S American weather guidance, we view any post-USDA break as an opportunity for end users to extend coverage. Note that crude continues to rally.
