** Soybeans/wheat have rallied on technical considerations with corn taking a breather in AM CBOT trade. Funds have been on the buy side of the marketplace with as soybeans push to their highest levels since early January. Funds managers are pegging the 200 day moving average at $9.79 and the 50 day at $9.845 as the initial upside targets for Mar soybeans.
KC March wheat futures is back testing resistance at $3.30-3.40 while March corn has support below $3.50. Seasonally, the last half of January is positive which normally carries forward into early February. US farmers typically have marketed at least 70% of their soybean crop by Jan 31st, so its S American crop sizes that will be debated therafter.
** CBOT brokers report that funds have bought 1,500 contracts of corn, 3,100 contracts of wheat, and 3,300 contracts of soybeans. In soy products, funds have sold 1,700 soyoil and bought 2,900 soymeal.
** NASA reported that 2017 was the 2nd warmest on record for the globe. World temperature records go back to 1880 and 2016 is still ranked as the warmest ever. Contrary to modeling that goes back to the 1980’s and 1990’s, a warmer globe has not translated into less foodstuffs. Actually, the expansion of corn and soybeans northward across Canada and Russia has added to the world’s food supply. Yet, the sun is dramatically cooling in a cycle which could promote elevated weather adversity in the years just ahead.
** NOAA released their long lead weather forecasts this AM which offered warmer than normal temps for the southern quarter of the US and above normal precip for the E Midwest during February. Dryness persists across the Plains.
The warmth then expands northward during March and some climate forecasters are doubtful that the Plains dryness eases during spring. ARC looks for the market to start adding weather premium to CBOT futures after Valentine’s Day.
** Chinese pork production edged up .8% in 2017 with private estimates of a 1-3% gain in 2018. China’s hog herds are expanding based on improving domestic demand. ARC notes that China’s beef production came in at 7.3 MMTs, a 20 year high. Chinese crush margins are back at marginally profitable levels which is spurring enlarged import demand.
** Private corn/soy crop estimates are in decline in Argentina with the Bolsa pegging the corn crop at 39 MMTs and some private soy estimates at 52-53 MMTs. Better rains are needed across Argentina in the weeks ahead.
** Midday GFS South American Weather Forecast Discussion: The forecast is little changed from the overnight run and remains wetter than the EU model for the northern half of Brazil next week. The GFS has heavy rains returning to much of Brazil in the 11-15 day period with some heavy totals across the southern quarter of the country. Brazilian crops in the southern quarter of the US demand more sunshine and dryness to reduce rust and disease pressures.
The forecast models are similar in that Argentina will hold in a below normal rainfall trend into early February. Rain totals over the next 10 days look to range from .2-.8” across Argentina with locally heavier amounts. Unfortunately, this rain is not enough to counter evaporative losses.
** AgResource Market Comment: The charts are looking more positive for soybeans/corn which is driving some short covering from fund managers. Weekly US export sales will be out on Friday AM. Soyoil is uncovering end user pricing as seasonal demand for bio diesel should increase amid the warming temperatures of March. ARC is becoming positive of corn on reduced South American crop sizes. Look to get long corn on 3-5 cent breaks.