Morning Commentary - 01/10/2019

CBOT Mixed Overnight in Low Volume Trade; CONAB Fails to Surprise with 118.8 MMTs Soybean Crop Estimate

** 6:30 AM CBOT Futures Are; March soybeans down 1.0 cent at $9.23, March corn is up .50 of a cent at $3.825 and March Chi wheat is down 1.50 cents at $5.185

** AgResource Morning CBOT Comment/Analysis: Good Morning! Low volume and mixed has been the overnight CBOT trade as the market appears to be in waiting mode. The waiting is in South American weather and China’s pledge to buy large amounts of US ag and energy.

  Rumors abound on the USTR’s post Beijing comment that China has pledged to secure a substantial amount of US goods and services. It has long been rumored that as the US/China trade deal scored progress, China would be back at the US food table securing additional goods including; corn, wheat, meats and dairy. It’s a question of timing and it’s difficult to be bearish of any CBOT grain fearful that China could be a buyer at any moment.

 Brazil’s USDA equivalent – CONAB – cut their forecast of the Brazilian soybean crop to 118.8 MMTs while holding their corn crop at 91.1 MMTs.   The Brazilian soybean crop was forecast at 120.0 MMTs in early December. The 1.2 MMTs CONAB cut was expected, but where the final crop sizes end up is all a function of future weather? The CONAB soy crop estimate is as of January 1st, and further crop loss due to adverse weather has occurred since. Most private estimates (including ARC’s) has the crop at 116-117 MMTs as of today. ARC sees the Brazilian soy crop at 111-113.0 MMTs should the existing weather continue.   The South American weather pattern shows little change over the next 2 weeks with deepening heat/dryness to impact NC Brazil while flooding rain falls across the northern third of Argentina. There is no evidence of a pattern change and the NC Brazilian forecast is drier/warmer than prior day runs with the Argentine rains farther south. Traders will be looking to the weekly European weather model forecast later today for any hints of change during February. Further losses of crop are expected amid the stagnant pattern.

  Malaysia reported that December palmoil output fell 2% to 1.81 MMTs and that exports were up .6% at 1.38 MMTs. December end stocks rose 6.9% to 3.21 MMTs. After pushing to a 2-month high on Wednesday, palmoil futures retreated with losses of 19 ringgits in the most active March contract to 2,164 RM/MT.

 US President Trump has announced that he will be attending the American Farm Bureau meeting in New Orleans next week. It’s rare for a sitting US President to attend the annual meeting – much less attend it 2 years in a row! Amid the optimism of a US/China trade deal and the potential of large US ag purchases, Pres Trump is expected to tell US farmers of their improved position in world trade and that help is on the way to boost their net profit margins.

  South American weather remains threatening while hope persists that China will secure US grain/meats. Any CBOT breaks will be shallow/short lived today. Few will want to be short of CBOT soy or grain if the South American weather forecast does not change heading into the weekend. 

** Snows for the Plains and S Midwest as the Jet Stream Sinks Southward: 

** Mild Central US Temps to Persist with Cold Building Across Canada: 

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