CBOT Sharply Lower on Speculative Liquidation; 1st Lower Soy Close in 6 Weeks; USDA Weekly Export Sales Today
AgResource Farm Marketing Advice for Friday: 1/ No new advice.
6:30 AM CBOT Prices: Mar soybeans are down 28.50 cents to $13.41, Mar corn is down 9.50 cents at $5.15 while Mar Chi wheat is down 16.50 cents at $6.4475.
AgResource AM CBOT Comment & Analysis: Good Morning! CBOT futures are sharply lower overnight on continued long liquidation as March soybean futures fell below initial technical support at $13.50. The soybean selling started in Asia and continued into the European trade in active volume. CBOT March soybean volume has exceeded 44,000 contacts while more than 32,000 contacts of March corn has changed hands.
Thursday’s CBOT open interest has corn gained 13,615 contacts, soybeans 629 contacts and wheat 2,337 contracts. The continued rise in open interest does not speak to a CBOT price top.
World financial markets are slightly lower following Thursday’s global push to record highs. The Dow is expected to open about 250 points lower on profit taking and continued worry about the pandemic. The US dollar is steady while crude oil futures are down $1.40/barrel at $51.73 basis March futures. There is a mentality of risk-off as the US political situation has become settled.
FAS will release their weekly export sales report today. Traders will be gauging weekly sales with the US crop year to date soybean sales to exceed a record large 2,070 Mil Bu while annual US corn sales exceed 1,800 Mil Bu.
In world ag markets, Paris March wheat futures are down €5.25 euros at €226.50 on speculative profit taking while March Malaysian palmoil futures closed 25 ringgits higher at 3,420 RM/MT. Excessive rainfall and flooding threats continue to bedevil palm yield potential and SE Asian importers are again stepping forward with new demand. China’s May Dalian corn lost 11.00 cents to $11.13/Bu while May Dalian soymeal fell $5.40/MT to at $543.60/MT.
South American weather forecasts are arid for N and EC Brazil and the southern half of Argentina. The extended 11-15 day forecast has gone dry for Argentina which means that next week’s rain has grown in yield importance. A growing problem is the heavy rains which is falling across Parana and causing low level flooding and considerable rust infections. Farmers are actively applying fungicides to control the spreading rust infections.
Turkey’s TMO secured 400,000 MTs of wheat on a delivered basis at prices that range from $302-313/MT. Russian wheat was included in the tender with the tax added depending on the shipping date. The Russian wheat export duty rises by €25/MT on February 15th and pushes to €50/MT on March 1st. In December, Turkey secured wheat at $265/MT which today’s tender confirming a $37/MT price rise.
The Buenos Aires Grain Exchange indicated that 99% of its soybean crop and 93% of the corn crop is now planted. Condition ratings are below the 5-year average amid dryness. Regular rains will be needed amid dry subsoils.
Sharply lower CBOT prices spur new demand – not the rationing that is needed. There is no change in bullish market fundamentals, and this is no place to make new sales. End users and importers should use this weakness to extend your forward coverage. The 2020/21 grain bull is a 5-month unruly adolescent!
South American Weather Pattern Discussion: The primary weather models are in good agreement which raises our confidence in the 10-day forecast.
A high pressure Ridge off just off the coast of E Argentina and a weak upper air flow across N Brazil produces a mixed South American weather pattern over the next 10 days. Above normal rain will fall across Parana and S Mato Grosso do Sul with rain totals of 4-7.00”, but Northern and East Central Brazil will hold in a below to well below normal rainfall pattern. This below normal rainfall pattern looks to continue into early February.
The major crop areas of Argentina are forecast to see below normal rainfall with high temps in the 90’s to lower 100’s into Monday. The best rain will drop Monday evening into Tuesday with totals of .25-1.25” with another chance of rain late next week with like rain totals. The extended range 10-15 day Argentine weather forecast is drier making next week’s rain critical for crop yield & production.
The 10-day rain forecast map is from the EU model. Note the unusual dryness that stretches across much of N and E Brazil and then thru the southern half of Argentina. Excessive regular rain will fall from Paraguay into Parana with low level flooding.