2/25/21

Morning Commentary 2/25/21

Better Rains for Argentina/S Brazil Next Week; Brazilian Paranagua Soybean Paper Bid 25 cents under Chicago; Paris wheat against Monthly Resistance

AgResource Farm Marketing Advice for Thursday: 1/ Soybean Producers: We are net long 100% of the 2020 soybean crop through a 20% cash long and 80% futures repurchase. Take profits on 40% in May futures at $14.40.

** New Speculative Advice: 1/ Exit 2 futures contracts of May soybeans at $14.40 or better.

6:30 AM CBOT Prices: March soybeans are up 13.00 cents at $14.3875, March corn is down 4.00 cents at $5.5525 while Mar Chi wheat is down 1.25 cents at $6.79.

AgResource AM CBOT Comment & Analysis: Good Morning! CBOT futures are mixed this morning with soybeans/soyoil futures pushing to new rally highs. March soybeans reached up to $14.4575 in a flurry of overnight speculative buying while November reached its initial target of $12.50. Corn and wheat have been unable to follow the bullish soy complex with Paris wheat futures rubbing against a longer-term downtrend line. ARC looks for a mixed CBOT trade today.

Monthly Paris Wheat Spot Wheat Futures: Up Against Resistance.

The South American weather forecast is offering needed rain for Argentina and RGDS in Southern Brazil after March 4th. The EU model offers soaking rain for Cordoba and Santa Fe (1-2.00”) while keeping Buenos Aires dry. The GFS does not offer as much rain, but the models are hinting at a progression of rain from Brazil as a high-pressure Ridge returns to NE Brazil. The next 5-7 days are warm/dry, it is the extended range where Argentine rain is offered.

The rains would be timely and arrive at time of Argentine crop reproduction. CBOT traders will be monitoring coming weather forecasts closely, but this morning there is a chance of rain for Central Argentina which has been lacking in recent weeks. Also, Northern and Central Brazil will be receiving more normal rain with good moisture slated to drop across RGDS in S Brazil mid next week. South American weather has a bearish lean this morning.

AgResource would also note that in the paper Paranagua fob trade yesterday that the bid fell to 25 cents under Chicago – a new low. The paper trade would indicate improved Brazilian harvest supplies heading to port. A concern for Chicago is that Brazilian soybean export paper is trading below March futures.

CBOT open interest fell a huge 49,773 contracts in corn (with March positions falling to 89,730 contracts), 22,960 on soybeans, and 566 contracts in wheat.

March soyoil/soymeal open positions are down to 10,000 contracts or less.

Reuters newswire is reporting that China’s crushers are drawing from inventory and slowing crush as Brazilian new crop soybean supplies are being delayed via tardy seeding dates and wet harvest weather. China has not shown an interest to secure US old crop soybeans amid higher prices. Brazil was expected to export more than 7.5 MMTs of soybeans in February, but total exports will only half due to the wet harvest. Mato Grosso farmers are making good progress on harvest this week and trucks are moving the new crop to port.

FAS will be releasing its weekly export sales report this AM which is expected to show declining demand for US soybeans/corn.

South American weather forecast offers improved rain chances starting late next week. ARC sees downside market risks if such Argentine rains develops.

South American Weather Pattern DiscussionThe forecast weather models agree and offer a pattern change. This reduces our confidence since it’s a forecast change

The attached 10-day rainfall forecast from the EU model. The forecast offers below to much below normal rainfall for Argentina/S Brazil for the next 5-7 days with improved rains starting during the last half of next week. The exact details of rain locations and amounts will be worked out in coming days, but a high pressure Ridge is forecast to develop over NE Brazil which would shunt upper air moisture southward. This NE Brazilian Ridge would curtail the heavy rains over Northern Brazil and push rain chances south into Argentina/S Brazil.

The pattern change is noted in all of the primary models, but we advise clients to monitor each run. There will be another 6-7 day warm/dry days across Argentina and S Brazil with highs reaching into the mid 80’s to the mid 90’s.  A few spotty showers are possible, but rainfall totals will be less than .40” with coverage no better than 20%.

Regular daily showers will persist across N Brazil with 10-day totals estimated in a range of 3-8.00”. A more normal rainfall pattern develops mid next week which should lead to a fast push forward with the harvest and seeding of the winter corn crop. The 11-15 day forecast holds onto the more normal rainfall profile.

Rain Slated to Fall over Drier Areas of Argentina Next Week: 

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