COMMENTARY 12/23/16

An early close for the market for the holiday today.  The forecast has even more showers and storms developing in Argentina over the weekend bringing 1 ½” – 3” in accum as thus officially ending the six week dry spell.  After that, it should turn drier for 5-7 days but more storms are expected beginning Jan 1.  In Brazil, high pressure will limit moisture with heat expanding to the NE w/ daily highs in the 90’s.  The S and W should see normal rain of 1 ½ to 3”.  Most crop areas should stay moist through early Jan with the exception to Bahia which is still thought to stay hot and dry.

 

LOW river levels…..

St Louis river level LOW! ~ at 3.0′ and forecast 4.8by 1/3.  

CORN

DOWN 1

A holiday market for all.  Wires carry concern about demand, yet the USDA announced another export sale.  An 8 MMT sale to Unknown follows 100 K MT to Mexico yesterday.   SA supplies may be looming rather large come harvest this year.  AgRural says Brazil’s safrinha corn area could reach a record 11.1 million hectares.  Argentina is now 63% planted and the BA Exchange maintains that planted area at 4.9 million HA with timely recent rains.  Who wants to plant corn this spring??  OSU ag economists say returns to land (gross revenue minus costs, except land) range from -$37 to $116 for yc and beans range from +$60 to +$230 per acre. <- Time to plant beans!

Bloomberg Trader Bias:  Bullish 5% TW (20% LW), Bearish 61% (60% LW), Neutral 33% (20% LW)

 

BEANS     

DOWN 5

More delicious bean growing weather for SA.  Argentina is 76% planted with planted acreage at 19.6 million hectares.  SE BA province is the only critically dry spot left.

Bloomberg Trader Bias:  Bullish, 6% TW (40% LW), Bearish 67% (25% LW), Neutral 28% (35% LW)

 

 

WHEAT

DOWN 3

Still big global supplies, especially in the S Hemisphere.  The EU is even expecting to carry over more wheat raising their ending stocks forecast 780 K MT to 10.04.  CBH Group says it could be a belt busting big crop for W Australia growing to 16 MMT this year.  The sme company recently announced a $750 million expansion, including adding 2 MMT of storage capacity over the next 5 yrs.  A strong ruble coupled with big wheat crops in both Argentina and Australia are trimming Russia’s wheat export outlook.

Bloomberg Trader Bias:  Bullish 12% TW (30% LW), Bearish 35% (50% LW). Neutral, 53% (20% LW)