COMMENTARY 2/23/16

Cool fronts should dissipate for S Brazil and Paraguay over the next 7-10 days but with it comes heavy rain with accums of 2.5″ to 5.0″ possible and 6.0″ + in Parana.  One weather model shows some areas there could get up to 12.0″.  Some storms are still expected in Argentina, but escape the heavy accum in the at least the S half of the State.

St Louis river level ~RISING ~ at 12.9′ and forecast to be 15.2′ by  2/28.

 CORN

DOWN 5

Fund selling, led by weaker outside markets and a growing S American crop size estimates from privates.  expect more Brazil Safrinha acres. Cordonnier, in both Argentina and Brazil, has the crop now up 2.2 MMT (from his last estimate), at 109 MMT for both countries combined.  Seed corn is in short supply with producers wanting to expand corn plantingsSafras estimates some 51% of the crop is in the ground, 13 points ahead of a year ago and 1st crop corn harvest is 23% complete, 2 points ahead of last year.

US corn seedings, out later this week are expected to be 89.6 million acre. Bloomberg has the 16/17 US corn planted area estimated at 89.7 million acres in a 88.3-92.5 range and vs 88.0 last year.  Some Southern US states are talking about a 25 to 30% increases in acres in AR, MS, and LA.  El Nino has weakened in the last 2 weeks suggesting now that there could be a 1 in 3 chance of a 6% cut in trend line yields, equating to just over a 10 bpa yield cut.  One bank expects the avg US price to be $3.70 -3.80 for the first half of this year. South Africa may relax its GMO restrictions.  This could open the door for imports of US corn (yellow and white), as well as Mexico.  S Africa’s imports of 98 K MT were sourced from Paraguay, Argentina, and Brazil this week.

BEANS     

DOWN 12

Fund selling and South American harvest continues as their crop size grows. The export market was heavy today as demand continues to look outside of the US for beans. Nearby basis was a nickel lower combined with the nasty Board drop.  Barge freight was unchanged but still heavy with plenty of empties coming up the Miss. yet minimal export demand to reload them. We are still waiting on SA to have trouble loading their bean vessels.  Brazil’s Port of Parangua has vessel waiting times now at 50-60 days, vs only 20 this time last year.  China exported 112 K MT of Meal in Jan, down from 161 K in Nov and way short of Jan 2015’s 162 K total. Oct-Jan exports are actually up 18% to 444 K MT.  Bloomberg estimates the 2016 US bean acres at 83.3 in a range of 82.0-85.0), up from 82.7 last year.  US bean seedings are expected to be 83.3 million acres.

 

 WHEAT          

DOWN 10

US exports are headed for a 44 year low.  Funds were sellers.  The Texas G/E winter crop declined to 41%, down 1% from last month and 3 points below last year.  The Philippines and Japan are looking to buy 230 K MT (along with a bean tender) feed wheat.