Written Commentary
MORNING OUTLOOK
Grains are mixed. SH is down 2 cents and near 12.55. SMH is near 410.5. BOH is near 40.96. CH is unchanged and near 4.55. WH is up 1 cent and near 6.15. KWH is up 1 cent and near 5.77. Some feel soybean and corn futures may be overbought. US stocks are higher. US Dollar is lower. Crude is higher. House passed an additional relief bill with higher individual payment.
Chinese Ag futures (May) settled down 23 yuan in soybeans, down 1 in Corn, down 35 in Soymeal, down 100 in Soyoil, and down 102 in Palm Oil. Malaysian palm oil prices were up 7 ringgit at 3,549 (basis March) resuming support on supply concerns.
The GFS model forecast last evening did not change much for Brazil. The bulk of center west and center south crop areas get routinely occurring rainfall over the next two weeks resulting in favorable crop development. Net drying is still expected in far southern Brazil, Uruguay, southern Paraguay and eastern Argentina during the coming two weeks.
For Argentina, the model further diminished rainfall in this first week of the outlook raising the potential for more significant crop stress because of limited rain and warm temperatures. The precipitation increases in Argentina for the Jan. 6-12 period will be welcome if they verify, but the nation is still not expected to get a general soaking of rain and crops will likely continue to struggle for moisture through the entire forecast period. The European model forecast has not diminished rainfall in Argentina as much as the GFS model run.
Talk that soybean futures were overbought trigger some yearend long liquidation. Asian soybean, soymeal and soyoil prices are lower overnight. There is talk that South America crops could be down 5-7 mmt from USDA Dec guess. Bulls feel this could increase US soybean demand and drop carryout enough to finally push SH over 13.00. Talk that Argentina strike could end this week also offers resistance. There is 300 mt soyoil and 740 mt soymeal waiting to be loaded in Argentina.
CH made new highs near 4.57. Lower SA crops could increase US export demand and push CH to 4.90. 2021 South America corn crop could be down 9-15 mmt from USDA Dec guess. US 2020/21 carryout 1,000? Key remains when USDA decides to raise US demand, lower carryout and raise cash US price outlook. US 2 week Midwest forecast is warm and wet.
WH tested October highs and KWH is near 2 year high before quickly trading lower. Talk of some moisture for US plains/Russia and low demand for US exports offered resistance. One group estimate the 2021 Russia crop at a new record 85.9 mmt vs USDA 84.0. Still there are no current exports from Russia. Ukraine has sold 70 pct of their export goal. Russia export tax and lower EU exports could help WN to eventually test 6.50. Key remains demand for food in 2021 and vaccine versus increase virus cases and 2021 World wheat supplies.
US 2 week south plains forecast is warm and dry.
CFTC commit of traders report showed Managed funds not as long soybean, soymeal and corn as expected.
On Monday, Managed funds were net sellers of 11,000 contracts of SRW Wheat; bought 17,000 Corn; net sold 9,000 Soybeans; sold 1,000 lots of Soymeal, and; sold 1,000 lots of Soyoil. We estimate Managed Money net long 7,000 contracts of SRW Wheat; long 325,000 Corn; net long 199,000 Soybeans; net long 85,000 lots of Soymeal, and; long 111,000 Soyoil.
Preliminary Open Interest saw SRW Wheat futures down roughly 3,500 contracts; HRW Wheat down 190; Corn up 2,100; Soybeans down 20,000 contracts; Soymeal down 5,500 lots, and; Soyoil down 3,400.
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