South American Weather Concern Ratcheting Up on Strengthening La Nina

Dec 4, 7:09 am | Morning Commentary | Share this:

** AgResource Daily Farm Marketing Advice for Monday: 1/ Corn Producers: Sell 10% of the estimated ‘18 corn harvest at $4.01 basis Dec ‘18 futures. 2/ Corn Producers: Sell 10% of estimated ‘19 corn production at $4.17 basis Dec ‘19 futures. 3/ Corn Producers: Sell 15% if the 2017 corn crop if March ‘18 corn futures reach $3.72.   

 ** 6:30 AM CST CBOT Prices: January soybeans are up 8.50 cents at $10.0275, March corn is up .50 of a cent at $3.5925, and March Chi wheat is up 2.50 cents $4.41.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! A strong start of the week has occurred with CBOT corn, soybeans and wheat all higher on concerning South American weather. The volume of trade has been active with more than 28,000 contracts of December corn, more than 42,000 contracts of January soybeans, and more than 9,000 contracts of March Chi wheat changing hands. Technically, January soybeans gapped to the upside while March corn tested its 50 day moving average at $3.605. The last time that March corn was able to push above the 50 day moving average was in late July!

  Friday’s CBOT open interest declined 2,658 contracts in corn, 5,199 contracts in soybeans, and 617 contracts in Chi wheat.

  The US dollar is higher following the Senate’s ratification of its version of a US tax overhaul on Saturday. However, the ag currencies – the Brazilian real and the Russian ruble – are little changed. 

President Trump is said to agree to meet with US petroleum interests in the next few weeks to discuss the US RFS program, and the cost to its industry. ARC doubts that any program changes can be achieved without the full support of US Congress which is extremely with unlikely farm state legislators strongly opposed. The US RFS program will likely continue as is.

 La Nina appears to be in full control of the South American weather pattern with dryness to become a growing issue across Argentina and S Brazil in the next 2-3 weeks. There will be chances for rainfall, but totals will fall far short of normal amid budding heat. The Argentine corn crop will be pollinating in the last half of December and is the crop of immediate risk. But, soybeans are also said to be having a hard time germinating amid the lack of soil moisture. The 10 day forecast offers just a few spits of moisture for Argentina and the southern 1/3 of Brazil with heat to start on the weekend and continue next week with high temps ranging from the 90’s and even a few lower 100’s. The S America weather pattern looks stuck into 2018.

  The northern 2/3’s of Brazil will receive regular rainfall with seasonal temperatures for at least the next 2 weeks. Some areas may like a little more sunshine, but there will be no shortage of rain across Northern Brazil.    

  Malaysian palmoil futures fell to losses of 16 ringgits with a close at 2,550 RM/MT. Paris wheat futures are up $.75 euros/MT at $162.75 March, while China soymeal rallied to sharp gains amid strong domestic cash trade. Corn followed. Argentina is the world’s largest exporter of soymeal and soyoil.

  It’s December 10th or after when adverse Argentine and S Brazilian weather starts to have a drag on yield. Unfortunately, La Nina is strengthening and looks to maintain Argentine/S Brazilian dryness through much of December.