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Morning Commentary | Morning Commentary – Page 2 – AgResource Company

CBOT Mixed to Start The Week on US/China Trade Hope and Threatening South American Weather

Jan 7, 6:34 am |

** 6:30 AM CBOT Futures Are; March soybeans up 2.00 cents at $9.235, March corn unchanged at $3.83 and March Chi wheat down 1.75 cents at $5.1525.                                               

** AgResource Morning CBOT Comment/Analysis: Good Morning! The first full week of ‘19 has started out mixed to firm with the soy complex rising while corn/ wheat futures ease on this week’s expectation for the index fund re-balance.

  The volume of overnight trade was below seasonal averages as few traders want to take on the market risk of uncertain/political trade negotiations.

  Just over 7,000 contracts of March corn, just over 11,000 contracts of March soybeans, and just over 5,500 contracts of March Chi wheat have changed hands. 

  US and Chinese trade delegates concluded their 1st day of Beijing discussions with reports of active participation with both sides are working together to implement the consensus of both President Trump and Xi. China’s top trade negotiator, Liu He made an appearance which showed he is charge and willing to work for a settlement. The Chinese media reported progress in today’s talks.

The last time that US trade negotiators meet in Beijing was in June with a stalemate as both sides were unmovable in their positions. It appears that time and sliding stock markets have pushed both sides to engage in deeper trade discussions. The US/China trade meetings will conclude up on Tuesday.

 The big questions that traders are pondering is if the meetings are viewed as favorable, will China step forward with additional US ag good demand?

 It’s not only a week of US/China trade discussions, the US will entertain and engage with high level trade discussions this week with the EU and Japan which are likely to include agriculture. USTR has a busy week ahead.

 Pockets of better than expected rain fell on the weekend across Central Brazil with several totals surpassing 2.00”. However, the coverage of this needed rain was less than 20% and the forecast has returned to the December pattern with a high-pressure Ridge across NC Brazil with a deep low pressure vortex across N Argentina. The pattern will produce flooding rains across the northern third of Argentina while soil moisture continues to drop across NC Brazil during the key soy reproductive period. The forecast is threatening, and ARC looks for further decline in total South American crop production.

 The US Gov’t remains partially closed by a lack of funding over the US/ Mexico border wall. This has delayed the USDA Jan crop report indefinitely.

 However, Brazil’s CONAB will be out with their crop estimates on Friday with most forecasting a Brazilian soy crop of 118-119 MMTs and corn crop of 92-93 MMTs

 USDA will release weekly export inspections this AM with US soy shipments pegged at 24-29 Mil Bu, corn at 34-38 Mil Bu and wheat at 14-18 Mil Bu.

 The Index fund re-balance starts Tuesday with selling of the grains and modest buying of soy. We look for a firm week on threatening South American weather.

** EU Monthly Weather Forecast for January for South America Released on Saturday: Brazilian Drought Deepens and Expands

** No Arctic Cold and Limited Snows for Central US Next 10 Days: 

 

CBOT Adding Weather Premium For South America Amid US/China Trade Hope

Jan 4, 7:10 am |

** 6:30 AM CBOT Futures Are; March soybeans up 3.25 cents at $9.16, March corn up .75 of a cent at $3.805 and March Chi wheat up 4.00 cents at $5.1675.                                                           

** AgResource Morning CBOT Comment/Analysis: Good Morning! CBOT futures are higher overnight as world equity markets try to mount a recovery and South American weather worries grow. The USTR delegation will be heading to China on the weekend for trade meetings with China in Beijing next week. A firm day is expected heading to the weekend as the CBOT adds risk premium to price.

  The long-range EU weekly weather forecast models that came out late Thursday afternoon offered no change in the existing pattern of dryness for NC and NE Brazil while excessive wet weather persists across Argentina for the next 3 weeks. South American corn/soy crop sizes are in decline in this “stagnant” weather pattern.

  The 10-day EU and GFS weather models offer a lingering Ridge of high pressure Ridge across NC Brazil with a low pressure vortex across Argentina.

Rainfall totals will range from just .50” over NE Brazilian crop production areas to 2.50” to S Mato Grosso over the next 10 days. This is equating to a general 7-55% of normal rainfall, which along with 90-degree temps will accelerate the decline in NC and NE Brazilian soy moisture.

  The best Brazilian rains will drop across RGDS and crop areas south of Central Parana. Crops here are well watered and will enjoy seasonal temps.

 A deep Trough of Low Pressure will produce flooding rains across the northern third of Argentina with totals of 6-10.00”. Such rain is falling on saturated fields and will aggravate low lying flooding. Potential flooded crop areas include the northern half of Santa Fe, Entre Rios and Northern Cordoba.

  South American crop sizes are in decline and traders will be closely watching to gauge if there is any change in the weather pattern? The adverse S American forecast will place a bid under the CBOT on any intraday weakness.

  China’s Central Bank lowered their bank lending reserve overnight to allow their banking system to lend an additional $116 Billion. This was the 5th cut in the past year as China tries to bolster support for its economy.

  China’s Commerce Ministry confirmed that it would hold trade talks with the US in Beijing on Jan 7-8th in the first face-to-face trade discussions since June. The Chinese announcement fanned a recovery in Asian equity and energy markets. US traders continue to speculate on China will make additional US energy or ag purchases ahead of the meeting as a goodwill gesture.     

  The US Labor Dept will be releasing its Dec Jobs Report this AM (+177,000 jobs expected) with Fed Chairman Powell speaking later today in Atlanta. Macro financial markets will have lots to news to chew on into the weekend.

  ARC looks for a firm Friday as grain trends shift to a more bullish chart posture.

** Percent of Normal Rainfall for Next 15 Days Across South America: 

** Central US Warmth for the Next 15 Days:

 

CBOT Focus on South American Weather and US/China Trade; Macro Market Worry

Jan 3, 7:11 am |

** 6:30 AM CBOT Futures Are; March soybeans down 1.25 cents at $9.0575, March corn up 1.50 cents at $3.7725 and March Chi wheat up 1.75 cents at $5.0875.

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! CBOT futures are mixed overnight as the struggle between the bearish macro financial markets and bullish South American weather forecasts persist. The volume of overnight trade remains holiday reduced with traders slow to return to trading amid volatile and political markets in the New Year.

  The maker of IPhones – Apple – announced disappointing quarterly earnings and blamed a good portion of their performance on the slumping Chinese economy and the US/China trade skirmish. This caused an immediate slide of 8% in their (AAPL) stock price which pressured the DOW to a 300-350 point loss.

  The concern for a deepening economic China slide initially pressured a host of world commodity markets – including the energy, metal and the grain markets. The concern over global economic health is a real worry.  

The South American weather forecast offers an extended period of dryness for NC Brazil and too much rain for the northern half of Argentina. Both are concerning for South American crop sizes and further crop falls are expected.

  The Brazilian weather forecast is arid for 2/3 of their crop production area with rains of just .25-1.50” which is just 10-50% of normal. The areas impacted are; Goais, MGDS, Southern Mato Grosso, Sao Paulo and MGDS. Daily high temps will be above normal amid the drying soils with highs ranging from the upper 80’s to the upper 90’s. A Ridge of High Pressure across the area will limit rain potential through at least the next 2 weeks.

  A deep Trough of Low Pressure will produce flooding rains across Argentina with fresh totals of 4-10.00”. Such rain is falling on saturated fields will aggravate flooding concern. The heavy rain is forecast to be farther south this AM which will impact Southern Santa Fe and Northern Buenos Aires. The concern for Argentine crops will be rising over the next 2 weeks.

  ARC would also include North African wheat areas to monitor amid their lack of rain from late November thru December. The forecasts are arid into mid-January and wheat here is in need of rain as their reproductive phase nears.

  Active cash rumors that China booked another 1.4-1.8 MMTs of US soybeans will not be confirmed by USDA this AM. However, discussions are underway as to whether China will book other US ag goods including grains, rice or dairy?

  US fob corn/US fob SRW wheat are the cheapest in the world which should be bolstering export demand? Russian wheat fob offers for February is at $245/MT ($6.67/Bu) at a new high. US Gulf HRW wheat is $11/MT or $.30/Bu cheaper.

 There may be some macro selling amid the US stock market fall, but our bet is that any weakness will be short lived amid threatening South American weather.

** Warm with Limited Snows for the Central US For Another 2 Weeks: 

 

Cattle Called Steady in New Year; South American Weather Turns Concerning

Jan 2, 7:16 am |

** AgResource Daily Cattle Analysis: Cattle futures closed lower on Monday and a steady outlook is offered for early trade at the start of the New Year. Dec cattle rallied into expiration and settled at $124.80 versus $123 a year ago. It’s the start of 2019r, but many traders are not expected to return until next week, which could keep trading volumes reduced.  

  Cash markets went untraded on Monday while beef cutouts were firm. The choice cutout valued gained $.94 and select jumped $3.14 on good demand and moderate offerings. The chart plots year-end closing beef quotes, and both markets end 2018 at the best levels in 4 years. The choice/select spread at $4.69 is now more than $12 under the high traded in early November. It’s also the lowest year-end closing quote for the spread on record.   

  Initial support this week in Feb cattle is expected at $123, while rallies back to new contract highs should be used for sales. We see 2nd quarter cattle futures (Apr/Jun) as  overvalued.

** South American Weather Pattern Discussion: The EU and GFS forecasts are in good agreement and much drier for the central half of Brazil than what was offered Monday. Rain forecasts have underperforming for 3 weeks and amid the drier forecast going forward, we are hoisting the yellow flag of concern for dryness in Central Brazil and the excessive rains for the northern 1/3 of Argentina. ARC is concerned with South American weather in the New Year!

  The EU model’s 10-day rainfall forecast is attached. Notice that rain totals have been much reduced for Central Brazil, while the prospect for heavy and flooding rains persists for the northern 1/3 of Argentina. This pattern has been stuck for the past 2 weeks and shows no signs of changing into mid-January. A high-pressure Ridge is farther west and looks to stay anchored across NC Brazil.

Cumulative rain totals of .50-1.00” are expected for S Mato Grosso, Goias, MGDS and Sao Paulo. Near normal rain is expected across RGDS and Santa Caterina, while 4.50-9.00” of rain fall across NC Argentina. This area has already been besieged with too much rain and flooding is likely in the low-lying areas. Temps average below normal in Argentina but above normal in NC Brazil with 90’s.

 

CBOT Starts 2019 Steady/Firm Watching China and South Amerrican Weather; US Wheat is Cheap

Jan 2, 7:12 am |

** 8:30 Pre Opening CBOT Calls Are; Soybeans 1 cent lower to 3 cents higher, corn steady to 1 cent higher with wheat called 1 cent lower to 1 cent higher.   

** AgResource Morning CBOT Comment/Analysis: Good Morning! CBOT futures are called mixed to higher to start the New Year. Concerning South American weather will battle the macro financial markets on the opening.

  The DOW is off over 250 points with crude oil lower on weakening world economic growth prospects. China announced new manufacturing data which suggests that their economic outlook continues to cool. This has allowed the start of 2019 to be similarly weak to prior weeks in terms of financials.  

  Commercial traders are on alert for China demand as the US delegation heads to Beijing. Rumored demand is for 2 MMTs of soybeans (to get to 5 MMTs) and may also include US corn and wheat. Grain tonnages are not known, but everyone is watching cash market with the USDA shuttered by the US Gov’t closure. The odds are high that the USDA January Crop report will be delayed.

  World wheat fob offers are returning in the New Year. Most are steady to firm from where they ended trading prior to Christmas. US Gulf wheat offers have fallen sharply during the holiday on fund selling. Russian February wheat is offered at $242/MT vs the US Gulf $232/MT for HRW. The $10.00 discount of US Gulf HRW wheat to Russian offers is at its weakest level in 4 years.

  US SRW wheat at $222/MT is the cheapest wheat in the world by a wide margin. French wheat at $240/MT is $18/MT more expensive. The cheapness of US wheat relative to the world marketplace is expected to underpin US wheat futures.

  Brazilian weather forecasts have shifted to a much drier profile over the past 48 hours as the mid December pattern returning. The forecast models for Brazilian rain have been underperforming and crop concern for Central Brazilian corn/soybeans is real. Brazilian soybean and corn crop prospects are in decline and one has to be thinking about seeding their winter corn crop in less than ideal soil moisture (should the dry pattern persist into February).

  The other weather extreme is Argentina. The northern third of Argentina is expected to see flooding rains of 4-9.00” over the next 10 days. Soils are already saturated and the new upcoming rain is going to produce low lying flooding. The pattern shows no sign of change with additional heavy rain offered during the 11-15 day period.   

 India lowered their crude palmoil import tax from 40 to 44% with refined palm products cut to 45% from 54%. The import duties are still high and won’t allow a substantial recovery in India’s import pace.

 Ethiopia has announced a tender for 400,000 MTs of wheat for February/March.

 ARC’s concern for South American weather increased over the holiday with too little rain for Brazil and too much for Argentina. This will underpin the CBOT. And traders are watchful for Chinese demand that could develop either right before or during the US/China Beijing summit. 

** Warm Central US into Late January; Snows Limited for the Central US: 

 

US/China Trade Optimism Lifts Soybeans; Brazil Soy Crop Slipping, but Decline Not Dramatic

Dec 31, 7:10 am |

** 6:30 AM CDT CBOT Prices; Mar soybeans are up 6.00 cents at $9.015, Mar corn is up .50 of a cent at $3.76 while Mar Chi wheat is down 3.50 cents at $5.08.  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning and Happy New Year! CBOT futures were mostly higher overnight with soybeans leading the gains, while wheat prices have slipped into the red in morning trade. A Saturday phone call between US President Trump and Chinese President Xi helped push CBOT summer row crop values higher with Trump exclaiming that “big progress” is being made on a variety of trade and IT/IP fronts between the US/China.

  The positive US/China trade progress has produced a bullish tailwind for US equities and commodity values this AM. The US DOW is expected to open 240 points higher with crude oil gaining over $1.00/barrel. With a US trade delegation heading over to China next week, the market has high hopes in terms of the US/China making some sort of deal that will allow for the resumption of normal trade between the two world economic behemoths.

  The optimism for a US/China trade deal is based on President Trump wanting to support higher US stock market values and China wanting to support their sliding economy. China’s National Bureau of Statistics said that the country’s official Purchasing Manager’s Index (PMI), fell to 49.4 for December, lower than the 49.9 that was forecast by analysts. This was China’s first PMI decline in over 2 years! China’s manufacturing sector is slowing. 

  During December, Brazilian soy crop hopes have waned amid drier than desired weather for North Central production areas. At the start of the month, analysts expected that Brazil will harvest 122-125 MMTs of soybeans. As of today, most private crop estimates have fallen to 119-121 MMTs.

  ARC forecasts the 2019 Brazilian soy harvest at 120 MMTs vs a forecast of 121.8 MMTs at the end of November. One has to remember that Brazil planted 3.1 Mil extra acres of soybeans in 2018, and assuming a normal trend yield of 3.35 MT’s/HA (49 BPA) would produce an additional 4.1 MMTs of ‘19 soybeans. Thus, seeing a production total less than 117 MMTs will be difficult. It would take a combination of Argentine/Brazilian weather problems to justify a rally in March soybeans above the early December highs at $9.40-9.50.

  US traders remain hopeful that China’s Govt will secure an additional 2.0 MMTs of US soybeans for their reserves and potentially other US grains including corn/wheat/rice. There is no evidence in the cash market that China is bidding for US crops this AM. However, as US/China negotiations push ahead, the pressure for additional US ag purchases by China will be felt. 

  Ag traders will say hello to 2019 and goodbye to an unsettling and difficult 2018 amid trade politics. ARC maintains a view of wanting to sell strong rallies in the complex while buying grains on sharp dips. Happy New Year!

** US Eastern US Temps Average Above Normal while Snows Are Below Normal:

  

CBOT Bounces on Rising Macro Financial Markets; Other Fresh News Lacking

Dec 28, 7:14 am |

** 6:30 AM CDT CBOT Prices; March soybeans are up 4.50 cents at $8.87, March corn is up 1.50 cents at $3.76, and March Chi wheat is up 2.50 cents at $5.13  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! There are only 2 trading sessions left in 2018. CBOT grain markets are focused on the extreme volatility of the macro financial markets – and most importantly the US stock market. Thursday’s late day DOW rally (with futures being another 180 points higher this AM) is producing a low volume bounce in CBOT grain markets.

 And the US dollar is weaker which is offering a bullish tailwind to commodities. ARC expects additional financial market volatility before the New Year. The CBOT will close at its normal time on New Year’s Eve on Monday. 

  In a political token to the US, China will allow its 1st ever imports of US rice with CIQ, China’s phytosanitary agency suggesting that US rice no longer faces being rejected at port. There is no indication whether or how much US rice that China might secure through a Gov’t trading arm?

  There is no evidence that China is securing US grain or soybeans this AM. However, traders hope that China will still book another 2 MMTs of US soybeans if the US/China negotiations are able to score progress.

  India indicated overnight that it is preparing to lower its import tax on palmoil which is due to trade agreements that are being struck in SE Asia. India is the world’s largest vegoil importer and raised its import tariff last spring to boost domestic farm profitability. However, it’s the final tax level that India lowers its vegoil import tax to that traders will pay attention to. The world remains awash in vegoil supplies which is likely to cap rallies.  

  Argentina will endure above normal rainfall for the next 2 weeks as a series of storms pulls across the same general area. Another 3 systems are expected which will cause low level flooding and washout of newly planted soy along with producing quality concern for the 30% of the unharvested HRW wheat crop.

  The Brazilian weather forecast calls for normal rainfall across their northern and central soybean crop areas with below normal rains for RGDS. The rains will help restore soil moisture with temps averaging out to be slightly above normal. The soy harvest in Mato Grosso will be gaining speed next week with supplies starting to work into the northern export arc by mid-January.

  CBOT January soybeans will come into deliverable position on Monday. Open interest fell 20,000 contracts in January soybean futures on Thursday. 28,012 contracts still open this AM.

  ARC estimates the 2019 Brazilian soybean crop in a range of 120-121 MMTs and we would remind clients that farmers here planted an additional 3.1 Mil acres of soybeans (3.6%) that will make it difficult for a big decline in the crop.

Our market bet for is for more of the same – two sided without direction! Don’t chase rallies and don’t sell breaks. 

** 10 Day Percent of Normal Rainfall for Brazil:

** 15 Day North American Temperature Anomaly: 

** Snows Absent for Central US into January 10th: 

 

 

CBOT Firm on Recovery; Pending Trump Actions Against China Worrisome for Trade Deal

Dec 27, 7:12 am |

** 6:30 AM CDT CBOT Prices; March soybeans are up 4.50 cents at $8.875, March corn is up 2.00 cents at $3.7525, and March Chi wheat is up 1.00 cent at $5.11  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! The overnight CBOT markets have been firm on short covering related to the DOW surging over 1,000 points to its biggest one-day gain in history. The heady rally sparked short covering in a host of commodity markets – including the grains. The question for today is whether the CBOT rally can be sustained?

  A newswire is running a story that Mato Grosso Brazil could witness reduced soybean yield due erratic rainfall. Yet, ARC Brazil Mato Grosso producer sources are optimistic of record yields with early harvest data pointing to a record large crop. Its expected that CONAB will raise Mato Grosso soybean yield and production in their January crop report while trimming others.  

  If there is a Brazil yield drag due to December dryness its Parana and MGDS.  Rainfall here has averaged just over 60% of normal which could trim soy yield potential. However, amid the recent rainfall and the better rain in the forecast, yield losses are not expected to be substantial. Nonetheless, the regional dryness could limit the ’19 Brazilian soy crop to 122-124 MMTs.

  The overnight weather models indicate favorable weather pattern for most of Brazil with near to only slightly below normal rainfall in the next 2 weeks. The best rain chances are across the north in Mato Grosso with reduce totals over the far southern state of RGDS. Temps will be warm into the weekend before cooling with the 14-day period to average out slightly above normal.

  Argentina will endure above normal rainfall for the next 2 weeks. T-storms produced rain totals of .5-2.00” overnight. Another 3 systems are expected which will cause low level flooding and washout of newly planted soy along with producing quality concern for the 30% of the unharvested HRW wheat crop.

 The US Dow is expected to open 250-300 points lower on news that US President Trump is likely to sign an executive order in early 2019 that would declare a US National Emergency and bar US companies from using telecommunication equipment from China’s Huawei and ZTE corporations. The new US political rhetoric against China’s biggest hardware sellers is concerning for a US/ China trade deal. And time is running short before higher tariffs are enacted.

   The Russian Gov’t has decided to ONLY pay transportation costs from Siberia into other more western Russian locations for domestic grain use. No transit will be paid for wheat/barley export. The SE Russian wheat export corridor is already short of wheat, and the news likely further slows Russian exports going forward. And export phytosanitary certs are also being delayed by weeks.

 Buyers will be waiting for the New Year amid the new US/China trade concern. With a record large Brazilian soybean harvest looming, ARC doubts that March soybeans can sustain a rally. 

** US Warm East and Cold West into mid January: 

** Snows Stay Out of the Midwest Next 10 Days: 

Resend of Correct AM File – CBOT Market Calls Steady to Firm

Dec 26, 7:53 am |

** Pre-Opening CBOT Calls Are: Soybeans 1-3 cents higher, corn steady to 1 cent higher with wheat called steady to 2 cents higher.  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! Pre-opening CBOT grain calls are steady to slightly higher. World crude oil prices are recovering, and the South American weather forecast is drier in NC Brazil and wetter across Argentina than what was forecast Monday. The pattern is not dry enough to cause any big drop in Brazilian soy production, but it could limit the upside above 122 MMTs.

  Asian stock markets fell to sharp losses on Tuesday following the US’s decline with the Dow expected to open higher in a post-holiday recovery. The futures market is forecasting that the DOW will open 80-100 points higher. The problem is that such an opening will not produce the market capitulation that traders desire to call for stock market bottom.

  President Trump indicated that; “The US Gov’t will not open until we have a wall!” US President Trump and the new democratic House of Representatives are likely to have an extended fight over a US/Mexico border wall into the New Year. There is no indication that the US Gov’t will reopen for business with traders discussing the odds of a much-delayed US January Crop Report.  

  The EU lowered its wheat production estimate to 128.5 MMTs (down 700,000 MTs) and raised its corn production estimate from to 67.5 MMTs (up 4.6 MMTs) for 2018. No reason was given as why the EU usable corn production estimate rose so sharply this late in the crop year? The EU left its wheat export estimate unchanged at 20.0 MMTs and corn import estimate at 18.5 MMTs. The EU rapeseed production estimate was left unchanged at 19.8 MMTs.

  Nice rains fell across NC Brazil in the past 36 hours which helped restore soil moisture with the soybean crop in their reproductive state. However, the forecast is drier in the 6-10 and 11-15 day period for NC Brazil with more heavy rain for Argentina. The same South American weather pattern of the first 3 weeks of December appears to be returning? The regional dryness across Paraguay, MGDS and Parana will limit soy and corn crop size potential. At the same time, flooding rains in Argentina will return crop quality concern for 30% of the unharvested wheat and the washout of the newly planted soy crop.

  In other world grain markets, China’s Dalian soybean/soy product market closed lower amid the domestic oversupply, while Malaysian palmoil futures bounced on enlarged biofuel demand. Paris wheat futures remain closed. 

  Fresh news is scant post-Christmas, but the 100 day moving average in March soybeans is holding at $8.9175. We look for a two-sided holiday reduced volume session with soybeans gaining on the grains. New China soy demand is awaited.

CBOT Called Steady/Firm on Reduced Rain for WC Brazil/Paraguay; Post Holiday News Lacking (Correct File Attached)

Dec 26, 7:30 am |

** Pre-Opening CBOT Calls Are: Soybeans 1-3 cents higher, corn steady to 1 cent higher with wheat called steady to 2 cents higher.  

 ** AgResource Morning CBOT Comment/Analysis: Good Morning! Pre-opening CBOT grain calls are steady to slightly higher. World crude oil prices are recovering, and the South American weather forecast is drier in NC Brazil and wetter across Argentina than what was forecast Monday. The pattern is not dry enough to cause any big drop in Brazilian soy production, but it could limit the upside above 122 MMTs.

  Asian stock markets fell to sharp losses on Tuesday following the US’s decline with the Dow expected to open higher in a post-holiday recovery. The futures market is forecasting that the DOW will open 80-100 points higher. The problem is that such an opening will not produce the market capitulation that traders desire to call for stock market bottom.

  President Trump indicated that; “The US Gov’t will not open until we have a wall!” US President Trump and the new democratic House of Representatives are likely to have an extended fight over a US/Mexico border wall into the New Year. There is no indication that the US Gov’t will reopen for business with traders discussing the odds of a much-delayed US January Crop Report.  

  The EU lowered its wheat production estimate to 128.5 MMTs (down 700,000 MTs) and raised its corn production estimate from to 67.5 MMTs (up 4.6 MMTs) for 2018. No reason was given as why the EU usable corn production estimate rose so sharply this late in the crop year? The EU left its wheat export estimate unchanged at 20.0 MMTs and corn import estimate at 18.5 MMTs. The EU rapeseed production estimate was left unchanged at 19.8 MMTs.

  Nice rains fell across NC Brazil in the past 36 hours which helped restore soil moisture with the soybean crop in their reproductive state. However, the forecast is drier in the 6-10 and 11-15 day period for NC Brazil with more heavy rain for Argentina. The same South American weather pattern of the first 3 weeks of December appears to be returning? The regional dryness across Paraguay, MGDS and Parana will limit soy and corn crop size potential. At the same time, flooding rains in Argentina will return crop quality concern for 30% of the unharvested wheat and the washout of the newly planted soy crop.

  In other world grain markets, China’s Dalian soybean/soy product market closed lower amid the domestic oversupply, while Malaysian palmoil futures bounced on enlarged biofuel demand. Paris wheat futures remain closed. 

  Fresh news is scant post-Christmas, but the 100 day moving average in March soybeans is holding at $8.9175. We look for a two-sided holiday reduced volume session with soybeans gaining on the grains. New China soy demand is awaited.