** The morning has been mixed at the CBOT in diminished volume. Corn, soybeans and wheat prices tested their lower end of their recent range yesterday and bounced. But, today’s recovery lacks conviction. Traders are focusing on the prospect of a US/China trade deal and waiting to hear if US President Trump will accept a budget proposal from the Congress that prevents a second Gov’t closure this Friday?
There is optimism that the US/China can reach a trade deal, but fresh news is absent and won’t be available until the high-level ministerial meetings begin on Thursday. President Trump and President XI both need a political win, and our bet is that new and more substantial progress that will be scored that allows for some sort of Presidential Trade Summit in March. The potential for US/China trade progress should place a bid under CBOT values.
** CBOT brokers estimate that funds have sold 1,600 contracts of wheat, while buying 2,500 contracts of corn and 2,300 contracts of soybeans. In soy products, funds have bought 1,200 contracts of meal while being flat in soyoil
** FAS reported that the US sold 122,376 MTs of US corn to an unknown destination in its daily sales report.
** The EPA made additional comments this AM that it is working at a very expeditious pace on drafting E15 rules to expand the use of E15 to year-round.The ethanol marketplace is excited by the new domestic demand increase.
** Following the CONAB report, Brazil’s ag policy secretary estimated that Brazil’s soybean crop would continue to decline based on adverse late January and early February weather. Most in the trade now see the 2019 Brazilian soybean crop at 113-115 MMTs. No further declines in the crop are expected as the weather pattern has improved and stabilized the crop.
** Jordan passed on wheat tender for 120,000 MTs. A retender is expected amid the slide in world wheat prices of recent days. Russian fob March wheat finished at $248-249/MT, which is down from last week’s $253/MT.
** European River levels are at their lowest levels in years amid the disappointing moisture that has fallen so far this winter. The forecast calls for largely dry weather with warming temps over the next 10-14 days.
** South American Weather Discussion: The midday GFS forecast has reduced rainfall for Argentina in its 10-day forecast with limited totals outside of a narrow swath of Buenos Aries. No extreme heat is noted, but soil moisture levels are in fast decline which will mandate that better rains in March.
The Brazilian weather forecast offers near to above normal rain which should help replenish soil moisture. The Brazilian rains are adequate for winter corn and late planted soybeans. The Brazilian forecast is like the overnight forecast which raises our confidence in its correctness.
** AgResource Report Analysis: It’s a waiting game for the results of US/China trade negotiations in Beijing. If the US can reach a deal on reducing China’s trade deficit with the US, it will include sizeable purchase pledges of US ag and energy goods. One does not want to be short of the CBOT when those pledges are announced and agreed to. Seasonal lows tend to occur in late January or by mid-February. The cash markets are firm and new crop Northern Hemisphere weather will become more closely monitored in several weeks.
