Morning Comments December 31, 2021

Happy New Year Facebook 2 vf

Corn, soybeans and wheat were all down hard yesterday, with soybeans down as much as 30. 

Forecasts are coming more into agreement that rainfall and continued moisture will likely start to work its way south into Parana, with much needed showers expected to fall down into parts of Rio Grande do Sul. In addition to wetter forecasts for some of the drier parts of the region, we are getting massive early yield reports out of areas of Mato Grosso where harvest has just begun. 

As we've discussed several times these last couple of weeks, the concern over production losses in Brazil--though valid for some areas due to the weather they have been experiencing--was a bit overstated in the futures market. Yes, it is likely we will see big cuts to production, especially in areas of Santa Catarina and Rio Grande do Sul, but the return to moisture in Parana and continued excellent conditions in points north will produce a record crop for the country. 

Concern may continue to be warranted for Argentina though, as at this point it doesn't appear we will see a break from the current pattern of below normal precipitation and above normal temperatures for at least the next couple of weeks. 

Spotty but extremely timely rains have been falling throughout the country, keeping some areas lush. We are starting to see signs of potential concern as crop conditions yesterday indicated a big drop for both corn and soybeans rated good to excellent. To be fair, conditions remain well above the recent average for this time of year, but are starting to take some steps backwards as heat and dryness start to take hold.

In addition to South American weather turning wetter yesterday, lackluster export sales totals did little to help soybeans. Total sales for the week were 524,000 tons, down significantly from last week's total and a marketing year low. China took the lion's share of the bushels sold, but the majority of that was due to a switch from unknown. Current exports are lagging USDA projections significantly, continuing to point to a potential big cut in export expectations in upcoming supply and demand estimates.

Corn sales were above expectations, with Japan and Canada our biggest buyers. Wheat sales continue to struggle, coming in below expectations.

President Biden and Russian President Putin had another phone call yesterday to discuss Russian/US and Russian/Ukrainian relations. Putin continues to contend that the nearly 100,000 troops amassed along the Ukrainian border are there for 'exercises,' while the White House continues to threaten severe economic sanctions will come if any Russian aggression is seen. 

Diplomatic talks in person between high ranking officials for each administration are planned for around the 10th of January, so little in the way of major developments is expected before then--so long as both sides mind the manners and do nothing stupid.

Looking ahead, today is an odd day where the markets are open but most businesses are closed in observance of New Years Day. Trade will likely be extremely thin and potentially very volatile.

Corn 1 to 2 lower

Beans 1 to 2 higher