top of page
If You Haven't, Try Our Daily Grain Market Reports FREE for 30 Days!

Outlook & Rain Days 02/06/2022

Bloomberg News published on their website at 4 PM yesterday:

Russia Invades Ukraine

It was a mistake and removed with apologies. Holy Cow… what a mistake!


 

The USDA will release its monthly World Crop Production, World Supply and Demand (S&D) and the US S&D at 11 AM Central Time Wednesday the 9th. We sent the estimates yesterday morning.

The markets will become less volatile as we get closer to the release of the reports on Wednesday. It is highly likely that whatever the markets do Monday, they will do the opposite Tuesday and barely move Tuesday evening through Wednesday’s release time.

The biggest question the grain market wants answered is what will the USDA see the Brazil, Argentina and Paraguay corn and bean crops? The market fully expects USDA numbers well above what everyone expects to be the final numbers.

There are many analysts who think the recent spotty showers in the dry areas of South America have halted the decline in production, but will not increase production. I agree that is possible, but I think there will be more loss of production from where ever the production is now, which is the biggest unknown.

What is known is:

1) Wednesday afternoon, the market will quickly turn its attention to the March options expiring on the 18th of February, the last Friday of February with at least two business day the following week.

2) The USDA Agricultural Outlook Forum 2022 is the last Thursday and Friday of February in the DC area. It will include everything about agriculture for 2022, including acres planted, harvested, yields, demand and new crop carryovers. You can see the agenda, speakers, and make reservations to attend at:

https://www.usda.gov/oce/ag-outlook-forum


3) After the Outlook Forum, all eyes will turn to the potential US acres, yields and weather.

Corn and beans are already deep into a bidding war for acres and with cotton crowding in with more than double its normal price. Cotton is stealing acres from corn, beans and poor winter wheat fields.

This week is the usual end of the market’s pricing-in action of the Brazilian soybean crop. That usually means a three to four week down trend comes to an end. Will it be the soybean uptrend that comes to an end this week?

Technically, there is no doubt soybeans are way over bought while at the same time technically very strong uptrend. March beans most recent contract high was made Wednesday. The highs Thursday and Friday came within 4 cents of that Wednesday high.

This week last year, the big spec funds were long about 100,000 more contracts of corn than they are this year while this year, they are long almost the same number of contracts of soybeans as last year.

Last year this week, March corn was $5.48 ($6.20 this year), December corn was $4.52 ($5.74 now) and March beans were $13.67 ($15.53 this), November beans $11.61 ($13.96 this).

The spec fund open interest difference between corn and beans for the two years indicate corn has more upside potential in the short run than beans. A reasonable person has to expect a 20 to 50 cents correction in soybeans. The fear of the USDA report on Wednesday just may trigger the correction to start Monday or Tuesday followed by more technical selling. However, the dry areas of SA still look to be dry for at least another two weeks. Will the market think the crops will get smaller? Certainly corn can because it needs more water than beans.

Longer term, corn and beans will be higher into May and June. Do not forget that.


 

Rondonópolis, Mato Grosso, in the heart of Brazil's most productive soybean area, received no rain yesterday; 0.6 inch a year ago and 0.3 inch two years ago (one inch = 24.5 mm).

Yesterday's high temperature was 89°F. Day time highs the next ten days will range from 83 to 91°F (100°F = 38°C). Yesterday, in the dry areas of South America: Santa Maria high temperature 79°F with 0.3 inch of rain. Cordoba high temperature 83°F with no rain. Salto high temperature 77°F with no rain. Total rainfall and temperatures expected in the next ten days: Santa Maria 0.14 inch 83 to 94°F Cordoba 0.17 inch 77 to 93°F Salto 0.07 inch 75 to 93°F

The Western Corn Belt has no rain days same as yesterday and the Eastern Corn Belt has two less rain days than yesterday.

Explanation of Rain Days


bottom of page