The grain complex is trading higher at midday, potentially seeing a technical bounce off of yesterday’s lows, leading to some short covering by the funds.
Argentina will be hot and dry for much of this week. This may stress crops especially in the southern area of the country. However, rain is expected next week which should help to keep crop conditions favorable.
Brazil’s weather forecast looks mostly favorable. Heavy showers will fall across most of the northern growing region this week before shifting to the south. This may cause some soybean harvest delays, but the moisture should be beneficial in any case.
There have been rumors that US importers may have purchased three cargoes of Brazilian soybeans. Brazil premiums have been dropping and are said to be $60-$70 per ton below that of the US, adding incentive for imports.
Soybean oil has been trending lower and may be limiting the upside in soybean futures. Renewable diesel data will be released tomorrow, but lower biodiesel RINS might indicate that there is currently more supply than demand.
Chinese soybean oil futures were down 3.8% (a seven-month low), and Malaysian palm oil was down 2.7% on Tuesday as well. This is also adding pressure to the world vegetable oils markets.
Select US states reported winter wheat conditions yesterday afternoon. Kansas, the largest wheat producing state, rated the crop at 54% good to excellent. This compares to just 21% GTE at this time last year.
According to IKAR, Russian wheat FOB values declined by another three dollars, to only $235 per mt. Russian exports continue to outpace other origins, which should keep pressure on the US wheat market.
Recent private estimates suggest a higher Australian wheat crop compared to the USDA estimate due to more rains and improved yields. This could lead to a revision higher on the next WASDE report on February 8.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
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