Corn is trading slightly higher today in thin holiday trade that saw prices on either side of unchanged. The re-opening of the two rail lines into Mexico have been supportive.
Scattered showers are falling in central Brazil this morning, and heavier rains are forecast towards the end of the week with already drenched southern Brazil included.
With the railways into Mexico now opened, shipments that have been backed up will begin flowing into the country, but could create a temporary bottleneck.
Mexico has purchased the bulk of US corn this year, and sales and inspections for this crop year are up 36 and 27% each as a result.
Soybeans opened lower to start the week, with pressure from both soybean meal and oil, as well as rainfall in Brazil with an improved forecast.
With both soy products slipping in price recently, crush margins have fallen slightly. Margins are still firm and attractive to processors as they are above $2.50 per bushel.
While central Brazil looks to recover from drought early in the season, Argentina has benefitted from favorable conditions and now has 69% of their soy crop planted with 37% rated good to excellent and just 3% poor to very poor.
The USDA’s most recent estimate for Brazilian production was 161 mmt, but many private analysts have their estimates lower between 155 and 158 mmt. Estimates for Argentinian production are at 48 mmt per the USDA’s last report.
All three wheat classes are trading higher to start the week, with March Chicago wheat appearing to break to the upside of its pennant formation with a possible target at the 200-day moving average at $6.60.
Support to the wheat complex is likely coming from the recent decline in the US dollar, which could have renewed buying interest from China and other countries.
The re-opening of the two railways into Mexico should be friendly for wheat, as well as corn as Mexico has been a steady buyer of all three classes of US wheat.
Friday’s CFTC report showed non-commercials buying back 4,497 contracts of wheat which reduced their net short position to 65,032 contracts.
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