Corn futures are consolidating after the recent rally to a lower trade at midday. Funds still hold a hefty net short position, but they might be waiting for more friendly news before covering additional positions.
The forecast over the next week or so in the US has rains favoring the eastern Corn Belt. The extended outlook remains somewhat wet, which may further delay planting progress domestically.
While the trade is expecting the USDA to reduce their estimate of Brazil’s corn crop on Friday, there is still quite a big discrepancy between their last estimate at 124 mmt, which is still well above CONAB at 111 mmt.
Soybeans and soybean meal are trading lower this morning, despite continued concerns about the crop in Rio Grande do Sul and the impacts of flooding there. Logistics issues are also a concern, including getting the soybeans to the Rio Grande export terminal.
The USDA has been slow to lower their South American soybean production estimates. But with the weather issues in southern Brazil, they may finally make reductions on Friday’s report; the trade is looking for a 2.5 mmt drop in production.
Although soybean planting in the US was ahead of the average pace as of Monday’s data, the recent storms across the nation’s midsection are likely to cause delays. This may result in planting pace falling behind on next Monday’s Crop Progress report.
There are chances for more rain in the US HRW wheat areas, which are still needed in many areas to alleviate dryness, especially in the southwestern Plains.
Record cold temperatures are forecasted for parts of Russia and Ukraine later this week. However, damage to the wheat crop is not expected to be a major issue, as the market appears unconcerned at this point.
Areas of France are still seeing too much rain and wet weather, which may lead to further cuts to their wheat crop ratings. Currently, the crop condition is rated about 30% below where it was a year ago.
The heavy rains in southern Brazil are not only affecting soybeans – winter wheat planting is also being delayed.
Grain Market Insider is provided by Stewart-Peterson Inc., a publishing company.
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