Bearish Signals from Outside Markets Indicate Lower Grains Open
A lower start is indicated this am, 3-5 wheat, 5-10 corn and 15 beans, in line with overnight losses. The $ is higher, crude oil and the equity markets lower this am, all bearish signals that the grain market will not ignore. As has been the case so often lately, traders will keep watching these outside markets, especially the financial ones, for direction in the grains throughout the day.
Corn harvesting was reported just 29% done last night in the weekly crop progress report vs 53% average. Beans were 67% done vs 74% average. These numbers were in line with trade ideas. Winter wheat planting is 79% done against 81% average.
Three analytical firms have cut their estimate of the Australian wheat crop since late last week, the latest being Australian Crop Forecasters, which is now predicting a 20 million tonne crop vs 21 million previously. All these firms have reduced their guess due to ongoing dry weather problems in parts of the wheat belt, especially the southeast. The current USDA guess is 22 million tonnes while ABARE, the Australian equivalent of the USDA, is 22.5 million tonnes, a figure that is likely to be reduced in their next report.
Starting Friday, Jan beans will replace Nov as the top month in the bean pit.
Argentine wheat areas enjoyed up to 1.25" of scattered rain the last 24 hours. Up to 1 1/2" is expected to be scattered over the belt today with dry weather Wed-Thur. Rain is likely again Fri-Sat in the northern part of the belt. All this rain will be welcome. Australia will see welcome rain in the west the next few days but South Australia will remain dry with very hot temps later in the week, further stressing the crop before cooler weather returns early next week. Mato Grasso, Brazil's largest bean state,will see scattered rain the next few days but hot and dry weather is forecast over the weekend. Bean planting is going at a slow pace so far this season in Mato Grasso. Oil World magazine is warning that the high price of fertilizer coupled with tight credit conditions for farmers will trim Brazilian bean production this season by 1-3 million tonnes.
The US southwest benefited from scattered rain overnight and up to 2.5" more is forecast the next 3 days, favoring central and eastern areas, before dry weather returns for the weekend. The western corn belt was dry the last 24 hours but scattered rain fell in northern parts of the eastern belt. Up to 2.5" of rain is forecast in the west today-Thursday, with dry weather over the weekend. The east will see up to 1" of rain Thur-Sun. All this rain, especially in the west, will further delay harvesting, keeping corn seriously behind normal. ---Vic Lespinasse
