Grains are lower in overnight trading:
Corn – 11 cents/bu (Mar @ 5.15)
Soybeans – 30 ½ cents/bu (Mar @ 13.55 ¼ )
Chi Wheat – 13 ½ cents/bu (Mar @ 6.58 ¾ )
Cdn $ +0.00200 (78.76 cents)
WTI Crude Oil +0.61/barrel (53.39)
2021 Wanstead Farmers Co-operative Annual Meeting – We want to remind you about our upcoming virtual AGM on Thursday, January 21st at 10am. Your annual statement, as well as our website has instructions for members to register. At the top of our website is a Register button that members can simply press to send an e-mail to us, or you can use the address: agm-registration@wansteadfarmerscoop.com. We require your name, customer ID, e-mail address and address upon registrations so that you can receive a personalized login.
Ongoing rains in Brazil and Argentina, with forecasts for more of the same for Brazil are continuing to put pressure on grain futures this morning. Heavy rains this past weekend have shrunk the huge moisture deficits that Argentina and parts of Brazil have suffered through since early September. This morning’s weather maps are actually drier for Argentina for the next 10 days, but the market’s focus continues to be on the fact that Brazil should continue to get rains. The production area of Argentina that has received less than 50% of normal rainfall shrunk to just 8% after the weekend rains, while the production area of Brazil that has received less than 50% of normal rains is now just under 20%. More rains will be needed, but there is growing confidence that Brazil’s bean crop has stabilized, and further production cuts are unlikely. To that end, despite the drop in CBOT soybean futures over the past couple of trading sessions, Brazil continues to hold a $10/tonne price advantage on soybeans destined for China in February and beyond shipping windows.
Reports from futures brokers in the USA suggest that American farmers are stepping up and aggressively selling old crop grain inventories overnight and this morning, as they look to capture what are still very strong prices, relative to what they could sell for at harvest in 2020. The rally in grain prices since harvest has been unprecedented in some respects, so a market correction like we are seeing should not come as a surprise. Markets simply cannot go up unabated every day.
The big question yet to be answered in the coming weeks is how much further rationing of demand needs to happen in the USA to ensure that America does not run out of grain prior to the 2021 harvest. We are getting into areas of good market support (corn at 5.10/bu and soybeans at 13.50/bu), so we would expect to see further commercial buying come to the market at prices that seem like a bargain when compared to last week’s heady levels. The USDA January Supply and Demand Reports pegged the 2020/21 USA soybean stocks to use ratio at a record low 3%, so any significant drop in prices that encourage further demand can be ill afforded.