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January 6th - Closing Market Commentary

01/06/2022
January 6th - Closing Market Commentary

Grains closed mostly lower on Thursday:

Mar Corn + 1 ½ cents/bu (6.03 ¾ )

Mar Soybeans – 7 ½ cents/bu (13.87 ¼ )

Mar Chi Wheat – 14 ¾ cents/bu (7.46)

Cdn $ +0.00115 (78.51 cents)

WTI Crude Oil +1.83/barrel (79.68)

Grain prices were EXTREMELY volatile on Thursday, as a stagnant export market for USA grains weighed on prices, yet ongoing dryness concerns in South America were seen as supportive for global values.  Corn closed almost 8 cents/bu off of it’s lows for the day, while soybeans closed17 cents/bu off of their lows, and wheat closed 10 cents higher than it’s lows for the day.   There is little doubt that the current weather forecast for southern Brazil and Argentina is friendly for grains, but some analysts argue the fact that we are already at historically high prices will limit the size of nearby rallies.  The other items lurking over the market are the January USDA Supply and Demand Reports and the USDA Quarterly Stocks Report which are scheduled to be released at noon ET, next Wednesday.

This morning’s USDA Weekly Export Sales Report saw corn, soybean, and wheat sales all fall below the lowest guess from the trade.  Corn and wheat sales were actually only half as big as the lowest trade estimate.  The weekly wheat and soybean sales were marketing year lows.  Of the modest soybean sales, China accounted for 354,000 tonnes, while Canada and Mexico were again the top buyers of corn.  Actual sales data is listed below, in thousands of tonnes:


This morning, the USDA did confirm the sale of 102,000 tonnes of soybeans to Mexico for the 2021/22 marketing year.

Argentina will experience temperatures in the 100s over the next 5 days with no material rains in the next 10 days.  Southern Brazil will not be quite as warm, but noon weather maps also reduced overall Brazilian rainfall over the next 10 days, with the south missing out on meaningful precipitation.  The 11 to 15 day forecast for South America still has significant moisture in it, but these extended weather models have proven to be very unreliable over the past 6 weeks.

Today, HIS Markit (formerly Informa) released their January estimates for Brazilian and Argentine production, pegging the Brazilian total corn crop at 117.8 million tonnes and the Argentine corn crop at 50 million tonnes.  In December, the USDA had Brazilian corn at 118.0 million tonnes and Argentine corn at 54.5 million tonnes.  HIS Markit lowered their Brazilian soybean crop by 11.3 million tonnes to 133.4 million tonnes, and lowered it’s Argentine bean production estimate by 4.5 million tonnes to 45 million.

Wheat futures fell to 2 month lows today on the lack of export demand.  With USA wheat values now on par with Russian wheat offers (before freight considerations), the market will be looking closely for any evidence of buying interest to re-emerge.

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