Closing Markets: Corn: +6.50 old & +3.50 new.
Beans: +3.75 old & +4.75 new. Wheat: +14.
Good evening!
Market Recap-
Happy Friday. Higher closes were had in the ag space to wrap up the week this week, as logistics concerns tied to cold weather across the heart of the US led to an injection of premium across the grain space going into the weekend. Fundamentally, we don't have a lot of justification for this week's rally, but understand why funds see reason to not want to be as short as they were previously with the potential weather issues that currently exist in Argentina. Keep in mind, current production estimates by the USDA that are north of 60 MMTs means a loss can occur and production will still likely be up from last year. There is still no shortage of grain around the world.
Corn Summary-
Corn futures saw strong closes to the upside on Friday, with spot March futures scoring new highs for the week and seeing their best day since the report day debacle seen to start last week. Aside from regular weekend profit taking and the short covering tied to Argentina that we mentioned above, we would note that the coming logistic struggle also likely led to the end-of-week buying, though the storm has been well advertised and we would assume most that are going to have problems have been making some sort of preparations in recent days. Nonetheless though, the slowdown in grain movement throughout the country due to snow/ice/cold will be problematic for overall export demand, which has remained the one positive in terms of market fundamentals.
Soybean Summary-
Soybean futures saw a quiet end to the week, with prices across the complex higher in varying degrees but off their highs made earlier in the session. Bean oil stole most of the attention throughout the day, as ongoing short covering tied to pending RVO announcements led prices to new highs for the move early this morning, but then dried up into the noon hour. We have no idea what the Administration is going to announce, but are curious as to what this afternoon's CFTC report is going to show in terms of short covering over the past week. Our assumption would be that once the funds get closer to neutral, rallies surrounding the RVO situation will become lesser events in terms of market movement, as traders will need to see actual policy finalized before pushing futures much above the highs made last summer.
Wheat Summary-
Weather related buying was the theme in the wheat market to end the week on Friday, as funds likely continued to cover shorts based on cold spells for both the US and the Black Sea. Winterkill will be difficult to assess in the short term, but the prospect of such an event has prices back to the upper end of the trading range that has generally been in place since mid-December. Otherwise, it continues to be a slow news environment, and we would expect prices to remain overall sideways.
Outside News Headlines-
Crude oil futures up $1.60+/bbl.
Weather Updates-
Aside from the frigid air in place across the bulk of the central and eastern parts of the US, weather focus this weekend will be on the massive winter storm that is expected to impact the south-central US and southern parts of the Corn Belt between tonight and Monday. 12Z model runs this afternoon have the heaviest 12+" of snowfall for a line from eastern OK to NY/NJ, with the heavier totals likely to be more widespread throughout the northeast. Other areas through the Midwest look to see anywhere from 1-8" of snowfall, with the exact bands of accumulation being fairly narrow and hard to predict.
There is little to no model agreement into next week, but once this weekend's big system exits, the EU forecast has little to nothing in the way of precip for next week besides a small clipper through the central Midwest Wednesday. However, the GFS is trying to put in another system almost identical to this weekend's for the southeast and mid-south next Fri/Sat/Sun. The lack of agreement between the two has our confidence in any forecast beyond this weekend very low, but that is the time period that will need monitoring as we move through the weekend and get into next week.
Weekend rains will impact a fairly small portion of Argentina's ag regions in the south and southwest over the weekend, but other areas to the north and east will be warm and dry, which has been the story for most of the week this week. Models have better rains filling in next week, but there will continue to be areas in the east that will be short-changed, which will lead to crop concerns more likely than not over the next 10 days.
Southern Brazil will be dry also, with rains continuing to fall across northern and central regions of the country that will cause ongoing delays to harvest. It’s by no means an issue at this point, but farmers in Mato Grosso will desire a drier forecast at some point over the next couple weeks. Heat is less of an issue here, with average temps expected to be close to normal through the south-central parts of the country.
Enjoy it!
Bailey Runyen
Grain Originator | Topflight Grain Coop.
101 N. Main St. | Cisco, IL 61830
Phone :: 217-669-2141
Email :: brunyen@tfgrain.com
