A week of ups and downs during the holiday-shortened trade session led to little change in the grain complex. On the week corn was down 1, soybeans were up 2, Chicago wheat up 2, KC wheat up 5 and Mpls wheat up 3.
Dryness in the Southern Plains combined with the cold weather snap this week is helping give support to an anemic wheat market. The drought continues to expand and intensify as La Nina weather patterns hold true with less moisture in the heart of the wheat belt. In the Texas and Oklahoma Panhandle, western Oklahoma, and southwestern Kansas, little or no precipitation occurred this week. Weather data from Amarillo, TX shows 73 consecutive days without measurable precipitation since Oct. 13. While winter weather has little impact on final wheat yields, it does give traders a reason to relinquish their large bearish bet. And, the longer La Nina continues, the more chance the drought extends into spring, when moisture will be critical.
In South America dryness concerns continue to linger in parts of Argentina. But overall there was enough moisture hitting the ground and in forecast models to keep traders from feeling bullish about the crop prospects there. In Argentina a system is expected to produce moderate moisture over the New Year’s weekend but more significant rainfall is expected Jan 9 -11.
Export sales were on the high side of expectations this week for both corn and wheat. Wheat sales of 478,000 MT were lower than last week but still at the high end of analyst estimates ranging from 250-550,000. Corn sales beat expectations for the 2nd week running at 1.245 MMT and soy sales of 974,000 were at the low end of analyst estimates. Soybean deals so far this marketing year are off 15% but USDA expects the marketing year 2017/18 to see higher export business. This could prove to be a bogey for future USDA supply and demand reports.
National Cash Market:
In the cash market corn and bean basis continued to firm with both up about 2 cents a bushel on average across the US. The big driver was the Gulf export market which saw basis levels for corn and beans rise by 5 cents a bushel. This led to a 6-cent advance in corn bids at river terminals but only a 4-cent advance in soybeans.
End users were mostly content to keep basis steady over the long holiday weekend. On average corn plants were up 1 on the week while soy plants were up 2. There were some notable quick ship options to corn plants in NE & IA this week. The cold snap added further complications as truckers were difficult to find during the sub-zero cold snap.
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