AM Comments 12/22/15
Tuesday, December 22, 2015, 7:12 AM
Submitted by: Dustin Weiner
As I type this the corn and soybean futures markets are a shade higher in what was a narrow overnight range. The outside markets were also locked into a narrow range last night as new news is hard to find. Weather in Brazil is still the main topic of conversation as the rains continue to miss the north, hitting the south. This is why it may be confusing when you read in the same day that Brazil is both too wet AND too dry. The U.S. proved to the world this past year that you CAN raise soybeans in a wetter year, so most of the real concern in the market involves the dry areas – not the wet.
While there are varying opinions on amount of damage due to the heat and drought seen in Mato Grosso (see chart below), it appears that somewhere between 15 to 20% of that overall crop is under stress. In similar fashion to our “good-to-excellent” ratings used here in the U.S., some are rating those affected areas of Brazil as over 40% “poor-to-very poor”. There are also stories out there involving water restrictions as wells begin to dry up. While all of that sounds terrible and should put a premium into soybean prices – the trade is well aware that the world is currently swimming in oilseed supplies. Meaning that the balance sheet can handle a crop loss of that size without much panic or reaction. However, if we do get some quick rallies during this thin holiday trade – they may present a great opportunity for the US producer to get some sales on the books.
Corn steady to 1 cent higher
Soybeans steady to 1 cent higher
Have a great day!