AM Comments 12/23/15
Wednesday, December 23, 2015, 7:12 AM
Submitted by: Dustin Weiner
The markets were a little firmer last night thanks to a little short covering ahead of the holiday. The markets will run a full day today but will close a little early tomorrow (12:05pm) and will not open up again until the normal time of 7pm Sunday night.
It’s hard to type comments without giving another update on South American weather – as that is really the only topic of conversation for the fundamental traders. The image attached below from Reuters gives us a look into the weather forecast for Mato Grosso over the next 12 days. One key thing to look at is the temps aren’t forecasted to drop below 70 degrees at night, and on many of the days they will see highs above 90 degrees. So, while this is concerning you need to remember that A) most all other areas of Brazil are seeing near ideal growing conditions, B) weather forecasts change and C) the world is still swimming in soybeans. For perspective, Mato Grosso is responsible for around 30% of Brazil’s soybean production and as I mentioned yesterday, just over 40% of Mato Grosso’s bean crop is under serious stress in this drought.
Overall, the soybean market seems to be waiting for additional weather news out of South America as most everything mentioned above appears to be “in the market”. The funds are still short most every ag commodity imaginable, and while rallies can be started by fund short covering, rallies are rarely sustained that way. This theory helps explain the quick sell off of rallies that have materialized lately.
Have a great day!