SEASONAL TRENDS

                Our first demand report of the week came out Monday with our weekly export inspection showing how much of each grain was inspected by the U.S.D.A. for near-term shipment.  Wheat inspections were 16.8 million bushels; up from 9.6 m.b. the week prior; equal a year ago and over our weak four-week average of 10 m.b.  The recent break in prices have brought in slightly improved exports, but not enough to drive wheat prices on its own, leaving wheat in a follower's call to corn and beans.  Trend-following funds have increased the size of their short position from 34 thousand contracts three weeks ago to 47 thousand entering this week.  This certainly sets up a situation soon to see a short-covering rally off profit-taking.  This being the last full trading week of the month, we could see it surface, especially off breaks.

                Corn inspections were 20.6 m.b. versus 31.3 the week prior; 30.8 a year ago; and four-week average of 24 m.b.  This was a little lower than the trade expected as corn needs to keep inspections in the 30 m.b. plus range to be price friendly. 

                Bean inspections were 42.1 m.b., down from 47.1 the week prior; but over a year ago of 38.2; and a strong four-week average of 42 m.b.  Though down from the week prior, it is still a very strong demand number.  Both corn and beans saw index funds increase their long positions held from the week prior, but trend-following funds cut their long positions appreciably from two weeks ago as they took long-position profits, acquired prior the January 12 crop report, to satisfy their month-end profit-taking to get those bonuses paid on profits of the month taken.  We have to expect at some point in February trend-following funds will put these buys back in the market long.  Seasonals are still down in January and February, but I expect grain lows to be in by February 20.  South American weather has a mixed view with Brazil, wet and on a perfect yield pace, but Argentina very hot and dry.  There is talk of potential rain this weekend and mid-week next week.  Should these rains fail to appear and weather gurus attach another hot dry week for next week, we could see some buying concern as traders remember how last year Argentina was very dry late January and through February cutting production appreciably.  Yet, if rains return, traders will talk of perfect conditions from hot to sunny to wet.

                We still see March corn support at 3.54 and worst case scenario at 3.42 near-term. 

                March bean support, we gave at 9.35, was hit today and brought a short-covering rally, but a close under 9.35 sets up 9.15 as next stop.

                March wheat has the same support numbers as last week at 4.90; then 4.80.  Resistance is 5.02 Wednesday.

                The hard red winter wheat crop weather by WXRISK.com sees good snow totals to hit northern Texas and Oklahoma late week with the soft red winter wheat in the south ice and snow.  Generally speaking, the snow cover and moisture is welcome after the recent warmer melt down.  Winter kill of the crop is limited to 5% or less so far.  The recent weakening of the current E Nino weather pattern leaves February weather uncertain.  If it continues to weaken, February could end up colder and wetter than normal, but if it strengthens back up, we're set up for warmer and drier and another winter wheat snow meltdown, leaving the dormant crop vulnerable again to a damaging freeze.

                In the big picture, El-Nino determines at great length our spring and summer growing weather here.  This is what we eagerly watch.  A strong El Nino into mid-year, we have a hot dry spring summer.  A weakening El Nino, the reverse weather.