When we went home Friday, the forecast called for good rains forecasted over all of Argentina and southern Brazil. It turned out rains missed many of the areas and were half or less of what was expected.
We have opened higher at the start of six consecutive weeks now.
The La Niña weather pattern that's led to the drought-like conditions in South America has lived up to its potential. When it's dry, it's very dry and when rain is called for, It's always far under estimates.
Monday saw beans with the largest gains as beans are in the heart of their pod setting stage when yields are most affected by weather, while corn's gains were smaller as it's the last quarter of key yield time and most effects of weather have taken the toll already.
Current forecasts see the next chance for rain as February 2 in Argentina, leaving them dry until then, with some longer term forecasts dryer again after that moisture.
The general overall thinking is that conditions in South America are going to be hotter and drier than normal into February 3 unless there is an unexpected rain.
The demand side of grains has been supportive to prices. Last week's export sales report showed strong demand for corn and beans. Last week's daily export announcements were big and will show up on this week's export sales report. With the Asian lunar new year holiday this week, we don't expect China to show up as a buyer; but, it China sees South American weather problems as permanent, they could speed their purchases. Asian business accounts for some 70% of U.S. feed grains exports in recent years.
China's business has been to buy beans, and with them on the sidelines now, or likely so due to their holiday, bean imports will be soft this week.
Corn demand, on the other hand, looks robust. One factor is Mexico's drought, so Mexico is coming to the U.S. for corn. On Monday, 152 thousand metric tons were to Mexico and a weekly export inspections report showed a 5-million-bushel increase in the export projections over last week.
Technicals read like this. March corn support Wednesday is $6.24, with resistance at $6.46. March beans support is $12.15 and resistance is $12.45. March wheat support lies at $6.10, resistance at $6.50
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