Monday's USDA crop report came out negative for pricing on all numbers but only marginally lower. They lowered production for 2008 81m.b. from the November report to 12.101b.b. It was like a teaspoon change considering the total. It was ending stocks that saw the bigger change from small changes collectively. Exports down 50m.b. feed use down 50m.b. and corn for ethanol down 100m.b. putting ending stocks next September 1st at 1.790b.b. vs. 1.624 in 2008. Not much of a change from the year prior, which brought 8.00 corn at our summer high but it was 300m.b. over the average pre-report trade guess giving corn a lower trade in prices Monday. In the big picture it puts corn right back where it was last January, where ending stocks were okay if we did not have a weather problem here or elsewhere. All the numbers on the report were old news results. Corn's outlook ahead looks fairly uncertain as to our production this year as beans big rally looks to steal away corn acres of 3 to 6m.a. come spring planting. Ending stocks due to South American drought conditions look only to adjust downward if La-Nina continues to bring dryness to Brazil and Argentina through February leaving the U.S. to fill the export hole left there. Domestically demand remains under a year ago as ample ending stocks have end users in a false sense of product security. However, this could change quickly the next six key growing weeks in South America. Weather remains the key growing weeks in South America. Weather remains the key driving force. Stay focused on weather in South America for daily pricing. On my last report last Friday, December 9th, December corn was trading about 4.12. I said to watch out for any call for rain in South America as we could see a 30 cent limit down day to start. Monday had rain in the forecast for late this week, which eventually faded, but Monday's fear brought that 30 cent drop along with a negative crop report psychology. After a 1.20 rally off the December low of 3.07 we saw a classic 50% correction. Here is how the weather reads for next week by WXRISK.COM the weather site. Argentina looks to see increasing heat and generally dry. Brazil has some rain but it always fades under a La-Nina event. To hold a long weather position for three days until we re-open next Tuesday carries a lot of risk but the weather reports are all supportive. Come Tuesday March corn will have support at 3.64 then 3.32 if rains come. First resistance is 3.90 then 4.04.
Monday's crop report put production at 2.95b.b. Up 11m.b. from the last report and 49m.b. over the pre-report trade guesses. They messed with numbers raising ending stocks from 205m.b. in 2008 to 225m.b. for 2009. Exports were raised but they lowered crush and feed use, which is old news. A sluggish crop report and a late week projected rain for Brazil pulled beans down Monday and Tuesday after our recent 2.00 rally. Any change in Brazil's weather to dryer or wetter will bring a measurable break or rally as weather reports continue to be 95% of the markets pricing influence. Demand continues robust. Thursday's weekly export sales report showed 1.361m.m.t. Of beans were sold last week more than tow times the week prior and four week average. Key player China was in for 861t.mt. vs. the three prior weeks of 444, 356 and 374m.b. China was in for 399t.m.t. this past Monday and that as well as their other business this week will show up on next week do export sales report. Next week should bode well for demand. Two things are occurring here- one, the Chinese are addressing their increased need for high protein crop needs and beginning to overbook U.S. beans on fear a continued drought in South America through February would leave a production hole to be filled by the U.S. This alone could cut our current ending stocks revision by 75m.b. The second issue is aggressive Asian buying ahead of the Chinese New Year beginning the last week of January. Beans look to Brazil's weather closer than Argentina. As Brazil are the world's number two producers behind the U.S. but ahead of the number three producer Argentina. WXRISK.COM the weather site sees Argentina very hot and generally dry next week with southern Brazil with some good rain events. The problem I see is rain totals appear too small to offset the intense heat and their sandy soil which aerates quickly. There is always a big risk on trading weather over a three day holiday which allows ample time for a weather pattern change to wet, but the La-Nina event there has been consistent and that should leave Brazil's rain totals smaller than expected. On Tuesday, March beans have support at 9.80 then 9.50 if rain enters. Resistance is 10.50 then 10.90.
Monday's crop report came in with generally lower than expected planting numbers. All winter wheat seeding was 42.098m.b. 4m.a.under last year. The break down of varieties were H.R.W. 30.2m.a. down 2m.a. S.R.W. 8.3m.a. down 3m.a. and white wheat 3.6 vs. 3.7m.a. a year ago. That is what happens when you drop $8. per bushel ahead of planting. Wheat demand remains as I have said for 3 months, poor. However, wheat's looks better once we enter March when world demand turns to the U.S. for what maybe the world's first crop of 2009 that is high in quality to meet miller's needs, as well as early emergence weather concerns as dormancy breaks. It is still January we are still dormant and still a third port of origin at best on the world market to buy wheat from. Wheat remains the tail of the dog to beans and corn. March has support at 5.60 Tuesday with resistance at 6.00 then 6.25.