Friday ahead of the open the USDA released its weekly export sales report one day delayed due to the holiday showing 1.086 million metric tons of corn was sold last week; a new marketing year high since September 1st. Asia- our primary customer for feed grains were in for 750t.m.t. vs. the week prior of 340. It is a big export number, but we need to see 700t.m.t. or more weekly to turn demand bullish. In the big picture demand remains a neutral pricing force. 95% of our pricing influence for corn and beans comes from weather in Argentina and Brazil until their growing season winds down mid to late February. Currently the drought in Argentina is being said to be the worst since 1961. Government offices there estimated that corn production is off 24% and beans 11% to date from a year ago from declining yields and fewer acres planted due to drought. The next three weeks will decide the final production numbers as key yield time passes. The weather site WXRISK.COM sees some rain Sunday into Monday, but the system has been getting drier as we get closer since Wednesday. This is consistent with a La-Nina weather pattern that keeps weather warmer and drier than normal. From Monday, support lays at 3.82 for March the major trend line at 3.68. If a change to wetter conditions Sunday and Monday; and another wet system called for late week when we open, you should expect a pull back to 3.68. Now- if La-Nina makes the Sunday to Monday rain event drier than expected, and the current forecast for hot and dry to return Tuesday through Saturday. We will look for March to push to 4.18 quickly.
Friday's weekly export sales report showed 1.324m.m.t. Of bens were sold last week vs. 1.360 the week prior and 77% over our strong four week average. Key world buyer China was in for 765t.m.t. vs. the four prior weeks of 444, 356, 374 and 822t.m.t. Two demand issues are at work here with China. One, their buying ahead of the beginning of next week's Chinese New Year when business traditionally slows, and two, their over booking U.S. beans on fear Brazil's crop will further shrink taking prices higher and shrinking their export supplies china likes to begin buying in January for spring shipment. Were Argentina is the world's third biggest soy bean grower and exporter, Brazil is the world's second biggest producer exporter only to the U.S. who is number one. I have noted on the recent reports that if the drought continues through the end of February we could see additional export business here, trim 75m.b. of our 2009 ending stocks of 225m.b. So- this weather situation is extremely critical to the U.S. ending stocks. Brazil's government is slow to release crop information but the recent release estimates 3 to 4m.m.t. are already lost. The states with biggest production to follow weather on are: Paran, Rio Grande Do Sul and Mato Grosso Do Sul. This is primarily their southern land region. Come Monday, if rains some how become greater in the Sunday, Monday event called for March futures will take out the 9.90 support and possibly test 9.60 if they also see another system late week. If the Sunday and Monday system comes in light on rain totals and the current Tuesday to Saturday; hot and dry forecast is still in tact we will push into a chart area between first resistance of 10.50 and next resistance of 10.90 before profit taking.
Friday's weekly export sales report showed 410t.mt. Of wheat was sold last week almost double our weak four week average. Asian markets were in for over half, clearly loading up ahead of the Chinese New Year and Asian holiday period. Though wheat production in South America is important to them, it is less important to the world ending stocks as they are not major exporters. Even with the good weekly sales was still a third port of origin at best for purchase of wheat on the world market. As I have noted since fall, demand can not change until our dormant new crop comes in sight on the horizon in late March as dormancy breaks. Dormancy on our hard red winter wheat crop breaks in March with April and May as key yield development time. If we break dormancy in March and weather is good; and our first crop condition report in April continues to show numbers consistent to be it went dormant around 65%- good to excellent condition, foreign importers will begin to turn to the U.S. as a primary port for high quality milling wheat for late May through June shipments. The areas of concern when we near March will be weather conditions in Texas and Oklahoma. Those two states went dormant in very poor condition. The National Weather Service this week expanded drought conditions for central and northern Texas into Oklahoma. If weather in March is good and through May in Colorado, Kansas, Nebraska the Dakotas as well as our soft red winter wheat states of Illinois, Indiana and Ohio; We could afford to suffer in the far Southwest. This was the pattern before we went dormant. It would actually be more bullish as a Texas, Oklahoma drought would price up production fear while the other 80% of production if high quality would pull demand back to the U.S. Ports. Okay, here is the near term trade. We are going to follow weather's lead to corn and beans out of South America. Support on March lies at 5.60 then 5.35. Resistance is 6.20. If the Sunday, Monday rains are greater than expected, we could see 5.35 and if drier, we push to 6.20 quickly.