Markets are softer this morning after the 3 day weekend. Corn is down 4 and soybeans are down 24.
Soybean prices dropped overnight, with concern over an increased out break of Covid in the Hebei province in China. The densely populated area around Beijing is seeing the largest outbreak in 10 months. Covid restrictions are increasing, and a larger lockdown may be coming.
The trading range is expanding, making for a much more volatile trade. Beans traded 30 lower at one point last night on the fear coming out of China. In the last 6 or 7 trading sessions, the market has expended a tremendous amount of energy. Any new longs can’t feel very good this morning. It’s up to the funds to defend their position today. If the market doesn’t have the ability to bounce back tomorrow, this could lead to a deeper correction. Which is probably due.
Russia announced a $1.65 export tax on wheat exports after March 1. Russia fob wheat prices tested $300 or 8.20. This could suggest as much as 5-7 mmt of Russia export demand may have to be shifted to other origins. This could also suggest nearby Chicago wheat futures could test 7.50. Ukraine will decide on Jan 25th on whether to restrict corn exports bases on raising interior feed costs.
Dry weather has returned to Argentina, with limited rainfall in the 10 day forecast. Southern Brazil also dries out in the same time frame, putting most of the rain into the same location in Eastern Brazil. Flooding rains keep falling in the west, and they are forecast to get another 6-8 inches this week. Temps will be really hot in Argentina over the next 10 days, reaching 100 degrees. Brazil will see mostly normal temps over the next week, in the 80’s-90’s. Argentina got some help with a few rains in the last 14 days and will need much more considering its going to be really hot.
Have a Safe Day!