Sure, some of the pressure might have come from the onset of better-than-expected rains in South America. The improving weather conditions might have started the ball rolling, and it might have gotten a push from the U.S. Department of Agriculture’s Final Crop Production estimate, but it was more about technicals and money flow than it was about anything else.
Bargain hunting buying helped the grains return to the positive side as traders that have been waiting for a retracement to start buying finally started to come off the fence.
Now there is nothing saying this market can’t see further selling pressure, but it appears that maybe support might hold. Weather has certainly improved in South America for the most part. Brazil’s crop has improved the most, but with the rain also comes a little mud. The northern and central regions of Brazil have seen consistent rains for over 21 days as the crop is nearing maturity. To add to that, the consistent rain showers have prevented producers from being able to spray for rust, which has started to become an issue in the northern half of the country. How much it will affect yield potential, no one knows. So far, yield reports in the north are coming in as expected at 60 bags per acre.
But the trade seems to be switching its focus off South America and more to demand. Demand for U.S. corn and soybeans remains robust, to say the least. That has been evident in the weekly export sales and shipments reports. The Jan. 25 export shipments estimate showed a marketing year high for corn shipments and another strong week of shipments for soybeans.
Soybean demand continues to be the strongest of the three major gains, and at the pace sales and shipments are going, USDA is going to have to increase soybean exports. And looking at the numbers, it would not be out of the realm to see that increase be close to 100 million bushels, which would leave stocks at a very tight 40 million bushels. Now USDA will not do that, as it would create panic in the soybean complex. But when looking at the numbers, it’s hard not to justify that increase.
Corn demand also has taken a huge jump. This past week China was an aggressive buyer of U.S. corn, and there were even rumors of a massive ethanol sale to China. On Jan. 26, China reportedly bought 1.36 million metric tons of U.S. corn while an unknown destination bought 103,000 metric tons of U.S. corn. That same day, there were reports that China bought 200 million gallons of ethanol for shipments in the first six months of 2021. That was followed up with China reentering the U.S. corn export market on Jan. 27, buying another 680,000 metric tons of corn and 132,000…
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