March corn traded lower on the day as traders took profits after the gains over the last 2 weeks ahead of this Friday's USDA report.
Many in the trade expect a slight uptick in the US carryout from the current level of 602 million bushels due to a slowdown in the ethanol and export demand pace.
The tight US stocks/usage ratio continues to add underlying support to the market. The weather in Argentina is dry over the next 5 days but some forecasts suggest a better chance for rain early next week that could benefit crop growing regions.
Confidence remains low in this forecast however. Additional downside pressure was linked to a short term technical outlook that has soured slightly which may have triggered a modest amount of profit taking on the day.
March Rice finished up 0.24 at 16.15, 0.05 off the high and 0.05 up from the low.
Soy Futures Closed Higher
March Soybeans finished up 7 1/4 at 1496, 1/2 off the high and 18 up from the low. November Soybeans closed up 4 1/4 at 1348 1/4. This was 13 up from the low and 3/4 off the high.
March Soymeal closed up 4.2 at 438.5. This was 6.7 up from the low and 0.4 off the high.
March Soybean Oil finished down 0.13 at 52.98, 0.24 off the high and 0.3 up from the low.
March soybeans traded higher into the closing bell and staged an impressive recovery after trading lower early in the session on profit taking and weakness in the corn market.
The South American forecast is mixed with a dry outlook for Argentina this week but a chance of showers returns early next week.
Brazil conditions remain mostly favorable with the exception of some dry regions in the south. Off and on showers are expected in most of the country this week and next which should help row crops.
Production forecasts for Brazil continue to come in either side of the current USDA estimate of 82.50 million tonnes. Aboive updated their estimate to 82.30 million tonnes vs. the December forecast of 81.60 million tonnes.
Yesterday, a Brazilian consultant dropped their forecast to 81.20 million tonnes vs. their December estimate of 82.2 million tonnes.
Other private analysts are expecting production between 83-85 million tonnes. US export demand remains strong but some anticipate a large Brazilian crop to help take on some of the demand burden once harvest gets moving in the month of February.
Wheat Futures Closed Lower
March Wheat finished down 5 1/2 at 757 1/2, 9 off the high and 6 1/2 up from the low. May Wheat closed down 6 1/2 at 764 1/4. This was 5 3/4 up from the low and 9 3/4 off the high.
KC and Chicago wheat traded lower into the closing bell on profit taking and as technical signals soured which added momentum to the downside.
KC wheat lost ground to Chicago and both wheat markets narrow their premium to corn. The corn market began the advance lower this morning after reporting terrible export demand data yesterday and on a slightly wetter forecast for Argentina next week.
The trade is expecting a slight uptick in the US all wheat carryout on this Friday's USDA Supply and Demand report. Export demand has improved for the US but sales and shipments remain behind the pace needed to hit the USDA export estimate.
Some traders are reporting that Russia may be removing a 5 per cent import duty on grain imports in an effort to cool rising wheat and flour prices.
The move suggests domestic stocks in Russia are tight but the market doesn't expect them to be back in the export market this crop year.
Brazil announced they will exempt 1 million tonnes of wheat from outside of the Mercosur trade block from an import tariff between April and July of this year.
The move will help Brazil import more wheat from countries like Canada and the US after Argentina production was slashed by untimely rainfall and flooding.
March Oats closed up 6 1/2 at 366 1/4. This was 9 up from the low and 3/4 off the high.
