Grains Calls Are Higher
Grain calls are higher. SH is near 14.16. SMH is near 463.2. BOH is near 41.85. CH is down near 5.31. WH is near 6.75. KWH is near 6.43. Weekend rains fell across central and south Brazil. North was dry. North Argentina saw rains. South was dry. Argentina forecast is dry. Inauguration Wednesday.
Last week GSI commodity index made new highs for the move before giving back same gains on Friday. The rally was led by higher World corn prices especially in China and higher World wheat prices. Most look for the Index to continue to trend higher as World corn, soybean and wheat supplies tighten and on the hope a vaccine will slow the spread of the virus and increase demand for raw materials.
Most look for US 2020/21 corn demand 400-500 mil bu more that USDA latest guess. This could drop the carryout closer to 1,100 versus USDA 1,552. Most feel nearby corn futures could test 5.70-6.00 as 8-10 mmt of World demand shifts from South America to other origins.
Most also feel US soybean demand could be 50 mil bu higher than USDA latest guess. Demand could even be higher but US carryout will be near the bottom of the bin. Some feel US domestic cash prices could test either 2013 high near 13.00 or 2012 high near 14.40 versus USDA est of 11.15. This could suggest first objective of nearby soybean futures could be 15.30 then 16.30.
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 3-4 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.
On Friday, Managed funds were net buyers of 2,000 SRW Wheat; sold 10,000 Corn; 12,000 Soybeans; 1,000 lots of Soymeal, and; 12,000 lots of Soyoil. CFTC estimated Managed Money net long 17,000 contracts of SRW Wheat; long 374,000 Corn; net long 166,000 Soybeans; net long 84,000 lots of Soymeal, and; long 95,000 Soyoil. We estimate Managed Money net long 23,000 contracts of SRW Wheat; long 414,000 Corn; net long 164,000 Soybeans; net long 84,000 lots of Soymeal, and; long 85,000 Soyoil.
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