Market 'ball' is getting kicked around
South American weather is still the great story this time of year, as the growing season hits its prime time of filling soybean plants and also at the double-crop planting season. So far, weather has not been ideal, nor has it been a big problem. Rather, where some dry spots had been developing and stressing crops in Argentina, that area is now seeing improving weather with more generous rain showers in the past two weeks, which is improving the crop in that area. The still warm temps still have some stress in southern Argentina, but overall, the crop is probably improving in Argentina with the return of rain there.
Other areas in southern Brazil are starting to see some crop stress develop there as it's been drier than normal in this area for the past couple weeks, and the dry weather pattern is forecast to continue for the next two weeks, which is likely to stress some crops there and trim the crop prospects for that area. That will mean a likely reduction in yield potential in southern Brazil, which could trim crop forecasts.
However, northern Brazil and central Brazil have had a nearly ideal summer so far: Cool temps are limiting crop stress, and intermittent rain showers are keeping yield potential high in this area. Whereas crop losses could occur in southern growing areas due to dry periods in southern Brazil and Argentina, northern and central Brazil are likely to have a bumper crop.
That leaves the total South American production about average, so that is leaving prices mostly neutral in the overall scheme of things, with South American weather neither giving the market reason to go higher or lower.
So this is turning out to be an uneventful winter of price movement, with little price direction from South American weather (although there are good days and bad days). Prices are moving little in spite of outstanding U.S. sales of soybeans (more than the year's projection in just the first portion of the shipping year).
With an average year of production in South America, that probably relieves a little stress on the soybean buyers who may have worried about a potential production problem in South America. But it does not alleviate the compellingly tight-stocks scenario in the world for soybeans, especially with China still buying aggressively on the world market. It seems as if there is still no score in this football game battle between the bulls and the bears. Instead, the ball has just been punted back and forth with the ebb and flow of South American weather. Now, the ball is in the court of the U.S. production season, and what it might bring to the world marketplace since South American production will be about average.
So the market is playing a game of "hurry up and wait" while we pass the time this winter with little price movememt. So back to summer production and the opportunities and potential problems that might bring to the grain market.
Look for a slow and uneventful winter to set in with little price movement on grains, especially the soybean market, as South American weather has left little for either bulls or bears to be excited about. Instead, we may as well take a warm vacation in this bitterly cold winter in the U.S., as the market so far hasn't needed to be watched too closely in this uneventful winter marketing season.