Investors know that South America’s weather is crucial in December

Perhaps price uptrends are in jeopardy, analyst says.

We begin the month of December with significant problems in South America, where dry weather has resulted in a delayed start to planting, and now is affecting the growing season as well.  

One private scout has started to reduce the SAM crop forecast by 1 to 2 million metric tons for both Argentina and Brazil – in both corn and soybeans. Whether or not that will eventually be justified will depend on the next two months’ weather:  December and January are the two rainiest months for SAM, and these important weather months are right upon us.  

SAM weather is still not good, with above-normal temps and below-normal precip still forecast for the next week in this tropical environment, which has its peak of yearly rainfall in Dec and Jan. The eight- to 14-day forecast tries to push back toward normal. There are still signs, though, of below-normal precip and above-normal temps.  

So, SAM weather is still less than ideal.  

We have a troubling technical formation in corn, with a downside reversal yesterday, 11/30, as we started the evening higher, and dropped into negative territory during the day. Soybeans and wheat also have threatening chart formations, but corn is the most formidable.  

We might see speculators take a shot at the short side of corn now, and unfortunately, that has worked recently in wheat as we’ve trended lower the past few weeks. Perhaps the uptrends are in jeopardy?

The problems with wheat began with improving weather; it started to rain in winter wheat country the past few weeks. Yesterday’s weekly ratings improved 3% in winter wheat to 46% rated good/excellent, a hefty improvement from last week.  Rains the past week continued to shrink the drought nationwide as soil moisture levels also have risen. That is good news for U.S. growers, but it also is weakening the U.S. grain markets. 

Export sales and shipments out of the U.S. continue to impress, while very strong sales and shipments of nearly all grains continue. It’s likely USDA will need to hike export projections for soybeans and corn, and perhaps even wheat in the Dec. report. Certainly we are on a pace that requires higher projected exports.   

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Ray can be reached at raygrabanski@progressiveag.com.  
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Ray is President of Progressive Ag Marketing, Inc., a top Ranked marketing firm in the country.  See http://www.progressiveag.com for rankings and link to data from Top Producer Magazine and Agweb.com. 

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