Improved South American rain forecasts undercut crop futures
Weather concerns continued supporting the corn market Wednesday morning, with traders appearing focused upon the heat wave now dominating crop growing areas in Argentina and southern Brazil. As in the U.S. hot, dry weather striking when their corn crop is pollinating could badly damage production prospects. However, afternoon weather forecasts suggested two weather systems could cross that region late next week and/or early the week following, thereby providing needed relief from current conditions. We strongly suspect that news played a major role in causing the late reversals suffered by the grain and soy complexes. Futures may move even lower during the days ahead, especially if traders construe the March futures reversal as a technical failure at trendline resistance drawn across its 2012 highs. March corn ended the CBOT session having fallen 7 3/4 cents to $7.20 3/4 per bushel, while December edged 1/2 cent higher to $5.90 1/4 per bushel.
The South American weather situation seemed to be providing underlying support for the soybean market as well, especially since so many users around the world are obviously relying upon huge Brazilian and Argentine crops to meet a large portion of their 2013 needs. Thus, it was not very surprising to see CBOT futures turn sharply lower in response to the updated weather forecasts posted around midsession Wednesday. The market might see more of the same if the preliminary forecasts for increased South American rainfall prove accurate. Traders will also be anticipating the weekly export sales data due to be released Friday morning. March soybeans fell 14 3/4 cents to a settlement price at $14.37/bushel, while March soyoil declined 0.43 cents to 52.00 cents/pound and March meal dipped $5.1 to $416.5/ton.
Kansas City futures led the wheat complex higher Wednesday morning, since the industry was clearly concentrating upon the dryness dominating the hard red winter wheat fields of the Southern Plains. The latest forecasts imply little improvement in that situation, but the wheat complex rather clearly could not buck the downward reversals suffered by the corn and soybean markets. Technical factors are conflicting at this point, with March CBOT wheat apparently having failed at the $8.00/bushel level Tuesday and bounced from the confluence of its 10 and 20-day moving averages Wednesday. The Friday morning Export Sales data may determine the direction it moves from this point. March CBOT wheat closed 4 1/2 cents lower, at $7.74 3/4, while March KCBT wheat settled down 1/4 cent at $8.30 3/4 and March MGE futures tumbled 4 1/4 cents to $8.60 1/2.
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