RAINS & BRAZIL ESTIMATES

Written By Sebastian Frost

MARKET UPDATE

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Overview

We had a blood bath yesterday where soybeans made their lowest close since June and corn made yet another new low.

Both were slightly higher today while the wheat market trades lower for the 3rd day in a row, testing that $6 support level.

Why has the market been pressured so heavily to start the new year?

Well Brazil got some rain, however these rains were actually LESS than expected. So if they were less than expected why did beans just get smacked -25 cents yesterday?

Simply the forecasts, as the forecasts are almost all in agreement that they will continue to get rain and remain cooler.

Here is the 10-day forecasts, they do look awfully wet.. the question is how late is too late to make a major difference?

Another thing to note, after this week of rains, some forecasters believe the pattern will again shift to hot and dry.

Even with the weather shifting more favorable, it hasn’t stopped analysts and experts from dropping their Brazil yield estimates.

We saw StoneX Brazil drop their number by 9 million metric tons from last month to 152.8 which is well below last year's crop and far below what the USDA's current 161 number.

Dr. Cordonnier cut his estimates another 2 million. He now has his number at 151. Citing low yields on the early harvested beans.

So here is what current Brazil estimates look like,

USDA

  • Corn: 129

  • Beans: 161

Dr. Cordonnier

  • Corn: 117

  • Beans: 151

StoneX Brazil

  • Corn: 124.6

  • Beans: 152.8

How light was rain in December for Brazil?

These next two charts from Karen Braun tells you everything you need to know.

This December was both the hottest and the driest on record. It wasn’t even close.

Rain came in a whopping 54% below average.

This comes after their driest October and November on record..

Here is a chart from Arland Suderman of StoneX. It showcases just how brutally hot 2023 was for central Brazil.

The average max temp was tied for the hottest on record at just over 92 degrees which is similar to what Nebraska saw this past August.

It is normally not this hot in Brazil due to the clouds during the rainy season, but this rainy season hasn’t been rainy at all.

What yield is the market pricing in for Brazil beans and corn?

I'd say we are priced into……

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IN TODAY’S UPDATE

  • What is the market pricing in?

  • Brazil projections and probabilities from AI

  • How much of a bullish wild card is Brazil corn?

  • Why history is on beans side

  • Why $14 to $15 beans is “possible”

  • Risks in the corn market

  • Catalysts wheat bulls need

Want to Talk?

Our phones are open 24/7 for you guys if you ever need anything or want to discuss your operation.

(605) 295-3100

sfrost@dailymarketminute.com

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Sebastian Frost
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