WEEKLY GRAIN NEWSLETTER
By Jeremey Frost
This is Jeremey Frost with some not so fearless comments for www.dailymarketminute.com
Tis the season as they say, so what do US Farmers want in their stockings? What will they get?
USA Farmers Christmas Wish
#1 Want and need is demand, because demand markets last much longer than fear of supply markets. In particular, the US Farmer wishes for the strong Chinese buying of soybeans to continue. But what they want even more is for the Chinese buying to also include Corn and Wheat. The reason this is so important is not only fundamentally do we want more exports, but it is a headline that could cause fund buying. Lately, I have said that the Funds or Big Money, followed by China and Russia control our markets. Yes weather always will play a part in it, but money flow is the real fundamental that matters at the end of the day.
Next on our list at #2 is the US Dollar to get cheaper. Same thing here as above this helps demand fundamentally but it also creates a story for Big Money to get behind. As a tag-along or side gift that comes included with this one is a “Risk On” type of environment that a weaker US Dollar tends to give.
Christmas is hardly the time to wish bad Karma on a neighbor but number #3 on our list is for South American hot and dry weather and La Niña to continue with an expansion of the Argy drought into Brazil. The next 45-60 days will make or break the South American crop. Even simply more scares could lead to US export business. If it starts raining in Argy that crop has potential to stabilize in size. If it stops raining in Brazil that crop has potential to get cut tremendously in size. Plus this is also something that could cause the funds to want to “get long” grains and oilseeds.
Coming in at number #4 on our list is a bullish USDA January report. This report is the same report that in 2008 helped MPLS go nuclear shortly after. The major things to watch for on this report will be US corn and soybean production. Will we see Pro Farmer type numbers finally appear? Demand changes and updates, can our feed/residual usage increase enough to offset export slips that we have had? Is there a chance that the USDA prints a bean carryout sub 200 million bushels or a corn carryout sub 1 billion bushels. Could the Grinch show up and raise our corn carryout to over 1.5 billion bushels? This also has the chance to give the funds a story and reason to buy grains in 2023.
Coming in at number #5 on our list, but actually number #1 would be ANY REASON for the FUNDS or BIG MONEY to buy grains and oil seeds. Fundamentally our markets show many signs that we could and should go higher than a year ago. Such as stocks to usage ratio, days of supply, basis, and future spreads. But if we can’t get the funds involved, who is going to push our prices higher? End users don’t want to have to pay more, plus it's not like they need the product all at once.
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Included In This Week’s Edition
Comparing drought history
Yield trends
Does history repeat itself?
Bull Bullets
Factors in the grains
South America
Argentina relative crop condition
Russia & China
Demand
Sunflowers
Insights from other analysts
Inflation