Summary

Much of Mato Grosso in Brazil received needed rainfall which should help to stop the damage for the time being. Soybean crops that were planted later are still in need of precipitation. Current weather patterns will need to be monitored closely.

Economic woes continue to permeate the headlines for the start of this New Year. The Global Economy has reportedly contracted for the 3rd consecutive year. Brazilian, Chinese and Russian economic softness are the main culprits. After two abridged weeks to close the year it is not surprising that exports sales across the grain complex were either at or near their totals of the marketing year.

Corn

The Corn market was only off 1.75 on the week last as it awaits the tomorrow’s report. The December Corn contract was flat. Our charts are pointing to continued sideways to downward movement. Even if there is a reaction to the upside after the report we anticipate the Corn would continue lower in the month of February.

South Africa is experiencing a heat wave that is seriously hurting their crop. As drought losses are sure to climb they could be looking at importing upwards of 4-5 million tons to make up for losses. Have already received 300,000 tons from Brazil. Last year they did not import any Corn from Brazil. Brazil exported Corn at a record pace for December of last year. The most recent commitment of traders report showed speculators continuing to sell AG commodities. Speculative shorts positions in Corn is now up to 212,000 contracts.

Soybeans

Like Corn Soybean was also slow going for the week. The March contract gained 1 cent and the November contract lost 4.25. It appears to be waiting for the reports tomorrow. According to our cycle work, we are looking for Beans to rise post the report information. The January reports historically are important for the Soybean market and have knack for setting tone for the grain markets through the 1st quarter of the year.

Wheat

Wheat finished the week in positive territory. The July Wheat contract was up 7 cents (1.45%). We saw increased activity with very little news to justify the move outside of sitting at technical support levels. The recent rains in South America that is helping the Soybean crop is unfortunately hurting Wheat quality. It is being reported that as much as 80% of Argentina’s Wheat crop is below milling quality. If that is true not very much of that Wheat will meet make the export spec to Brazil. Perhaps the US market rose last week in light of this news. Wheat was down big today and it will be a few months before the prospect of such exports would come to fruition.

Crude Oil

Brent Crude futures hit an 11 year low near $32.15 last week and made a new low of 31.13 today. Global oversupply continues to push prices lower. A little bit of history for you, back in 1998 and 1999, NATO was facing off with Russia over the Serbian war in Kosovo. During that event the US government ran covert operations in the financial markets to drive down the price of Crude Oil in a successful effort to cripple the Russian economy. Crude traded all the way down to $9.55 per barrel in December of 1998. The market bottomed in February of 1999. Fast forward to present day, the NATO alliance is again facing off with Russia over the war in Syria. The US government again seems to be doing business as usual and appears to be running covert operations to drive down the price of Crude Oil to punish both Russia and Iran for assisting Syria. Also, the US gov’t is not too fond of Russia granting Snowden asylum.