Concerns about the shortage of U.S. corn and the potential impact of dry conditions in South America reportedly played major roles in boosting corn futures again Tuesday night. Traders are reportedly becoming worried about an early end to the Brazilian rainy season, which might leave second-crop corn plantings hurting for water. Quickly drying Argentine corn fields seem vulnerable as well. These developments, along with the bullish implications of the January 11 USDA reports have powered yellow grain prices upward for seven straight days, with the Tuesday CBOT advance pushing the nearby contract above major chart resistance. This seems quite favorable, but the market is likely getting overbought on a short-term basis. March corn climbed 3 3/4 cents to $7.34 1/4 in overnight action, while December rose 3/4 cent to $5.90/bushel.
Futures traders are apparently worrying about the impact of the ongoing dry spell over Argentine soybean fields. This might not be a major concern if those plants have adapted to those conditions, but it seems more likely that they are not well rooted after their wet spring. That may render their soybean crop vulnerable to hot, dry conditions. Given the optimism now dominating the grain and soybean complexes, it is terribly surprising to see soy prices rising as a consequence. On the other hand, the meal-led decline suffered Tuesday afternoon pushed nearby March beans below their 40 and 50 day moving averages, thereby suggesting the technical situation is not as favorable as that for corn. Still, the market will apparently test that chart resistance again today. March beans surged 11 cents to $14.24 1/2 in early morning trading, while March soyoil gained 0.17 cents to 51.04 cents/pound and March meal advanced $2.8 to $414.7/ton.
The lack of snow cover for much of the Winter Wheat Belt could become a major issue early next week, when an arctic air mass is expected to move into the Great Plains. For example, preliminary forecasts put Wichita Kansas temperatures in the low teens next Monday night. Thus, winter kill becomes a concern for the wheat markets. A wire service story suggested conditions over the main Russian wheat growing region were much worse, be we have to wonder if those are particularly abnormal for that area. Wheat futures posted moderate gains overnight, but remain well below chart resistance associated with their respective 40-day moving averages. March CBOT wheat rose 5 1/4 cents to $7.88/bushel in pre-dawn activity, while March KCBT wheat pushed 5 cents higher to $8.43 1/4 and March MGE futures climbed 5 1/4 cents to $8.71 1/2.