Improved weather forecasts for major South American grain and soybean growing regions undercut the U.S. grain and soybean complexes Wednesday and those losses continued in Thursday morning trading. Traders also seemed concerned about the likely result of the latest weekly report from the Energy Information Administration (EIA), since the preceding release indicated ethanol industry activity has slowed to a crawl. The mid-morning report actually stated ethanol production for the past few days only 1% above the comparable week-prior figure, but the subsequent futures rebound suggests traders were expecting another significant decline. March corn had edged 3/4 cent higher, to $7.21 1/2 in late-morning activity, while December had fallen 3 3/4 cents to $5.86 1/2 per bushel.
The Wednesday news concerning South American weather proved particularly negative for soybean futures, since it was most pertinent for a large portion of the Argentine grain/soy growing region; emerging dryness has recently become a real issue for those areas. Unfortunately for producers and bullish interests, the EIA news didn’t have a great deal of import for the soy complex, so CBOT prices remained under general downward pressure through much of the morning futures session. Moreover, the March contract proved unable to push back above support/resistance associated with its 40 and 50 day moving averages, thereby rendering it vulnerable to technically motivated selling as well. March beans fell 15 3/4 cents to $14.19 1/2 per bushel by late Thursday morning, while March soyoil had declined 0.20 cents to 51.83 cents/pound and March meal dove $7.0 to $409.5/ton.
In contrast to the improved weather forecasts for South American fields, all signs seem to point to continued dryness over the Southern Plains of the U.S. That implies little relief for drought stricken winter wheat fields, as well as diminished production prospects for spring and early summer. Nevertheless, wheat futures posted a stunningly weak performance Thursday morning. Some might blame concurrent losses in corn and soybean prices, but the fact that the wheat losses were substantially larger than those suffered by nearby corn futures undercuts that argument. We’re inclined to blame technical factors, especially the inability of the March CBOT to top the $8.00/bushel level Tuesday for the decline. March CBOT wheat had fallen 8 3/4 cents to $7.66/bushel just before the lunch hour, while March KCBT wheat plunged 9 3/4 cents to $8.20 1/2 and March MGE futures dipped 5 3/4 cents to $8.54 3/4.