Chicago Grains Comments - Tuesday

29/12/15 -- South American Weather: "Torrential rainfall over the last several weeks have resulted in the worst flooding in over 20 years along the border areas of Brazil, Paraguay, Argentina, and Uruguay," said Dr Cordonnier. "The capital of Paraguay, Asuncion, appears to have been the hardest hit with flooding along the Paraguay River which has displaced over 100,000 people. In Argentina, the floods are impacting the provinces of Entre Rios, Chaco, Corrientes, Formosa, Missiones, and Santa Fe. Most of the flooding is occurring along the region's rivers, but much of the farmland in the region is flat and poorly drained, so some crop losses are expected. This is also the last region in Argentina to plant their summer crops and the heavy rains are expected to delay the end of spring planting," he added.

Soycomplex: Beans closed higher, recovering around half of yesterday's losses. Price falls then were linked to reports that "heavy rains over the weekend in key growing regions, including Mato Grosso, helped to ease concerns about potential yield losses following a period of dry weather," said the HGCA. But as indicated above, elsewhere it's too wet. Far too wet in many places. We have however had similar flooding problems in Argentina in recent years and still emerged with good yields. The newly devalued Argentine peso hangs over the bean market, threatening to unleash a flood of cheap beans onto the market. Concerns over the Chinese economy remain. Midwest flooding is also causing some disruption to movement of grains and beans at terminals on the Mississippi. Jan 16 Soybeans settled at $8.70, up 5 cents; Mar 16 Soybeans settled at $8.65 3/4, up 4 1/2 cents; Jan 16 Soybean Meal settled at $268.50, up $1.20; Jan 16 Soybean Oil settled at 30.52, up 32 points.

Corn: The corn market closed managed small gains, as it too partially reversed some of Monday's thin losses. The weather situation outlined above offers a "6 and two three's" type scenario. Argentine currency weakness offers real bearish potential though. The Buenos Aires Grain Exchange estimated that Argentinean corn plantings are nearly 74% complete. There's still talk of an late eleventh hour push in corn acres due to President Macri's recent election victory. US grower interest in selling at these current levels remains light. Around 85% of the state of Illinois and 50% of Missouri are said to currently be covered by flood warnings. Ukraine are busy exporting corn, bit their crop is sharply lower this year, so they won't be unable to hold that pace for as long as normal. "Very serious drought has developed in South Africa, damaging corn prospects for the second straight year. The current drought this season is the worst since 1992, local sources claim," note Martell Crop Projections. Mar 16 Corn settled at $3.62 1/2, up 1 1/2 cents; May 16 Corn settled at $3.69, up 1 1/4 cents.

Wheat: The wheat market closed with fair gains, possibly more due to year-end short covering/book squaring than anything else. The Argentine wheat harvest is only said to be around 59% done versus 75% normally. They are keen to find buyers though, judged on last week's Egyptian success. New lows for the Russian rouble will keep them coming back for more. They've publicly ruled out export sanctions against Turkey over the downing of the Russian jet over Syria last month. Their 2015/16 wheat exports have set a new record high, and their 2015 wheat crop is said to be around 2 MMT up on a year ago. Morocco are said to have tendered for 360,000 MT of US wheat for May 31 delivery.I wouldn't be surprised to see Egypt back testing Argentina (an others) resolve again next week or even sooner. Winter weather conditions in Russia and Ukraine have finally turned "normal" with snow and colder temperatures moving in. Ukraine say that their winter grains area is the lowest seeded in 10 years. May 16 CBOT Wheat settled at $4.82, up 8 3/4 cents; May 16 KCBT Wheat settled at $4.83 1/4, up 7 cents; May 16 MGEX Wheat settled at $5.06 3/4, up 5 1/2 cents.