CONAB, Brazil’s equivalent of the USDA released their updated production numbers showing more reductions for their corn and soybean crops.
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Just a few days after the USDA left South American production numbers near unchanged, CONAB lowered their estimates. They show soybean production at 146,859 mmt, down from 149,404 in last month’s report and well below the USDA’s 155mmt. For corn, CONAB estimates Brazilian production at 112,753mmt, down from 113,696 last month and like soybeans, well below the USDA estimate, which is at 124.00.
The gap between CONAB and the USDA has been large enough to drive a semitruck through but the continued rate of decline in CONABS estimates may be concerning to Funds who as of last Friday held a record net short position which paired with a record 16 week selling streak. It seems likely at this point that USDA may be overly optimistic and Brazil potentially too pessimistic, which could land us somewhere in the middle, and the middle just happens to be trending lower which may have spurred some short covering in soybeans.
For the corn market, it was a different story, it was an extraordinarily uneventful today with seven consecutive contract months finishing the day unchanged. I’m not sure if anyone keeps stats on this, but that has got to be a record. Talking with an old floor trader this afternoon he mentioned not seeing anything like it, even back in the day when a few cent move was a big move.
Now that last week’s WASDE report and today’s CONAB report are behind us, attention will shift to the quarterly stocks report and perspective plantings report at the end of the month. With those reports starts to bring on the weather conversation. Though it is early, there seem to be some questionable spots in the Midwest, particularly in Iowa. The question is, does this weather concern materialize and to what extent. Seasonally, we would be surprised to see it add premium to prices, but eventually believe it will present an opportunity to the producer to establish a higher floor.
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