We’ve had time now to digest everything from the USDA’s WASDE report that was released on Thursday. Jim Bower from Bower Trading broke down some of the numbers saying, “Brazil’s corn production number at 95 million metric tons was well above CONAB’s number at 88 million metric tons. So, there’s a question that’s going to have to be answered through harvest activity of just how big or how small that Brazil corn crop really is. The bean crop for Brazil came in at 112 million metric tons. That’s almost exactly in line with the trade estimate.”
Bower says that while there seems to be a bias toward planting more soybeans, he believes that Thursday’s report would indicate that the corn market has already cleared some key resistance levels and may move to the upside more easily. “Now, to get it to move up hard, obviously, you’re going to need to have a validated, and I underline the word validated, weather threat. Keep in mind the corn and bean market will also have to adjust to what happens with wheat because wheat will be coming out of dormancy here in about another 2 or 3 weeks in the far southern reaches. (Thursday’s) report on wheat was a little bit negative but most of that negative number has now been dialed into the to the actual price.”
Bower stresses that we need to pay attention to what’s happening in the international market and not just what’s happening domestically. “Corn demand, for whatever set of reasons that are available for international standpoint, seems to be picking up. So, I’m not saying to be too bullish or too bearish, but be very cognizant of what’s going on internationally. The question is how high can we go now will depend upon what happens for the remainder of the year in Brazil and Argentina because that situation’s not over yet.”
Bower says that he’ll be monitoring Brazil and Argentina closely through the end of February and into early March a bit closer than he originally thought based on the report.
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