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Evening markets: 'Arctic blast' worries freeze out grain bears

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Grains staged a turnaround Tuesday – closing higher, this is – spurred by worries over US cold, which chilled out ag bears.

 

“An Arctic blast hammering the northern US is forecast to break more than 400 cold-temperature records in the next 48 hours,” said Allendale.

 

“Every state east of the Mississippi River, with the exception of Florida, is expected to see at least one record-cold temperature through Wednesday,” the broker said, quoting comments from the National Weather Service.

 

‘Stalled harvesting’

One impact is that the US autumn harvest, already running late thanks to the knock-on effects of a rain-delayed spring sowing season, is freezing up.

 

Maxar, noting that “snow cover is now in place across the majority of the Midwest and has even increased across northern portions of the Delta as well as the northern and far southern Plains”, said that the snows have “stalled corn and soybean harvesting.

 

“Continued cold conditions across all areas will keep soils from drying rapidly and will continue to slow fieldwork.”

 

Chicago corn futures for December closed up 1.1% at $3.77 ¾ a bushel, supported also by some improved US export data.

 

US corn shipments last week, at 560,615 tonnes, were at the top end of the range of market forecasts of 350,000-600,000 tonnes, and twice the volume exported the previous week.

 

‘Potentially crop-damaging freeze’

Chicago soft red winter wheat futures fared even better, adding 2.1% to $5.17 a bushel for December, to end back above 10-day and 20-day moving averages.

 

The cold weather represents a direct threat to US winter wheat, with Allendale noting forecasts that the cold snap will “bring a potentially crop-damaging freeze to Texas and other Gulf states”.

 

Meanwhile, US exports last week, at 528,875 tonnes, exceeded market expectations of a figure of at best 500,000 tonnes.

 

“Chicago wheat which erased its past three sessions’ losses on strong US export inspections and freezing conditions across the Plains,” CRM AgriCommodities said.

 

Flat soy

Chicago soybean futures for January could not keep up with grains, closing flat at $9.17 a bushel.

 

But then US soybean exports last week, at 1.33m tonnes, were not so impressive – at least, in terms of falling within the range of market expectations of 800,000-1.30m tonnes, and actually falling some 150,000 tonnes week on week.

 

Furthermore, soyoil the soy complex star of late, fell back by 1.2% to 31.03 cents a pound for December on profit-taking, although managing to recover just enough from intraday lows to end just above its 20-day moving average.

 

And there was a somewhat mixed reaction to comments in a speech by US President Donald Trump to the Economic Club of New York, in which he said a trade deal with China was “close”, but also renewed his threat of additional tariffs on imports from China.

 

If Beijing doesn’t accede to the US’s trade terms, “we’re going to substantially raise those tariffs,” he said.

 

Argentina downgrade

Sure, Richard Feltes at RJ O’Brien said that South American weather “leans negative” for Chicago prices, “with Brazil dry areas shrinking while Argentina is still slated for general rains at the end of the 10-day period”.

 

Still, Dr Michael Cordonnier, the respected analyst, lowered his Argentine soybean production forecast by 1m tonnes to 55m tonnes, citing weather worries.

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