Grains Analysis
by Tim Hannagan, PFGBEST
1-800-563-9510
thannagan@pfgbest.com

Tim Hannagan is one of the nation’s most prominent grain analysts. His report for Tuesday, Jan. 17:

Late Friday, the weather gurus added rain to the weekend forecast for South America and prices pulled down toward the end of the session. But they added weather premium back in Monday night, after the weekend was drier than expected. Now there is also talk of dry weather into Friday.  That's what the market is doing now, pricing in the forecast as the South American crop is developing.

WXRISK.COM still expects rain for this weekend in the dry areas of central Argentina of .50 to 1.50 inches with up to 60% coverage. This helped limit gains Tuesday. If outside markets pull back from today's gains Wednesday, and the rainy forecast still holds for the weekend ahead, grain prices could weaken Wednesday.

Then again, if they think the forecast for the weekend and even beyond is going to be drier, we should expect to fill at least 75% of the gap left on the charts from Thursday's USDA crop report on the upside. Grain agencies in Argentina and Brazil continued to lower eventual corn and bean production, but the trade here listens but doesn't react as they know their grain agencies are small, understaffed and generally rely on common perception and reporting systems that are far less sophisticated than USDA’s.

Farmers there have no incentive to report early crop results. I do believe corn and bean yields and production are much lower than our recent USDA report suggested as our government is always slow to adjust to foreign shortfalls. The reason or theory is the U.S. government is perceived by foreign entities to have superior crop forecasting tools such as weather satellites, and we don't want to dictate foreign pricing, and/or create panic as a result of our advantage at the expense of another government program of pricing and crop controls.

Technicals: March corn support is $5.90 with resistance $6.16 then $6.40. March bean support is $11.55 with resistance at $12.00 then $12.25. March wheat support is $6.00 then $5.75 with resistance at $6.50.

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