Grains lost ground overnight after closing sharply higher on Friday. Likewise, crude oil and S&P futures were deep in negative territory to start the week.
On Friday the CFTC showed non-commercials slashed their net short position in CBOT corn by 74,000 contracts in the week ending Jan. 26, to 129,051. Non-commercials cut their net short in CBOT wheat by 19,000 contracts, to 91,973, and expanded their net short in soybeans by 5,400 contracts, to 82,286.
In overnight news, Algeria was in the market, issuing a tender for optional-origin milling wheat, and a group in Israel is tendering for a 100,000 MT shipment of optional origin corn. Russian wheat export prices rose last week as the rouble strengthened, making grain less competitive on dollar-denominated global markets. Black Sea prices for Russian wheat with 12.5 percent protein content were at $182 a MT, up $2 from a week earlier.
Argentina’s weather outlook is wetter today relative to that of Sunday. Rains are expected late in the week with scattered showers over the weekend, and more significant rain early to mid-week next week. Brazil is still seeing areas of heavy rain to slow harvest, but areas of the center south and northeast had some dryness.
Oil found itself on the defensive as economic data from China showed the manufacturing sector contracted at the fastest pace since 2012. Also, last week’s price rally was driven by talks of an output reduction deal among OPEC and Russia, but that action seems less likely to happen. A senior OPEC source told a Saudi Arabian newspaper it was too early to talk about an emergency meeting of the Organization of the Petroleum Exporting Countries. OPEC member Iran, which last month was allowed to return fully to markets after years of sanctions, is so far unwilling to participate in cuts. Partly because of Iran's return, OPEC output has jumped to 32.6 million barrels per day (bpd), its highest in years, adding to supply of more than 1 million bpd in excess of demand which has pulled prices down 70 percent since mid-2014.
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