Grains posted modest gains overnight with soybeans and wheat posting a nearly 3 cent advance and corn was fractionally higher. Outside markets saw S&P futures and crude oil lower, while the US dollar firmed slightly in the night trade.
Argentina on Tuesday removed limits on how much corn and wheat the country's huge farm sector can export. This follows the new policies earlier in the month that eliminated export taxes on corn and wheat, which plunged Argentina’s corn export price to a 25-cent discount when compared to the US over the past two weeks. The export quotas had curbed corn and wheat planting and resulted in the overplanting of soy in recent years. The government has estimated that the country's grains production will grow to 130 MMT from the current 100 MMT.
In weather news, Brazil’s Northeast states of Bahia and northern Minas Gerais are the focus of concern were hot, dry conditions are limiting production potential. Light rain is expected in the region through the end of this week, and is expected to increase by the weekend into next week. The rain will slowly bolster soil moisture and ease some of the stress to crops. Rain totals for the seven day period ending next Tuesday morning will range from 0.75 to 2.50 inches with locally greater amounts. Moisture shortages will remain in most areas in northeastern Brazil by the beginning of next week. Even so, the remaining 95% of soy producing area in Brazil remains at or above adequate soil moisture.
Heavy weekend storms caused flooding in parts of the southern U.S. Midwest, threatening the region's soft red winter wheat crop, although the magnitude of the impact is expected to be limited. Concern was also mounting about potential crop damage in Russia. A forecast plunge in temperatures in parts of Russia could pose risks to winter grains after abnormally warm weather in recent weeks reduced the snow cover protecting them.
In crude, prices fell on the prospects of a short-lived cold spell through Europe and the US, which had provided some hopes of demand stimulus last week. Oil could draw support if U.S. Energy Information Administration data later on Wednesday shows a drawdown in U.S. weekly oil stocks. A Reuters poll of nine analysts estimated that crude stocks fell 2.5 million barrels in the week ended Dec. 25. The American Petroleum Institute, an industry group, on Tuesday reported a surprise build-up in U.S. stocks.
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