What Traders are Talking About:
* South American weather improving. Weather conditions were generally improved across Brazil and Argentina this week with central Brazil seeing drier conditions, while southern Brazil and Argentina got some needed rains (although not enough in many areas of Argentina). Forecasts call for more of the same through the weekend and early next week. While this rain event hasn't been great to this point, it at least should stop the bleeding in some parts of Argentina and southern Brazil -- for now.
The long and short of it: There are still areas of concern in South America, primarily with the Argentine soybean crop, but there are indications the weather pattern is improving. If the weather pattern is trends wetter in Argentina and southern Brazil, and drier in central Brazil, it will be hard to drum up more than light short-covering in soybean and corn futures.
* Brazil buys U.S. HRW wheat. A Brazilian miller purchased 100,000 MT of U.S. HRW wheat amid limited supplies in Argentina. The fact Brazil is looking to U.S. wheat to meet needs after as short Argentine crop is not a surprise, but the timing is a little curious. Last week, Brazil's ag ministry announced it would exempt 1 MMT of wheat (possibly up to 2 MMT) from the 10% grain import duty outside the Mercosur trade bloc (Argentina, Brazil, Paraguay, Uruguay, Venezuela and Bolivia) from April through July. Unless there is a special exemption, this purchase would be subject to the import tax.
The long and short of it: This purchase, while small, suggests Brazil's need for wheat from sources other than Argentina is real. As I said before, the U.S. has much better odds of picking up business from Brazil than from Russia, which will also allow duty-free imports from April through July.
* Markets closed next Monday. Grain and livestock markets will trade normal hours today ahead of the extended holiday weekend. Markets and government offices are closed Monday, Feb. 18 for Presidents Day. After recent price downturns, short-covering ahead of the holiday weekend is likely as traders typically hedge their bets over extended weekends.
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