Grain Markets Rally Monday

We saw a nice rally in corn and wheat Monday but beans were the leader, posting gains of about 26 cents a bushel. It is not unusual to see the grains rally during the shortened Thanksgiving holiday week. If there is friendly news, many times trading is a little thin because some traders take time off during Thanksgiving week. This year it sure seems like there is a fundamental reason for a rally even with record corn and soybean in the United States.

In South America, Brazil's second crop of corn was hurt badly by drought. In addition, Argentina's soybean crop was hurt by heavy rain just as the beans were ready to harvest. The result is South America does not have any corn or beans to export right now. That means if a country needs beans or corn they are only available from the United States. In addition, the palm oil crop was hurt by bad weather in Malaysia. Palm oil competes with soybean oil. With less palm oil the world is using more soybean oil.

Corn and bean exports from the United States reflect that we are the only country with available supplies. Year to date corn exports from the United States are running 83 percent over last year's pace and beans are 26 percent above last year at this time. This strong export pace should continue until later on in February or March when new crop supplies are again available from South America. At this point the weather in South America is OK but traders are watching it closely. Hang on if there are weather problems in South America!