China and Brazil grabbed the weekend headlines and was very much the focus behind much of Monday's futures rally in soybeans and wheat. Brazil's main soybean producing region is receiving too much rain and is placing the maturation and harvest pace at risk and quality issues could be the next big item to be mentioned in the major news wires. Heavy rains over the weekend and steady rains are forecasted much if not all of this week. The best chance for cooperative dry weather may not appear until late this weekend into next week. We need to insert that early corn harvest yields are very inconsistent within Argentina as it works through the frost-freeze fringe areas. However, the seven-day forecast is viewed as beneficial to its soybean crop.
China is a two-fold tale. Reports began to surface over this recent weekend that China needs to increase its imports of Malaysian palm oil to build sufficient cooking oil supplies before the 2008 summer Olympics that are to be held in China from September 6th through the 17th. With recent January damage to its rapeseed crop, China suggests additional imports are needed. Take note of two items with regards to its rapeseed damage assessment. Number one is that China's early estimates suggested the damage of their rapeseed crop at 40%, while sources outside of China suggest the damage will be closer to 10%. China's own finance ministry now suggests the damage incurred was less than 2% of last year's production or about 200,000 tonnes damaged. The same rapeseed region is also a prime soybean-growing region, but new crop supplies will not be available until immediately after the games have concluded. The number 2 issue is the lack of moisture for China's winter wheat crop. New wire reports suggest China's winter wheat crop is in a drought area. In looking at the prime winter wheat area of China, weather conditions continue to support the idea of favorable weather. It is the spring wheat region, which is experiencing stress and far from being planted. This spring wheat area as well as the key northeast region where corn and soybeans are planted will bear scrutiny as spring planting approaches in late April to early May.
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