- HEADLINES: Paris wheat futures drop to lowest level since 2020; Tugs Chicago corn lower; Brazil crop estimates lower.
- US wheat futures sag following Paris Futures/Russian FOB offers steady at $209/mt; Soyoil holds on talk of improving cash demand from biofuel industry; Private forecasters adjusts Brazil soybean crop down to 143.9 million mt and corn to 114.9 million mt. Brokerage firm StoneX raises Brazilian soy crop estimate 151.5 million mt.
- Chicago grain futures are mixed at midday in a reversal of yesterday with soybeans higher while the grains sag on falling EU/Russian cash offers. Chicago wheat has fallen on fund-related selling as May futures dropped below last week’s low at $5.60 which triggered new selling from algo/AI trading systems.
- May Chicago wheat contract lows rest at $5.535, a reversal that was established on February 20. The March/May wheat spread has pushed out to a 3.50 March premium as cash supplies are sought to fulfil prior Chinese purchases.
- March Paris wheat futures fell to €184.50 this morning on a wave of selling that has prevailed throughout the week. Today’s low in spot Paris wheat is the lowest since August of 2020, the depth of the pandemic and before the arrival of record large Chinese corn imports. It is liquidation which is much like Chicago March corn the week prior. Cash longs that are bailing on delivery potential.
- Chicago corn has been dragged lower by the wheat weakness in “me too” selling. May corn is up 11 cents on the week on active China demand for Ukraine corn. US cash corn selling has subsided and chart support at $4.18-4.21 should hold.
- Soybean futures have been supported by firming Brazilian basis in the May forward timeframe as the market starts to dial in a smaller Brazilian harvest. How small has yet to be determined with yield data from RGDS key to deciding whether the Brazilian soybean crop is north or south of 146 million mt.
- Chicago brokers estimate that managed money has sold 6,700 contracts of Chicago wheat, 5,900 contracts of corn, and 3,900 contracts of soyoil. In soybeans, managed money has bought 3,200 contracts and 1,900 contracts of soymeal.
- The latest private 2024 Brazilian soybean crop estimate was lowered to 143.9 million mt with the corn crop lowered to 114.9 million mt on harvested yield and producer survey data. Our soybean crop estimate is down 1.5 million mt from our February forecast and down 12.1 million mt from USDA. The March Brazil corn production forecast is down 4.8 million mt from last month, and down 9.1 million mt from USDA. March is normally the month that USDA makes their big adjustments to S American crop estimates and there is risk of a bigger than prior month cut.
- StoneX raised their 2024 Brazilian soybean crop estimate to 151.5 million mt vs 150.35 last month with the corn crop virtually the same as last month at 124.4 million mt. The winter Brazilian corn crop is still being planted and it is too early to adjust yield until the monsoonal flow shows an early retreat in April.
- Market volatility in a host of commodity markets is starting to pick up with the new Northern Hemisphere growing season ahead.
- The midday GFS weather forecast is like the prior run and shows modest changes in the outlay of rain across Brazil/Argentina. The coming rain will be enough to satisfy the early moisture needs of corn, but soil moisture levels are in retreat and the forecast should closely watched. No lasting extreme temperatures are forecast with highs ranging from the 80’s to the mid 90’s. The midday model has the Argentine rainfall being slightly further north across Santa Fe and N Cordoba. Southern Argentina will in need of better rainfall by the end of next week.
- EU/Russian wheat is the Chicago grain driver today as cash busts March Paris wheat futures length. Like Chicago corn last week, emotional bottoms are being formed as spot long futures positions are liquidated. USDA’s March WASDE report is next Friday. No news yet from the Commodity Classic from USDA’s Vilsack or EPA’s Regan. Paris wheat is now closed and the grain lows for the day are forming. Look for a modest Chicago bounce into the close on pre-weekend short covering and the rise in spot crude oil futures above $80/barrel. The bio crops of corn/soyoil should be supported on oil.