- HEADLINES: Row crops recover following CONAB, Export sales data.
- Chicago soybeans have led a recovery in row crop values while US wheat futures trade steady to slightly lower. CONAB’s failure to raise Brazilian soy production above 135 million mt is noted, and US weekly export sales exceeded expectations. There is still no concrete evidence that US export demand is slowing, and even amid the absence of China US corn sales remain far above the pace needed to meet the USDA’s forecast.
- Export sales through the week ending Feb 4 featured 57 million bu of corn, an impressive total given China’s securing of 2.1 million mt on Jan 29 was reported in the previous week’s tally. Mexico and Japan combined for purchases of 39 million bu. From mid-Feb to August exporters must now average corn sales of only 12 million bu per week to hit the USDA’s 2,600 million bu target. US soy sales totalled 30 million bu, unchanged on the previous week and which included confirmed Chinese purchases of 19 million bu. Soy sales moving forward must average only 2 million bu per week. US wheat sales were 22 million bu, vs. 24 million the prior week. Meal sales totalled a sizeable 263,000 me, and a clear boost in US meal export demand has occurred since the end of 2020. Slowed Argentine crush and worrisome dryness there will sustain interest in US meal through spring.
- For their respective crop years to date, exporters have sold 2,266 million bu of corn, up 142% from last year and a record 87% of the USDA’s forecast, 2,185 million bu of soybeans, up 81% from last year and also a record 97% of the USDA’s forecast, and 845 million bu of wheat, up 5% on last year. Pace analysis places final 2020/21 US corn exports at 3.0-3.1 billion bu and final 2020/21 US soy exports at 2,350 million bu. USDA numbers as they stand today demand a rapid shift in world trade flows or massive cancellations of existing sales. The market is watching Brazilian vessel waiting times grow amid slowed soy harvesting. The pace of harvesting is unlikely to improve until the latter part of February.
- To that end, markets have quickly fallen to fair value as determined by the USDA’s February US balance sheets. The market’s readjustment occurred in a rather quick 1.5 days. A choppier marketplace lies ahead as S American yield data is awaited. The risk of crop reductions will keep end users and importers active on breaks.
- European corn futures did not break significantly following the USDA’s Feb WASDE release and continue to inch closer to mid-Jan’s 7.5-year high. Up-river corn fob basis in Argentina is quoted slightly firmer this morning.
- The Buenos Aires Grain Exchange this afternoon is expected to raise corn and soy crop ratings following rainfall in far Western and Northern growing regions and mild temperatures in all areas. Yet, the two week forecast maintains near complete dryness and rising temps into late February.
- This year’s seeding delays pose a problem for later planted crops. BAGE last week estimated that 25% of the soy crop is setting pods, vs. 41% a year ago. 36% of Argentina’s corn has reached pollination, vs. 51% a year ago. Argentine weather stays critical into early March.
- The midday GFS weather forecast is drier in Central Argentina in the 11-15 day period but is otherwise consistent with prior runs. S America’s upper air flow into Feb 24 will block meaningful rainfall from flowing across Argentina and Southern Brazil. This will also funnel heavy cumulative precipitation into Mato Grosso, Goias and far Northern Brazil through the period. The GFS forecast maintains that precipitation accumulation upward of 7-10″ will impact pockets of Mato Grosso and N Brazil over the next two weeks.
- Markets will continue to trade USDA balance sheets, which has turned focus almost entirely to S American production. The return of this supply-driven market will produce wild price swings. We would caution against chasing strong breaks and rallies until more is known about S American production and US seeding intentions.