• HEADLINES: Wheat leads morning rally on concern over Black Sea logistics; Global weather patterns stagnate.

• Chicago futures are mostly higher at midday as corn, wheat and soy markets add varying levels of premium. Wheat’s been the star performer on Friday amid escalating Black Sea tensions, with a new threat emerging the form of vessel logistics. Wheat markets worldwide have been reluctant to discount the potential for a slowing of Black Sea grain flows, but much more attention will be paid to weekly corn/wheat shipments there next week and beyond. We maintain a bullish bias based on geopolitical risks and as S American crop potential continues to erode as odds are high that warmth/dryness in Argentina persists into the first part of March. The Buenos Aires exchange on Friday detailed that later planted corn is beginning to pollinate in primary producing areas.

• Spot crude has extended its overnight rally to $1.95/barrel. The DOW is flat. Paris milling wheat futures look to settle €7.00-8.00/mt higher. US exporters sold another 108,000 mt of soybeans to China for new crop delivery and 128,000 mt of old crop corn to Japan. Importer interest has risen on the hike in price which is important.

• Other breaking news is absent. Key on Sunday night is whether updated weather model runs show any chance of needed rainfall in Argentine and Southern Brazil during the final week of February. Odds of this are low given cooling equatorial Pacific Ocean temperatures, and the lack of pattern change warrants strong early-week trade. As of this morning, longer-term climate models are in broad agreement that abnormal dryness will blanket Argentina and even much of Brazil’s safrinha corn belt into the end of March. Our message is that S American weather/supply threats have not ended.

• We also expect the market to pay closer attention to near-term US weather beginning in late February. There is no indication of any atmospheric pattern change that would allow a better flow of moisture to impact areas already impacted by drought across the Southwest and Southern and Central Plains. Precipitation accumulation since Oct 1 in TX, OK, eastern CO and western KS sits at just 15-40% of normal, and so current drought is the result of long-term deficits. NOAA’s analysis suggests rainfall there of 4-7” is needed in the next 60 days to end drought. Meanwhile, NOAA’s evaporative demand forecast implies Plain’s drought expansion over the next two months.

• The global wheat market in recent weeks has shifted focus to seasonally declining world trade and developing surpluses in Europe. The perception of new crop wheat supply and demand begins to impact wheat price determination more directly March 1 onward.

• The midday GFS weather forecast is much wetter in far North-eastern Argentina in the 11-15 day period, though confidence in this solution is lacking. Cumulative rainfall of 4-6” is offered to a narrow area enveloping northern Cordoba, Santa Fe and Entre Rios. Close attention will be paid to EU/Canadian model guidance for confirmation. Otherwise, the 10-day forecast is similar to the overnight run, with meaningful precipitation in S America isolated to Central and Northern Brazil. The GFS forecast also maintains extreme heat in Argentina in the 6-10 day period, with highs there routinely exceeding 100 degrees. Immediate focus stays on Argentina, but it remains that soaking rain is needed in Southern Brazil by early March to maximise safrinha corn yield potential.

• Chart-based support has held. Corn and soybeans have found new price plateaus, with spot beans to trade in a range of $15.50-16.20 until more Brazilian harvest data is available. The long-term outlook stays bullish as Argentine crop health slides further. Breaks are buying opportunities.

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