- HEADLINES: Inflation runs hot for March at 8.5%; GASC allows other wheat sellers; Biden announces E15 in vote of confidence.
- Chicago futures are strongly higher at midday with corn, soybeans and wheat all trading to hefty daily gains. The volume of trade expanded with the rally as new investment enters the commodity space in line with the March US inflation rate of 8.5%, the highest in 40 years. Investment funds see commodities as a partial hedge against inflation. Diversification into commodities is being advised by a host of wealth advisors and hedge fund managers.
- And the decision of the Biden Administration to allow the use of E15 to lower unleaded gasoline prices was a vote of confidence for the renewable fuel. There was worry as world food prices soar, politicians would pull back on their green fuel pledges. Today’s Biden’s decision to allow E15 to lower fuel costs ended any nearby concern that food will take precedence over fuel.
- Chicago stays in a bull trend trying to gauge Central US weather conditions for spring planting and the ongoing Russian war.
- Chicago brokers estimate that funds have bought 3,100 contracts of wheat, 5,500 contracts of corn, and 2,600 contracts of soybeans. In soy products, funds have bought 3,100 contracts of soyoil and 2,200 contracts of soymeal.
- For the first time since 2013, spot cash corn bids reached $8.00/bu in the W Midwest with ethanol producers bidding up for nearby needs. To date, $8.00 cash corn in NW Iowa and C Illinois has not sparked much new cash corn movement. It is new crop where farmer selling is focused as new crop cash corn nears or exceeds $7.00/bu. The basis bids for new crop are discount, but they are premium for old crop as supplies tighten.
- No new daily export sales were reported by FAS, but Thursday’s Weekly Export Sales Report is expected to show sizeable new corn/soybean demand. China’s 1.0 million mt corn purchase of last week will be included which should produce a weekly sales total of 1.8-2.0 million mt. Soybeans will also be robust on Chinese interest. China has been securing Brazilian soybeans in recent days on their discount.
- Egypt’s GASC has said that it will now accept wheat offers from Russia/Ukraine and Eastern Europe in its latest tender that closes tomorrow. The tender originally called for just EU wheat, but sellers can also submit offers from the more traditional sources of supply. Whether GASC will be willing take the risk on Black Sea wheat execution will be seen. GASC is also said to be looking at Indian wheat purchases, but their aversion to Karnal Bunt, a fungal disease is likely to prevent India from being an origin.
- Russian President Putin indicated that Russia would press Ukraine until their goals are fully met. Putin persists that the war is going per plan. Anew Russian offensive appears to be preparing for Eastern and Southern Ukraine with capturing the Donbas as being the initial military goal. And whether a poisonous substance was dropped into Mariupol, Ukraine is under investigation. The Russian war rages with atrocities against Ukraine civilians having a serious negative impact on the peace/cease fire talks. The Russian war appears to be lengthy, with few aware of Putin’s final goal.
- The midday GFS weather forecast is consistent with ongoing arid weather across the Southern and Central US Plains with heavy snows to drop across North Dakota and the northern half of Minnesota in the next 48 hours. Cool to cold temperatures prevail across the Central US into April 24 which will slow seeding and seed germination. The planting window is pushed forward to the last days of April and early May.
- There is no sign of demand rationing in wheat, corn, or soy via high and rising prices. US cash soy crush margins are profitable by $1.90/bu, livestock feeders have margin as do US ethanol producers. Chicago must reach values that spark demand rationing, which has not yet occurred. Adverse weather only adds to any existing bullishness. The market risks stay bullish heading into an extended holiday weekend.