- Chicago futures are higher at midday on positive comments from USTR Ambassador Lighthizer that the US/China are in the final weeks of having an agreement, but there are still issues that must be resolved. Lighthizer went further than the US/China have scored real progress and that the final document is running as long as 120 pages. Today’s testimony from Lighthizer was far different from his late February briefing which was more hawkish on US/China trade negotiation progress. Chicago immediately added premium to price with funds buying wheat, corn and soybeans at mid morning. The tone for midday is more positive today that it has been in weeks. Wheat has already scored a technical reversal with soybeans and corn scorning new lows, but not taking out the prior days high. The bears are asking about the timing of when the US/China could announce a signing ceremony. The large net fund short position appears to be shifting the risk back to the bulls.
- Chicago floor brokers estimate that funds have bought 5,400 contracts of wheat, 3,200 contracts of corn, and 4,300 of soybeans. In soy products, funds have bought 2,300 contracts of soyoil and 1,200 contracts of soymeal.
- IEG Vantage (formally Informa) estimated 2019 US corn seeding at 91.77 million acres with soybeans at 85.5 million acres. The corn estimate was up slightly from their February forecast with soybeans slightly lower. Their other spring US wheat seeding forecast was 13.6 million acres, also little changed from February.
- CONAB estimated the 2019 Brazilian soybean crop at 113.5 million mt with corn at 92.8 million mt. The soybean crop forecast was less than expected while corn was in line. Research does not see the Brazilian soybean crop falling too far below 113 million mt.
- EPA Head Wheeler stated that he would sign a bill in the next 36 hours allowing for EIS to be used this summer. We calculate that the EPA decision would allow for an additional 200-300 million bu of corn to be used during the summer driving season. It is not a panacea for a new bull, but it may allow WASDE to bump up their corn use for ethanol by 25-50 million bu following the signing of the order.
- USTR Lighthizer stated that a US/China trade deal would open “a lot of US ag sales for US farmers” and that the agreement would address non-tariff barriers such as GM and GM approval. This comment bumped US ag futures higher.
- Media has the US$ amount of US ag goods that China would secure annually at $30 billion on top of pre-trade war levels, which using the 2017 crop year would produce annual buying of $50 billion, a monstrous total.
- A storm system is forming in the SW US in the next 24 hours which will grow in intensity across the Plains/W Midwest late Tuesday and Wednesday. The storm will produce blizzard conditions and excessive rainfall from NE into MN. Strong winds and another pull of arctic air follows. As the storm exits on the weekend, a 5-day period of mild/sunny weather will evolve with any cold temperatures holding across the NC Midwest. We do not see this as a pattern change with another system brewing in the Pacific and likely to pull eastward across the Central US after Mar 22.
- Aggressive fund selling pushed Chicago prices lower than should have been expected if a US/China trade deal is in the works. However, trade deals are binary and funds were betting against a successful negotiation. Our vote is for a US/China signing announcement in the next two weeks.