- It has been a mixed and dull session (again) in Chicago and elsewhere. All markets are near unchanged at midday, with European wheat eyeing a similar settlement. US-Chinese negotiations will be ongoing this week, and comments from Treasury Secretary Mnuchin indicate that so far things are going well. USDA Deputy Secretary Censky commented that Presidents Trump and Xi are expected to meet in March. It remains tough to be overly short ag futures ahead potential large-scale Chinese buying.
- Other news this morning is mostly positive. US ethanol production through the week ending last Friday totalked 303 million gallons, up a solid 18 million from the prior week and even above the previous year’s level for the first time since early November. US ethanol stocks last week totalled 985 million gallons, down 20 million from the prior week. Weekly ethanol stocks/use fell sharply. Crude at midday is up $1.15/barrel to $54.25. Gasoline and ethanol prices are in tow, with spot RBOB testing recent highs. No new export sales were announced this morning, but there has been more discussion over the recent plunge in ocean freight. This favours Argentine origin corn into Asia beginning in late spring, but will also help US wheat find non-traditional markets, including North Africa. Weekly export sales on Thursday are expected to include 30-35 million bu of corn, 38-45 million bu of soybeans and 22-27 million bu of wheat, the lion’s share of which should be HRW. Corn sales tend to stay seasonally slow during the Christmas and New Year holidays. Note too that FAS plans to be fully caught up with its sales reporting in next Friday’s release. There is no sign that the US weather pattern will change by the end of February. Additional heavy snow will impact the PNW and Midwest into early next week. Temperatures lean cool, with frigid readings to persist across the N Plains and Upper Midwest. We also mention that Australia is entering its third year of extreme drought. 30-day Aussie precipitation ranges from 0-40% of normal in the West and Northeast crop belts. Little/no rain is forecast in the next two weeks.
- The S American weather forecast is wetter in Central Brazil next week and hints of needed rainfall in Central Argentina beyond February 22. The GFS’s outlook is rather favourable in Brazil, with widespread soil moisture improvement expected during and just after safrinha corn seeding ends. Weather watchers are eyeing developing dryness in Argentina, and recall later planted corn pollinates in late Feb and March. Whether the EU model follows this wetter outlook will be watched closely.
- Ag future are caught in long established ranges, and the waiting game will continue. Several weeks of US export demand will be released next Friday. The USDA’s Outlook Conference is scheduled for Feb 21-22. This will be followed by US-Chinese talks and a potential extension in the trade truce. Grains remain fundamentally supported, but too many crosscurrents will keep the spec community from establishing large positions. We estimate that managed fund length in corn has been pared down to near zero.