- HEADLINES: Chicago markets flat at midday; China buys US corn; Brazil trending drier.
- Chicago futures are mixed, and Little changed at midday. Rallies and breaks lack momentum. Paris milling wheat futures have recovered from early morning, while row crops benefit from solid, and in the case of corn rising domestic demand.
- We maintain an outlook for choppy Chicago trading in diminished volume into the release of NASS’s stocks and seedings data on March 31. Neither the bulls nor bears can manage any leverage amid the uncertainty of the report. Plains rainfall has been and will be beneficial. Additional precipitation into April will fully replenish Midwest/Central Plains US soil moisture. The Northern Plains will be largely missed. Strong cash markets suggest end user buying lies below Chicago while Brazilian safrinha corn yield risks stay elevated. Precipitation across Brazil into mid-May will have a dramatic impact on the world’s exportable surplus of corn.
- FAS announced that China has secured 1.16 million mt of US corn for old crop delivery. We would mention that this corn was purchased in the cash market last week with China announcing the sale head of Thursday’s Anchorage Bilateral meeting. The sale raises 2020/21 corn sales to a record 2,400 million bu. We hear that another 700-800,000 mt of China sales announcements could be made.
- 2,400 million bu plus of US corn sales reflects 92% of the USDA’s 2020/21 forecast, a record for mid-March. The pace needed moving forward drops to just 10 million bu/week (sales last Mar-Aug averaged 25 million). And the recent surge in shipments supports the idea that China will indeed ship out its purchases.
- US ethanol production through the week ending March 12, to be released Wednesday, is estimated at 278-283 million gallons, vs. 276 million the previous week, as mobility data indicates a further uptick in miles driven has occurred since early March.
- Brazil’s interior corn price index scored fresh all-time highs when valued in Reais, with a weaker currency only modestly offsetting the recent dramatic rally. Brazil’s corn index is quoted at $6.90/bu, vs. $5.00 a year ago. Short and long-term forecasts maintain the risk that a lengthy period of dryness returns to Central Brazil beginning next week.
- Corn has taken over bullish leadership amid the need for perfect Brazilian weather and as the shift in world consumption from the Northern to the Southern Hemisphere will not occur in full until late summer/early autumn.
- Chicago brokers estimate that funds have bought 5,200 contracts of corn, while being flat in soybeans, and selling 2,100 contracts of wheat. In the products, funds have sold 3,000 contracts of soyoil while being flat in soymeal.
- The midday GFS weather forecast is wetter in Argentina and drier in Eastern Brazil relative to overnight output. Additional rain lingers in Buenos Aires into Wednesday. Unwanted showers continue in Mato Grosso and far Northern Brazil into the weekend before net drying makes a return.
- A pattern shift occurs next week. High pressure ridging returns to Centre-East Brazil next week which blocks precipitation from all but far Southern Brazil during March 22-30. This pattern will allow soy harvesting to be completed, but the duration of dryness in Mato Grosso/Parana should be closely monitored.
- In just two weeks the market’s perception will shift over to US new crop supply potential. Chicago old crop breaks will be brief and shallow on tightening supplies. Minor oilseed/veg oil markets continue to rally, but one must be careful regarding a top in palmoil in seasonal supply expansion. World oilseed crush margins are profitable. Cash wheat at current prices finds increased feed use. The global corn market cannot afford the loss of Brazilian corn this spring. Corn/soybean prices in April hinge on the March 31 Stocks/Seeding report data.