• Chicago corn, soybean and wheat futures are mixed at midsession. Corn has been the upside leader with gains of nearly 8 cents, recovering more than half of Thursday’s loss. Wheat has weakly followed corn with soy futures trading quietly on either side of unchanged.

• Overall Chicago volumes are low with traders not wanting to take on risk ahead of a 3-day weekend. The CME is closed on Monday in observance of the Martin Luther King Holiday. China and non-US world financial markets are open which causes the bears worry that China could issue duty free import licenses that would start their annual purchase programs. The bears are openly discussing that they do not want to be short on the night that China offers such licenses.

• Chicago brokers estimate that funds have bought 15-16,000 contracts of corn and 900 contracts of wheat, and 1,200 contracts of soybeans. In soy products, funds have sold 2,300 contracts of soyoil while being flat in soymeal.

• There are strong cash rumours that China has booked 2-4 cargoes of US corn off the PNW for spot shipment. US corn is the cheapest in the world for the next 6 weeks which has some hoping for additional US corn purchases. We assume that this is for open/existingTRQ’s and that China is allowing the receivers of the TRQ’S to make purchases. We also note that 2 cargoes of US sorghum are in the Texas Gulf line-up that is nominated for China. China could secure additional US corn amid its world price competitiveness. US wheat is the most expensive in the world which could cause it to languish. China would be better securing the wheat away from the US.

• The upshot is traders must be careful in selling the ag commodity that is the cheapest in the world. TRQ demand that has been rumoured for months could now be getting booked, if the US price works. China has already booked about 3.0 million mt of Ukraine corn and a small amount from others, so it is possible that China could take 3-4 million mt of US corn in nearby.

• We are also told that there was sizeable buying of US cash beef/pork and poultry products on the CME break from Japan, Mexico, South Korea and China. Chinese and world meal traders want to get the cash product booked before China issues duty free import licenses in the next few weeks.

• The forecast has added some rain to Central and Northern Argentina with a complex storm complex on Tuesday/Wednesday next week. The rainfall will be welcomed with other areas missing much precipitation over the next 10 days. RGDS in Southern Brazil is also parched with near to slightly below normal temperatures. Heavy and sometimes soaking rain falls across Northern and Central Brazil which will slow the harvest but help latent maturing soybeans. The rain will be needed to boost soil moisture as the winter corn crop is being planted. Overall, the forecast has more rain for Argentina and is favourable. The only concern that we have is S Argentina where weeks of recent dryness must be monitored.

• Chinese traders know how to profit when a window of opportunity opens. US corn is the cheapest in the world into early March and existing TRQ’s are now active. This means that those holding TRQ’s could use them for US corn purchases. A total of 3-4 million mt of US corn sales potential exists. US wheat is not competitive and US soybean imports requires duty free import licenses.

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