- Commodity markets always react more to US/China trade news than other financial markets due to leverage that is needed to control a futures position. A China media source wrote on Saturday that a US/China trade summit between US President Trump and Chinese President Xi would not happen until June. It could not be corroborated with any other news sources and based on a 2.5% rally in China’s stock market index overnight, we are dubious to its correctness. Yet, some in the US commodities industry are running with the story and it is causing pressure in Chicago. Our confidence in a China sponsored June signing date between Trump/Xi is low. US/China negotiations are occurring at high governmental level and last week both USTR Ambassador Lighthizer and US President Trump stated that a US/China deal could be announced in weeks. We see no corrections from the US side on their comments of reaching success in “weeks” and we suspect that if negotiations are not completed in quick order, the US could again raise tariffs on Chinese goods. We doubt that the US/China negotiations will drag on for months. No one in DC seems to know where the US/China June signing date has come from.
- Traders estimate that funds have sold 2,200 contracts of wheat, 3,600 contracts of corn, and 2,900 contracts of soybeans. In products, funds have sold 1,100 contracts of soymeal and 900 contracts of soyoil. Volume has been extremely slow in the morning Chicago decline with their being no directional passion. US export inspections for the week ending March 14 were; 31.3 million bu of corn, 30.9 million bu of soybeans, and 13.0 million bu of US wheat. For their respective crop years to date, the US has shipped out 1,078 million bu of corn (up 221 million or 26%), 1,017 million bu of soybeans (down 461 million or 31%), and 660.5 million bu of wheat (down 6% or 43 million).
- Ukraine has exported most of their 8 million mt of milling wheat that was a soft allocation by the Government last autumn. And Ukraine has exported 5 million mt of feed wheat, with there being no passion to export the remaining 3 million amid high fob prices relative to corn. Also, Russian wheat export estimates for March are declining to 1.8 million mt with sales going forward to be sharply restricted by strong interior prices and a lack of supply in the east. We doubt that Russia will export 37 million mt and see the total being between 34-35 million mt.
- A dry/mild weather profile is offered for the Midwest/Plains for the next 8-9 days. Cool temperatures will give way to warming later this week which will accelerate the snowmelt across the north and add to tributary flooding through the West Central US. Several weak systems will produce rain through the Plains/Delta with the north largely dry/mild. A new potent storm system is forming in the SW US next Wednesday (March 27) which looks to pull eastward in the last half of next week. This system is farther north in the GFS weather solution, farther south in the EU model. A wet Central US weather flow returns late March to exacerbate flooding woes.
- The market’s confidence in a US/China trade deal was diminished on the weekend with a China media report saying that a signing summit could be delayed to June. That report cannot be confirmed with either US or Chinese sources. Our confidence in its correctness is therefore low. Funds are sitting on a record corn short with key NASS reports just 9 trading days away. Central US weather looks to be turning cool/wet in late March and early April. This is no place to be making new sales in the grains.