- A low volume/mixed Chicago trading session is underway with selling noted in corn/soybeans as futures pushed below Monday’s low. Wheat futures have held more stable. Chicago values are struggling for direction amid limited news on US/China trade negotiation progress and large S American supplies. Chicago volume is curtailed by the binary aspect of a US/China trade deal. An announcement of a deal will cause a sharp Chicago rally on Chinese demand, while delays or no deal would be bearish. Last June, the market did not react until the US tariff announcement and the same will occur in a trade deal or no deal. Forecasting politics is difficult. Yet, there has been enough progress in negotiations and both the US and China political leadership need to move beyond the 9-month trade spat. The question is when. Research doubts that corn, soybeans or wheat can sustain a break with funds so heavily short.
- Traders estimate that funds have sold 2,900 contracts of wheat, 4,700 contracts of corn, and 3,100 contracts of soybeans. In products, funds have sold 3,100 contracts of soyoil and 1,500 contracts of soymeal.
- Plains and W Midwest farmers continue to be vocal that the autumn of 2018 was one that they would like to forget amid the abundance of rain and length of the harvest. Seed corn company test plot and producer harvest data offers a significant drag in US corn and soybean yields due to the wet adverse weather. However, since NASS harvests their objective test plots in September/early October for the October Crop report, did they catch this yield degradation. That is the big question that farmers and traders are pondering heading into next week’s March Stocks report. If NASS overstated US corn and soybean yields, it should be uncovered in coming quarterly stocks estimates. A bullish surprise could loom in the US corn stocks data on March 29.
- The WSJ is reporting that 9 million people and countless thousands of livestock are being adversely impacted by severe flooding. NE Governor Peter Ricketts is calling the flooding; “The worst that the state has ever endured”. Standing water is everywhere and as temperatures warm, the snowmelt is expected to worsen. The forecast offers mostly dry weather for the next 7-9 days, but it is going to be important that near to above normal rains do not return in early April or severe spring planting delays will be endured. The flooding comes at a bad time for cows calving and for dairy operations struggling with low milk prices and poor margins. Soy crush plants are struggling amid the flooding.
- A seasonal/slightly wetter weather profile is offered for the Midwest/Plains for the next 8-9 days. The GFS forecast has added light showers on the weekend and early next week. Amounts will be generally less than 0.5″ with coverage no better than 45% of the Central US. Temperatures will be seasonal with highs ranging from the mid 40′s to the mid 60′s. No bitter cold is foreseen which will start to warm soil temperatures. A new potent storm system will form in the SW US mid next week which will pull eastward through the Plains/Midwest from March 20 into April 2. This system looks to lay down 0.5-2.50” of rain and introduce new flooding woes. El Niño is rapidly building in the equatorial Pacific which looks to keep the Central us wet into May.
- A US/China trade pact is a binary event in being either very bullish (if it occurs) or very bearish (if it does not). Funds are adding to a HUGE net Chicago short. If a China trade deal occurs there will be upside fireworks in US ag markets. US President Trump will be holding a press conference this afternoon with Brazilian President Balsonaro. We expect reporters to ask about a US/China deal progress. We continue to believe that this is no place to turn bearish on Chicago.