• HEADLINES: Chicago expectedly retreats following early soybean rally; Brazilian farmers reward the rally with large cash sales; GFS midday weather model wetter for S Brazil.

• It has been a vicious trading session into the midday hour with early chart-based buying in soybeans/soymeal sparking a sharp morning rally. Soybean futures rallied to more than 20 cent gains with soymeal up $8.00/mt before hedge related selling emerged. Wheat and corn prices sagged on the cancellations of Australian wheat and errant rumours that French purchases are also being postponed/cancelled. Chicago wheat futures have fallen back to last week’s low, but end user demand is offering support below $5.30 May Chicago.

• The Brazilian farmer leaned on the rally with new cash soybean sales which has pulled values into the red. We doubt that any bull or bear trend can be sustained until after the USDA Stocks/Seeding report later this month. This is one of the most important reports of the year, which is followed by the spring seeding season. There are wide private opinions on US corn/soybean seeding intentions and farmers are still changing their crop mix as they ink revenue insurance policies. Key support is offered below $5.25 May Chicago wheat, $4.285 May corn, and $11.80 in May soybean futures. Soyoil will be the bullish stalwart on setbacks due to the narrowing of palmoil/soyoil spreads. While great crop debate will persist across Brazil on disappointing soy yields.

• Chicago brokers estimate that managed money has sold 7,200 contracts of wheat and 6,500 contracts of corn. Funds have bought 1,200 contracts of soybeans, 2,900 contracts of soymeal, and 1,400 contracts of soyoil. Brazilian farmers were sizeable sellers of cash soybeans on the morning rally with some brokers estimating hedge related sales of over 1.2 million mt.

• There are rumours that China has cancelled 500,000 mt of French wheat. We cannot confirm the rumour and are doubtful. China has cancelled 500,000 mt of US SRW wheat which was announced in the daily USDA sales report. We understand that China private and JV buyers of world wheat are seeing losses and are unable to pass those losses along to the government as it has in the past. The buyers have decided to cancel the sales which are being announced. As the wheat market heads even lower, there may be additional cancellations.

• US weekly export sales for the week ending March 7 were 3.1 million bu of wheat, 50.5 million bu of corn, and 13.8 million bu of soybeans. US soymeal sales were 209,000 mt with soyoil sales at 11,200 mt. The soyoil sales were at a marketing year high. For their respective crop years to date, the US has sold 680 million bu of wheat (up 28 million or 4%), 1,595 million bu of corn (up 342 million or 27%), with US soybean sales down 355 million or 19%). WASDE needs to adjust US soybean export forecasts down another 15-25 million bu in their April report. No change is due in either US corn or wheat annual export forecasts.

• The midday GFS weather forecast is consistent with morning output. Improved rainfall impacts Mato Grosso/Goias across Brazil. 10-day rainfall totals of 2-3.00” are forecast. Soaking rainfall of 3-6.50” is forecast for Southern Brazil and far NE Argentina. Such rain will produce regional flooding with soil moisture levels already saturated. There is a risk to the developing and nearly mature soybean crop that needs to be closely followed. Otherwise, enough rain looks to drop across the remainder of Argentina for favourable crop development with the early corn harvest underway. Strong and in some cases record Argentine corn yields are being reported.

• Until the markets are past the key March 28 USDA reports, values will chop sideways in a somewhat unpredictable pattern. The shorts are trying to cut their market risk while the bulls and end users will not chase a rally without real adverse new crop weather. The first weather risk to monitor is Brazil’s winter corn crop and if the extended range forecasts are correct in an early withdrawal of the monsoon in early April. Our message; “Don’t chase breaks or rallies until after the Easter Holiday”.

• HEADLINES: Chicago chops, above session lows; Crude higher on tightening balance sheet; Brazilian weather stays concerning.

• Paris milling wheat stays weak on reported Chinese cancellation of French purchases. Chicago markets off lows amid rising energy markets, searing heat in Central and Northern Brazil next two weeks. Soyoil stays firmly above 50-day moving average, and tests 100-day moving average, following newer seasonal highs in palm oil overnight.

• Chicago futures are lower, but off session lows, at midday as end user buying absorbs early speculative selling. More attention is being paid to weather pattern stagnation across Brazil’s safrinha corn belt, as well as the coming lengthy period net drying across the US Plains and far W Midwest. Central US fields will be fit to plant much earlier than normal, but the trade is beginning to debate the longer impact of record US winter temperatures, which correlate with summer heat, and net drying across an area encompassing NE, the Dakotas, MN and WI into late month. Weather plays a greater role in price discovery moving forward.

• US ethanol production in the week ending March 8 totalled 301 million gallons, vs. 311 million the previous week but up 1% year on year.

• We believe that the USDA must raise its 2023/24 US ethanol grind forecast 15-25 million bu in its April WASDE, and economics are improving as Midwest ethanol swap prices rise and ethanol’s discount to gasoline is sizeable. Ethanol blend demand rises steadily into late summer.

• Spot WTI crude at midday is up $1.60 at $79.10/barrel as the US’s season of increasing stocks comes to an end. Commercial crude stocks on March 8 were 447 million barrels, down 1.5 million from the prior week and 7% below last year. Unlike 2022, when reserve stocks were being pumped into the marketplace, US crude and gasoline stocks move lower into Aug/Sep. Fair value in crude is seen at $76-82, which on balance lends support to biofuel markets and corn/soyoil. Crude prices tend to peak in May-Jun.

• The major forecasting models are at odds over the placement/intensity of rainfall in Mato Grosso over the next 7-10 days but agree that sweltering heat and complete dryness continue across Mato Grosso do Sul, Parana, and Sao Paulo. High temperatures there on Tuesday were in the mid/upper 90s. Similar readings persist into March 20.

• The midday GFS weather forecast is consistent with morning output. Regionally heavy rainfall impacts E Mato Grosso, Goias and NE Brazil. Soaking totals of 3-4” are forecast in RGDS in southern Brazil. A pattern of below/well below normal rainfall and lingering heat continues in central Brazil throughout the next 10 days, with GFS forecast 11–15-day guidance trending drier. The failure of rain to appear in central/northern Brazil in late March triggers a more robust period of short covering in Chicago corn futures.

• Spot Chicago soy at $11.50, spot corn at $4.00-4.10 and Chicago wheat below $5.80 have fully digested the flood of bearish input thrown at markets in late 2023. It is now a blank canvas, with both the bulls and bears at the mercy of weather forecasts/actual conditions moving forward. Focus stays on Brazil nearby as safrinha corn begins pollinating in April. Excessive rain in RGDS in S Brazil will also be watched as soybean harvesting has yet to begin there.

• HEADLINES: Chicago soyoil pushes above key 50-day moving average; May corn tests resistance at $4.45 and above; GFS weather forecast drier for Central Brazil at midday.

• No new daily China wheat cancelations of US SRW: Widespread debate on which Brazilian crop size estimate to trust, CONAB or USDA. Short covering featured across Chicago with sizeable purchases of soybeans as May tests $13.00 and May soyoil jumps above the 50-day moving average at $47.03. Look for resistance above $4.48-4.52 May corn in a test of the January lows.

• It has been a firm morning in Chicago with soyoil and soybeans breaking above initial chart-based resistance. CONAB is finding that its March Crop estimate is getting more trader “windage” that it might normally receive by coming out after the USDA report. Normally, CONAB releases its monthly crop estimates on the same day as WASDE, which means that the USDA report supersedes the Brazilian forecast. The several day delay in releasing CONAB’s monthly forecast has offered it a crop platform to be debated by the trade. Questions abound on who to trust in estimating the Brazilian corn and soybean crops.

• The 8.2 million mt CONAB soybean crop difference with USDA has important impacts on 2024/25 US soybean exports on the size of the Brazilian soybean export tail. And if the Brazilian corn crop is 112.7 million mt, it too will serve as boost to US corn exports in the September-January timeframe.

• Chicago brokers estimate that funds have bought 4,900 contracts of corn, 5,200 contracts of soybeans, and 2,400 contracts of wheat. In the products, funds have bought 3,200 contracts of soyoil and 1,300 contracts of soymeal. Oil share is back testing 41% as May futures try to close above the 50-day moving average for the first time since early September.

• Increasingly, producer surveys are suggesting that US farmers will plant more soybeans, cotton, and other minor crops since corn/sorghum/spring wheat just do not offer much profit enticement. In the Delta it is all about cotton and soybeans, with farmers really cutting back hard on their intended corn acres due to cost and margin. In the Northern Plains, it is the same crop theme in that corn is too costly with profit margins that are close to breakeven. As farmers ink farm revenue insurance coverage, analysts are questioning whether 2024 US corn seeding will drop closer to 90 million acres with soybeans rising to 87 million acres or more. Heading into the March 28 report, we expect that it is corn that will see the additional short covering due to all the producer and insurance industry talk of fewer seeded acres.

• US Consumer prices rose 3.2% in February, slightly more than expectations that were calling for a gain of 3.1%.  This was the second straight month of firmer than expected inflation which will likely keep the US Central Bank on hold through its June meeting. The risk is not one of the US Central Bank raising rates further but holding them higher for longer. We believe that US Central Bank will only cut its lending rate by 1 or 2 times later this year.

• The midday GFS weather forecast is drier across Central Brazil with limited rainfall for Paraguay, MGDS and Parana with heavy rainfall impacting RGDS and far NE Argentina with 10 day totals of 3.50-6.50”. Our confidence is rising with respect to the coming lengthy period of below normal rainfall and above normal temperatures across a majority of Brazil’s safrinha corn belt. There are hints of better rains across N Brazil in late March/ April, but the strength of Brazil’s monsoon will begin to wane thereafter. Also, closely follow Southern Brazilian rain and the potential for flooding with soil moisture already saturated across RGDS. The Argentine weather forecast leans favourable to yield/crop production into April.

• Key today will be whether May soyoil can close above the 50-day moving average at $46.95 for the first time since September. Funds are short an estimated 58,000 contracts of soyoil futures as of yesterday’s close. May corn came close to testing its 50-day moving average at $4.48 while May soybeans neared psychological resistance at $12.00. Chicago values should consolidate recent gains, but any setbacks will be well supported amid concerning Brazilian weather for late soybean and winter corn production.

• HEADLINES: Wheat recovers and forges a second key reversal; GFS weather forecast drier at midday for N Brazil with searing heat; China cancels 264,000 mt of US SRW wheat.

• China cancelled an additional 264,000 mt of US SRW wheat which elevated the 3-day total to 504,000 mt. Commercial talk has another 2-3 cargoes that could be cancelled taking total cancelations to 600-650,000 mt. This would leave 600-650,000 mt of US SRW wheat sales that will be exported. Chicago wheat rebounded strongly from fresh contract lows at the opening. May Chicago soyoil has tested its 50-day moving average at $46.90 while May corn has exceeded key resistance at $4.40. Soybean/soymeal prices are sagging on spreads.

• It has been a mixed Chicago morning with the grains gaining on soybeans/soymeal. The volume of trade has been active with Brazilian corn futures rising on the worsening dryness forecast for Northern and Central Brazil. There is a strong correlation that dry March weather produce dry April’s across Northern Brazil which is underpinning corn. Brazilian farmers cut back on winter corn inputs (fertilisers) and the crop will not be able to endure deepening dryness. Brazilian fob export premiums are slightly weaker which is helping to cap Chicago rallies. Chicago has a mixed midday tone and Brazilian winter corn weather and the coming US spring growing season will play important for the marketplace heading into the NASS March 28 Stocks and Seeding report.

• Chicago brokers estimate that funds have sold 3,500 contracts of soybeans and 2,100 contracts of soymeal. On the buy side, funds have purchased 5,200 contracts of corn, 1,900 contracts of soy oil and a net 2,100 contracts of Chicago wheat. There has been active spreading of long wheat/short soybeans.

• US farmers have engaged in modest cash corn sales on the rally. The cash movement improved as May corn futures rose above $4.40/bu. US soybean cash movement is constrained as US farmers appear willing to store corn heading into spring planting. There are rumours that S Illinois, Missouri and S Indiana farmers have planted a few acres of soybeans on rising soil temperatures. However, the risks of planting this early are high with even germination rates required for high yields. Amid the widening talk of summer US heat/dryness, farmers appear to be willing to push spring planting dates forward.

• US weekly grain inspections were 44.2 million bu of corn, 14.8 million bu of wheat, and 25.9 million bu of soybeans. Weekly US wheat/corn exports were above trade expectations, while soybeans were disappointing. For their respective crop years to date, the US has shipped out 858 million bu of corn (up 215 million or 33% more than last year), wheat exports of 491.4 million bu (down 92.6 million or 16%), and 1,286 million bu of soybeans (down 306 million or 19%). We maintain that US soybean exports could be reduced by 15-25 million bu with a like increases in the US soybean crush rate. Cash crush soybean margins are well above $1.00/bu and crushers are active processing due to record large US soymeal sales. The new Alta Iowa soy processing plant called Platinum will start operations in May.

• The midday GFS weather forecast is drier across Northern Brazil and more like the EU model solution. Our confidence is rising with respect to the coming lengthy period of below normal rainfall and above normal temperatures across a majority of Brazil’s safrinha corn belt. Enough rain falls in Mato Grosso nearby, but little/no rain and warmth are advertised in Parana, Mato Grosso do Sul and Sao Paulo. There are hints that better rain for N Brazil in very late Mar/early Apr, but the strength of Brazil’s monsoon begins to wane in April and the rainfall outlook for winter Brazilian corn is concerning. The Argentine forecast is favourable except for the heavy rainfall for NE Argentina with totals of 4-7.00” which will produce localised flooding.

• CONAB will be out early Tuesday with an update on Brazilian corn and soybean production. We look for a CONAB soybean crop at 145-147 million mt which will keep the spread between itself and USDA at an important 8-10 million mt of supply. Note that world 2023/24 soybean end stocks are only 12 million mt above last year. A smaller Brazilian crop is key with WASDE raising Chinese soybean imports to a record 105 million mt. Brazilian soy exports in February are estimated at 14.5 million mt. Wheat has forged a key chart reversal following bearish news.

• HEADLINES: USDA avoids major balance sheet changes in March WASDE; Chinese soy imports raised; US winter warmest on record.

• USDA’s March WASDE, as expected, is a statistical yawner. US wheat end stocks raised on lower exports, following another 110,000 mt cancellation from China this morning, while S American crop estimates left largely untouched. Old crop Chinese soy imports raised 3 million to a record 105 million mt.

• The USDA’s Feb WASDE was released but largely ignored, with Chicago and global ag markets mixed at midday. Row crops are down slightly while Chicago wheat is higher in a reversal of Thursday’s trade. Wheat’s reaction to larger projected stocks and a second cancellation of previously purchased SRW by China suggests bearish input has been digested.

US End Stocks (million bu):

                    Feb        Mar

            2022/23    2023/24    2023/24

Corn            1,360        2,172        2,172

Soybeans        264        315        315

Wheat            570        658        673

• The bulls are disappointed in USDA’s lowering of Brazilian soybean production by just 1 million mt to 155 million, which keeps global soy output in 2023/24 at a record 397 million mt, up 19 million year on year. Our work maintains a final Brazilian soy crop size of 142-143 million mt based on ongoing yield disappointment in Mato Grosso. Argentina soy production is unchanged at 55 million mt.

• We also note old crop Chinese soy imports were lifted 3 million mt to 105 million based on shipping data from major exporting countries. China’s soy imports in crop year 2022/23 were increased 3.65 million mt to 104.5 million. It has been suspected all season that China had been underreporting monthly imports, which USDA has validated this morning. Modest growth in China’s demand for soy remains intact.

• Otherwise, USDA’s Feb WASDE included just a tinkering with global balance sheets. Argentine corn production was increased 1 million mt. Ukrainian corn was lowered 1 million mt. Global stocks were trimmed slightly. The US balance sheet was left alone, with stocks pegged at 2.17 billion bu. USDA’s seasonal average corn price forecast was lowered $0.05/bu to $4.75.

• The US soybean balance sheet, too, is unchanged from February. The season average price forecast is unchanged at $12.65. Global soy stocks were reduced 1.7 million mt to account for larger trade (China).

• US wheat end stocks were increased 15 million bu amid lowered projected SRW and HRW exports. Weekly/monthly US wheat shipment data has been weak, but even accounting for recent Chinese SRW cancellations, US all wheat export commitments (669 million bu) sit at a near-record 94% of USDA’s new forecast. We view the downward revision as premature.

• Global wheat stocks were lowered 600,000 mt as larger projected world trade offsets slightly higher production in Russia, Argentina and Australia combined.

Global End Stocks (million mt):

                    Feb        Mar

            2022/23    2023/24    2023/24

Corn            301.6        322.1        319.6

Soybeans        102.1        116.0        114.3

Wheat            271.1        259.4        258.8

• The midday GFS weather forecast is again drier in northern Brazil in the 6-15 day period, and confidence is rising with respect to the coming lengthy period of below normal rainfall and above normal temperatures across a majority of Brazil’s safrinha corn belt. Enough rain falls in Mato Grosso nearby, but little/no rain and warmth are advertised in Parana, Mato Grosso do Sul and Sao Paulo. There are hints that better rain develops in north/northeast Brazil in very late Mar/early Apr, but the strength of Brazil’s monsoon in every year begins to wane beyond the middle of March. The lack of rainfall prior to this date is a concern. The Argentine forecast is favourable. Moisture reserves build further over the next 10 days.

• The March WASDE has been digested. Key moving forward is whether funds maintain sizeable/near record short positions ahead of critical Brazilian weather and the N Hemisphere growing season. Winter in the US was officially the warmest on record, which boosts the chance of heat during the summer months. More attention is being paid to negative moisture anomalies and the lack of precipitation offered to the Central/Northern Plains, IA and NW Corn Belt into March 25. Fair value is all about weather.

• HEADLINES: China cancelled two cargoes of US SRW wheat; Funds cover shorts on charts; GFS Brazilian weather forecast slightly drier.

• Chicago futures are higher with corn, soybean and wheat futures all engaged in the rally with corn rising above its 20-moving average for the first time since December 12. May corn pushed against the February lows at $4.40 while the 50-day moving average crosses today at $4.51. It will take a push above the 50-day to alter prevailing bearish corn price trends. Soyoil has also pushed above its 20-day moving average. The market is short covering ahead of the March USDA report tomorrow. Traders are aware that USDA historically has used the March report to make their largest adjustments of the crop year to S American crop sizes.

• The USDA announce the cancellation of 130,000 mt of US SRW wheat to China for the 2023/24 crop year. The cancellation had been rumoured but doubted. China shipped out a cargo of US SRW wheat last week with total export commitments now falling to 1.785 million mt with 1.2 million mt of the sale still open. Traders are now alert to the potential for additional cancellations or forward pushes of China wheat purchases to a new crop position. The cancellation of US SRW wheat is something of a wet blanket over today’s market. The May KC/Chicago spread has pushed back out to a 38-cent premium after trading at even money just 2 weeks ago. Chicago March wheat is placing carry back into the market of 8 cents vs May.

• Chicago brokers report that funds have bought 1,800 contracts of Chicago wheat, 7,100 contracts of corn, and 5,600 contracts of soybeans. In the products managed money has bought 3,400 contracts of soymeal and 3,900 contracts of soyoil. A close above $46.12 May soyoil (last week’s high) would be important chart wise. The 50-day moving average in May soyoil futures crosses at $47.06. The last time that May soyoil closed above its 50-day moving average was back on September 15 last year.

• For their respective crop years to date, the US has sold 677 million bu of wheat (up 38 million or 6%), 1,544 million bu of corn (up 338 million or 28%), and 1,449 million bu of soybeans (down 339 million or 19%). The soybean and corn sales pace are on track to reach USDA’s annual forecast depending on the size of 2024 S American crops. A Brazilian soybean crop of less than 145 million mt or corn crop less than 117 million mt would push additional export demand to the US in an old crop position. We do not expect that WASDE will make any big adjustments on US corn/soybean export estimates tomorrow. But if the final 2024 Brazilian soybean crop is 150 million mt or more, a further downward adjustment in the US soybean 2023/24 export forecast to 1,680-1,710 million bu is advised. WASDE in February measured US 2023/24 soybean exports at 1,720 million bu, and we have already cut our export forecast to 1,690 million bu based on pace.

• The midday run of the GFS weather model is slightly drier for Northern and Central Brazil with less rain of 0.25-1.00” over the next 10 days (vs the overnight run). The GFS model has been erratic on its run-to-run S American forecasts for most of the past week. Our bias is towards the drier and consistent EU model solution. Elsewhere, favourable finishing rain helps Argentine crops into mid-March.

• It has been a green morning in Chicago, but the Chinese wheat cancellations are holding values back in Chicago wheat on the fear that an additional 2-4 cargoes could also be cancelled. Most expect that China will go forward with remaining US SRW wheat purchases, but sourcing the US supply became difficult prior to new crop.

• Whether China sources cancelled US wheat from Australia or France in the coming weeks will be closely followed. Otherwise, whether the overnight rally continues depends on Friday’s USDA WASDE report. The bearish side of Chicago has become very crowded, and the risks of weather/short covering rallies is growing as spring planting approaches. Fundamentally, the strongest bull case can be made for vegoils on tightening world supplies. GASC wheat tender news is awaited.

• HEADLINES: Chicago wheat falls to test $5.275 low set in November on managed money selling; US weekly ethanol grind stays firm; GFS weather forecast wetter for N Brazil.

• World wheat markets are lower on the fall in Russian fob wheat offers below $200/mt with Chicago forging a new low of $5.33 May futures, the lowest price for a spot futures contract since November 2023 when values bottomed at $5.275. Corn and soybeans followed wheat’s early sag, with both markets finding support on end user pricing and fund short covering. Corn has been able to push back into the green at midday as crude oil prices are sharply higher with WTI April back testing resistance above $80.00.

• Wheat has been the Chicago bear story this morning with fund selling increasing on the break to new lows amid the US premium to Black Sea/European markets. Paris wheat has fallen to €188.50/mt in a retest of Monday’s low. Chicago wheat has been falling more sharply on Algo/AI selling. The May Chicago wheat/corn spread has narrowed to a $1.10/bu premium, which is in line with historical averages. However, if wheat premium were to drop below $0.8O vs corn, it would boost wheat feeding interest in the feedlot areas of the Plains. There is no doubt that wheat has been an anvil on the entire Chicago this morning as Russia and the EU competes for remaining world export demand heading into the new crop campaign. The funds are putting on sizeable new net short positions as evidenced by the rise in world wheat open interest.

• Chicago brokers report that funds have sold 9,700 contracts of Chicago wheat, 1,100 contracts of corn, and 3,100 contracts of soybeans. In the products, managed money has sold 2,900 contracts of soymeal and bought 1,900 contracts of soyoil. Chicago wheat open interest was up 13,500 contracts yesterday. The wheat selling is new short positions due to the break to fresh contact lows.

• The US produced 311 million gallons of ethanol last week, down 6 million gallons, but still a record for the week and up 5% from last year. WASDE/USDA is too low with their US ethanol grind estimate by 15-25 million bu based on the current pace. US ethanol stocks were up 3% on last year at 1,094 million gallons. And US gasoline consumption rose to 9.01 million barrels/day, up 5% on last year. The outlook for US ethanol consumption is seasonally brightening.

• Brazilian farmers have been more active sellers of soybeans on rallies early this week, but that selling has slowed on the break this morning. The Brazilian selling has allowed crushers and exporters to extend their forward coverage. Basis bids or premiums have not changed all that much. Estimates show that through Saturday, Brazilian farmers will have harvested 57-58% of their soybean crop. Winter corn seeding will be completed on a timely basis by March 15.

• The midday run of the GFS weather model is slightly wetter for Northern and Central Brazil with additional rainfall of 0.5-1.25” over the next 10 days compared to the overnight run. Bahia would be drier, but the GFS model has been erratic in its S American forecast for the past week. Our bias is towards the drier and consistent EU model solution. Elsewhere, favourable finishing rain impacts Argentina into mid-March.

• Chicago wheat values are testing the November low at $5.275. China cannot take cheap Russian wheat due to ambrosia seed and the need for a phytosanitary agreement. China is expected to keep shipping out US SRW wheat purchases. Whether China uses this break to add to their forward purchases is being debated by world exporters. If the wheat market pressure subsides, corn/soy futures can post a recovery. We note that traders worry that US soybean export sales will be poor Thursday with additional switches or net cancelations of unknown destination sales.  The only bullish fundamental story is world vegoil pricing on rising biodiesel demand amid strong margins due to $80.00 WTI crude.

• HEADLINES: China stays active seeking Ukraine corn/Canadian canola/Brazilian soybeans; Ukraine to enlist/draft farm workers; Managed money grain short into key USDA reports.

• US/Paris wheat futures higher on bottom picking and worry about future EU/Ukraine production; Brazilian farmers use the Chicago rally to sell recently harvested cash soybeans, but premiums keep rising. China buys Canadian canola for the first time in months and stay active booking Ukraine corn with another 2-3 cargoes sold. Chicago has firmer undertone based on fund short covering need.

• Chicago grain futures are higher at midday. May corn futures rallied and tested the 20-day moving average at $4.33. US wheat futures rebounded from prior contract lows while soyoil tested last week’s high. Hedge related selling in soybeans/soymeal pulled Chicago values off early session highs, but fund managers are feeling that their record large net short position is maybe too aggressive ahead of a new Northern Hemisphere growing season. Look for managed money to pare back their grain short into Friday’s USDA March report, and potentially into the end of the month if Friday’s data is not overly bearish. Fund managers are trying to measure their risk vs reward ahead of a new growing season.

• Chicago brokers estimate that managed money has bought 4,600 contracts of wheat, 8,100 contracts of corn, and 3,600 contracts of soybeans. In the products funds have bought 2,200 soyoil and sold a net 1,100 contracts of meal.

• Ukraine has likely sold its last cargo of wheat for the 2023/24 crop year and news that its military will start pulling conscripts from the farm has cash traders wondering about spring planting totals. To date, Ukraine has stayed away from selecting men from agriculture for the war on the need to produce grain and food. However, Ukraine military numbers are in sharp decline and the government will pull farmworkers and farm owners into the war. We have no way of knowing how this will impact Ukraine grain production, but the timing of the decision could not come at a worse time ahead of spring seeding.

• China is starting the week (the same way they ended last week) with the purchase of 2-3 cargoes of Ukraine corn and fresh interest in Brazilian soybeans. And China also booked 2-3 cargoes of Canadian canola for the first time in months as price reached levels that were deemed attractive. China’s new offtake of Canadian canola suggests a seasonal canola low is forming. China is importing record tonnages of world feed grains and elevating recent soybean purchases from Brazil and Argentina. We are not sure why China’s demand has taken a turn in the past week, but our count on Ukraine corn is starting to add up close to 1.5 million mt in the past 10 days.

• Brazilian soybean export premiums are up another 2-4 cents/bu even as the farmer has sold sizeable quantities of new crop soybeans this morning. The basis increase in surprising the Brazilian industry when a year ago, premiums were in the ditch on record large production. We note that Brazil’s CONAB will update their crop estimate on March 12, 4 days after the USDA March report.

• Rainfall in India for the past 30 days has run well above normal, and thunderstorms could have included wind and hail, but it is difficult to determine how much quality or quantity damage has been produced by the above normal rainfall. We would caution against making big downward adjustments to Indian wheat production.

• How short do fund managers want to be heading into a new growing season with key NASS reports? The March WASDE is on Friday with the all-important Stocks and Seeding Report due March 28. Excluding today there are 17 trading sessions before the NASS March 1 Stocks/Seeding Report with a long 3-day Easter Holiday weekend to follow. Spring planting season will start immediately following with Midwest farmers able to seed on the Revenue Insurance dates of April 10-15. Chicago price risks are to the upside with May corn futures not having pushed above its 20-day moving average since Dec 12. A close above $4.335 May corn or $11.73 May soybeans, or $46.11 May soyoil futures turns short term trading trends upwards.

• HEADLINES: Paris wheat futures drop to lowest level since 2020; Tugs Chicago corn lower; Brazil crop estimates lower.

• US wheat futures sag following Paris Futures/Russian FOB offers steady at $209/mt; Soyoil holds on talk of improving cash demand from biofuel industry;  Private forecasters adjusts Brazil soybean crop down to 143.9 million mt and corn to 114.9 million mt. Brokerage firm StoneX raises Brazilian soy crop estimate 151.5 million mt.

• Chicago grain futures are mixed at midday in a reversal of yesterday with soybeans higher while the grains sag on falling EU/Russian cash offers. Chicago wheat has fallen on fund-related selling as May futures dropped below last week’s low at $5.60 which triggered new selling from algo/AI trading systems.

• May Chicago wheat contract lows rest at $5.535, a reversal that was established on February 20. The March/May wheat spread has pushed out to a 3.50 March premium as cash supplies are sought to fulfil prior Chinese purchases.

• March Paris wheat futures fell to €184.50 this morning on a wave of selling that has prevailed throughout the week. Today’s low in spot Paris wheat is the lowest since August of 2020, the depth of the pandemic and before the arrival of record large Chinese corn imports.  It is liquidation which is much like Chicago March corn the week prior. Cash longs that are bailing on delivery potential.

• Chicago corn has been dragged lower by the wheat weakness in “me too” selling. May corn is up 11 cents on the week on active China demand for Ukraine corn. US cash corn selling has subsided and chart support at $4.18-4.21 should hold.

• Soybean futures have been supported by firming Brazilian basis in the May forward timeframe as the market starts to dial in a smaller Brazilian harvest. How small has yet to be determined with yield data from RGDS key to deciding whether the Brazilian soybean crop is north or south of 146 million mt.

• Chicago brokers estimate that managed money has sold 6,700 contracts of Chicago wheat, 5,900 contracts of corn, and 3,900 contracts of soyoil. In soybeans, managed money has bought 3,200 contracts and 1,900 contracts of soymeal.

• The latest private 2024 Brazilian soybean crop estimate was lowered to 143.9 million mt with the corn crop lowered to 114.9 million mt on harvested yield and producer survey data. Our soybean crop estimate is down 1.5 million mt from our February forecast and down 12.1 million mt from USDA. The March Brazil corn production forecast is down 4.8 million mt from last month, and down 9.1 million mt from USDA. March is normally the month that USDA makes their big adjustments to S American crop estimates and there is risk of a bigger than prior month cut.

• StoneX raised their 2024 Brazilian soybean crop estimate to 151.5 million mt vs 150.35 last month with the corn crop virtually the same as last month at 124.4 million mt. The winter Brazilian corn crop is still being planted and it is too early to adjust yield until the monsoonal flow shows an early retreat in April.

• Market volatility in a host of commodity markets is starting to pick up with the new Northern Hemisphere growing season ahead.

• The midday GFS weather forecast is like the prior run and shows modest changes in the outlay of rain across Brazil/Argentina. The coming rain will be enough to satisfy the early moisture needs of corn, but soil moisture levels are in retreat and the forecast should closely watched. No lasting extreme temperatures are forecast with highs ranging from the 80’s to the mid 90’s. The midday model has the Argentine rainfall being slightly further north across Santa Fe and N Cordoba. Southern Argentina will in need of better rainfall by the end of next week.

• EU/Russian wheat is the Chicago grain driver today as cash busts March Paris wheat futures length. Like Chicago corn last week, emotional bottoms are being formed as spot long futures positions are liquidated. USDA’s March WASDE report is next Friday. No news yet from the Commodity Classic from USDA’s Vilsack or EPA’s Regan. Paris wheat is now closed and the grain lows for the day are forming. Look for a modest Chicago bounce into the close on pre-weekend short covering and the rise in spot crude oil futures above $80/barrel. The bio crops of corn/soyoil should be supported on oil.