- HEADLINES: New contract highs in December corn futures; Fund flow Monday, fundamentals little changed from Friday; Turnaround Tuesday?
- Chicago midday futures are sharply higher as the Russian war against Ukraine rages on. Recall our comment of last week, War on/War off, today it is “war on” with few expecting that diplomats negotiating a cease fire/peace accord can score progress this week. Chicago is adding premium to price awaiting new war headlines.
- We note that forecasting war headlines is impossible which has caused a large share of the Chicago volume decline. Few have profited from chasing rallies or breaks, and the expanding volatility of the market is causing traders to retreat to smaller positions, or just not trading at all. We understand the difficulty in trying to trade war headlines.
- The best war barometer is the US/world stock markets, and they are holding a strong rally that started early last week. Is the stock market suggesting that peace accord progress has occurred or that the war will not have a lasting bearish impact on world economic growth? US/world stock market values should be sharply lower if there was any sense that Putin’s war against Ukraine will be lengthy. Few have any idea on the length of Russia’s war aggression.
- Today is a “flow Monday” with buying emerging in Chicago in the first 10 minutes of the day. We see no appreciable change in fundamentals that would argue that Chicago corn, soybeans and wheat need to be substantially higher than Friday’s close. The problem is that when funds want grains, there are no resting sell orders on the other side of the trade, which causes the running bull market.
- Chicago brokers estimate that funds have bought 5,000 contracts of wheat, 9,000 contracts of corn, and 6,400 contracts of soybeans. In soy products, funds have bought 1,200 contracts of soymeal and 3,600 contracts of soyoil.
- US export inspections for the week ending March 17 were; 57.7 million bu of corn, 20.0 million bu of soybeans, and 12.1 million bu of wheat. The exports of all three were less than expected. And for their respective crop years to date, the US has shipped out 1,078 million bu of corn (down 190 million or 15%), 1,570 million bu of soybeans (down 407 million or 20%), and 608 million bu of wheat (down 128 million or 17%). The US soybean export pace is catching up with last year, while wheat stays disappointing.
- There is growing talk about how the US rail lines are struggling with car placement, velocity, and placement to move ag products/grain. Car wait times are rising and congestion is becoming worrisome. Whether this will impact grain/ethanol movement and rising spring planting inputs need is be closely monitored. Truck transit is costly with demand shifting to the rail.
- The midday GFS weather forecast is wetter for the Eastern Plains and the Western Midwest than the overnight run with 0.5-2.00” of rainfall. The rain also pushes further west into the W Plains which would aid HRW wheat. The upper air flow pattern is open with fresh rounds of showers/storms to impact the Plains and the Midwest in April. We see no evidence of a blocking pattern which should increase rainfall chances for the Central US into mid-April. Warming temperatures and seasonal rainfall would aid drought stressed HRW wheat.
- Today’s fund flows are strongly on the buy side due to the raging Russian war. Note that Chicago volume totals are low, and that resting orders are minimal or absent. US planting weather will become important following the March 31 Stocks/Seeding report. Total US farmed acres will be closely watched, with corn to likely gain on margin against soybeans. We fear a bearish surprise in US corn and a bullish surprise in soybean seedings. US export sales totals have been slow since late last week as end users have “altitude sickness”. This is no place to chase a rally.