- HEADLINES: Wheat drags row crops lower; Talk of Argentine corn crop below 35 million mt; GFS colder in US Plains.
- Chicago ag markets have leaked lower this morning amid a new round of speculative selling in global wheat markets and on otherwise lack of fresh news. Equity and energy markets remain firm, but Central Banks’ commitment to make depositors whole has been digested. Our bet is that the eyes of all market will be on Wednesday’s Fed meeting wrap up as there is no longer a guarantee that rates are hiked, and as usual Chairman Powell’s commentary will be dissected considerably.
- Wheat markets in the US and Europe just can’t shake weakness in the Russian market, where fob quotes for April-May delivery have fallen to $283-285/mt. Russian origin wheat is again the world’s cheapest. Spot Paris milling wheat has posted newer 18-month lows. Exporters are working to clear remaining old crop supplies at a time when world import demand shrinks seasonally due to looming harvests in North Africa, the Middle East and India. EU corn futures have followed. We also note rapeseed futures in Paris have fallen to two-year lows as that market digests adequate supplies and a probable boost in Ukrainian oilseed/vegoil production in 2023.
- Choppiness will continue until there is clarity on US production potential, which begins with the release of planting intentions next Friday. We continue. to recommend end user coverage on weakness. We hear discussions that final Argentine corn production may drop below 35 million mt, which forces world trade on US and Brazilian exporters throughout the next 12-13 months. Safrinha seeding in Parana this week is 77% complete, and corn to be planted in the next 10 days will pollinate in very late April/early May. A record Brazilian corn crop is probable, but weather there matters over the next 7-9 weeks.
- IHS Markit estimates new crop US corn seeding at 90.9 million acres, vs. 87.5 last year, new crop soybean acres at 88.2 million, vs. 87.5 million last year, and all-wheat seedings at 49.2 million, vs. 45.7 million last year. IHS Markit’s soy acreage number is 700,000 above USDA’s Outlook Forum guess, but corn and wheat are little changed. There is broad consensus that total major crop area this spring will expand 6-7 million acres year-on-year, but like always this will hinge upon favourable spring conditions across the Northern Plains. It is far too early to be concerned about snowpack there, with prevent plant dates still two months away, but updated two-week forecasts feature additional snow and freezing overnight lows. The midday GFS weather forecast projects snowfall upward of 4-10” in the next 72 hours. Frigid temperatures return to the Northern Plains next week.
- US exporters sold another 136,000 mt of corn to China. Weekly corn sales on Thursday are expected in a range of 55-65 million bu.
- The midday GFS weather forecast is consistent with the morning run. Soaking rain begins to replenish soil moisture in Central and Northern Argentina, with a 5-day period of steady rainfall to begin in the coming hours. Cumulative totals of 2-3” will be widespread. The rain is no doubt welcomed, but early harvest efforts will be obstructed. Meaningful Brazilian rain stays isolated to Mato Grosso. Dryness elsewhere is favourable given the need to finish soy harvest/safrinha corn planting in Mato Grosso do Sul and Parana. There is no indication that Brazil’s wet season ends prematurely.
- Lasting direction is unlikely until US stocks and seedings are known. Don’t chase daily moves. There remains a need for weather premium given the importance of US production expansion in 2023.