- Dull and mixed has been the morning trade with corn, soybeans and wheat trading either side of unchanged. An early rally failed with profit taking featured ahead of the weekend. The end of the month and uncertainty about the coming steps for US/China trade are restricting Chicago trade today. A mixed to slightly higher Chicago close is expected heading into the weekend.
- China Vice Premier Liu He will be meeting in the Oval office after the Chicago close. All sides suggest that enough progress has been made in this week’s trade meetings, but additional negotiations are needed to reach the finish line. That said, it is likely that the US would ask for additional US purchases of US goods as a measure of good faith to keep the negotiations pushing ahead. Traders are speculating that the buying will be for US grain, not soybeans.
- FAS reported that for the six weeks ending Feb 14 that the US sold 238.4 million bu of corn (40 million bu/week), 240.0 million bu of soybeans (40 million bu/week), and 131 million bu of wheat (22 million bu average/week). The sales were respectable with wheat being above trade expectations. The dumping of six weeks of trade data reflects the importance of having US export visibility each week. For their respective crop years to date, the US has sold 789 million bu of wheat (up 2 million from last year), 1,509 million bu of corn (up 31 million or 8% from last year), and 1,356 million bu of soybeans (down 284 million or 17% from last year). This is the first time during the 2018/19 crop year that US wheat sales exceed the prior crop year. The discount of US to French/Black Sea wheat is producing improved US wheat export demand.
- In the background of the Chicago markets remains this Chinese offer to secure nearly $50 billion of US ag goods if a trade deal is reached. USDA trade Undersecretary McKinney stated this morning at the USDA Outlook Forum that the US/China are apart on some key issues like IP protection. McKinney’s comment suggests that the US/China may not be ready to ink a deal today and that additional negotiation time is needed. Rumours persist that China is asking for US corn offers and that US sales may have occurred. Pinning down the sellers on who the buyer is remains elusive, but some commercials have been active cash corn buyers at the Gulf with CIF premiums rising. Logistical problems also persist for Gulf exporters.
- The S American midday weather forecast is drier across Argentina. The forecast models are struggling with a complicated pattern shift this weekend and where the rains will drop. The midday model reduced rainfall across Argentina which would be adverse for crops. Cooler temperatures flow southward behind the front with highs in the 70’s and 80’s. Yet, for crop conditions to stabilise requires more than 1.00” of rainfall this weekend. Brazil continues to see near to above normal rainfall with three frontal passes producing 0.75-4.50” over the next 10 days. The forecast is overall favourable to Brazilian crop, yet with El Niño returning, our concern is April dryness.
- US/China trade negotiations will end today with clarification needed of what will happen next. The Mar 1 deadline looms for next Friday with US President Trump heading to Vietnam. Comments later today from both sides will be important. Corn looks to hold the most bullish story going forward, but it’s the first year in many that US demand for corn, soybean and wheat will all outstrip production assuming trendline yields. Chicago volatility is likely to increase as spring planting nears.