- Chicago ag markets are lower at midday with Brazil coming back online following the Carnival holiday while traders worry that world grain demand is showing new signs of slowing. Russian milling wheat was sold cheaply into Egypt in a tender that was financed by the World Bank. The pure cheapness of Black Sea and Aussie milling wheat is stealing corn import demand and causing worry if the US can recapture world corn demand to raise low crop year to date sales totals. World millers kept their storage filled as a means of a hedge against the Russian war with Ukraine. However, if the Ukraine export corridor is extended, a new Northern Hemisphere harvest will produce enough supply comfort that world millers will use their stores and pull back on new purchases prior to the coming harvest. This could slow world wheat/corn trade into May/June.
- A heavy feel dominates Chicago with wheat/corn the downside price leaders while soybeans/soymeal try to hold at historically high price level amid the expanding Brazilian/Paraguayan harvest. Chicago soy rallies look to be laboured as the focus on weather shifts from S America to North America.
- Chicago brokers report that funds were sellers of 3,100 contracts of corn and 2,200 contracts of wheat, while being on both sides of the soybean market. Trade counts have funds selling 1,200 contracts of soybeans, 1,800 contracts of soyoil and 600 contracts of soymeal.
- The lowest offer to GASC in a World Bank tender was $317.50/mt for Russian wheat which we work back to replacement at $290/mt on a FOB basis. This is down another $7-8/mt from where GASC purchased world wheat back on February 2 at $297-299/mt FOB. The sale confirms that Russian fob wheat has returned to a carry with old crop wheat priced below new crop offers. Amid the Russian war against Ukraine, this carry was not afforded to values until now. And Black Sea milling wheat is priced well below all other FOB corn offers, excluding Ukraine at $264/mt. Russian fob wheat at $290-292 is $10/mt below the US Gulf corn offer for April at $303/mt. Amid the cheapness of E Australian feed wheat landed into SE Asia and now Black Sea milling wheat being cheaper than US corn, North African importers will look to wheat as a feedstuff, not corn.
- Note that EU milling wheat is trading below EU corn which should boost its use as a feed within the community. EU wheat stocks are likely more abundant than forecast as high prices have cut demand. And now Russia looks to grab additional world wheat market share via price through early May. Importers and millers will be patient with new crop pricing amid the slowing world economic outlook and the abundance of wheat that is being offered from Russia, Ukraine, E Europe, and the Baltics.
- The midday GFS weather forecast is like the overnight solution with several bouts of showers possible into the weekend, a dry forecast for the half of next week with showers increasing after next Wednesday. The Argentine forecast offers below normal rainfall with 14-day amounts ranging from 0.5-1.50”. Yet, the models are struggling with rain amounts/location as La Niña weakens in the equatorial Pacific. Argentine high temperatures will range from the 80’s to the mid 90’s, 3-5 degrees above seasonal averages.
- Brazil will see near normal to above normal rainfall with the heaviest totals for RGDS/Santa Caterina and Parana. No extreme heat is forecast, and the harvest should continue to normally advance for the next 2 weeks.
- $6.80 Chicago March corn and $15.50 March soybeans are historically expensive when looking backwards at 10 years of Chicago price data. And these values are occurring at a time of rising world lending rates and slowing GDP rates.
- World grain demand has turned soft, and China sees no reason to chase the soybean market higher with Brazil harvesting a record crop that is struggling to find storage. Russian wheat has fallen to a new yearly low with old crop priced below new crop for the first time since the Russian war started. Black Sea fob milling wheat is priced below fob corn. Sell rallies as we see a top is forming in soybeans/soymeal.