- Strong grains and weak soybeans are the Chicago trends at midday. May corn has run up against the 50-day moving average at $3.8025 which is where temporary selling pressure has emerged this morning heading into March option expiration. A close above $3.805 May corn would start to chase the funds out of their net short positions with the next resistance zone being $3.8325, the 100-day moving average. Wheat appears to be following corn amid the hope that it is next on China’s shopping list. Weak soybeans are due to active cash selling in Brazil late yesterday as farmers fret that the US/China could be nearing a deal. S American farmers have enjoyed the US/China skirmish to date, but they well understand that a deal would end that windfall. Chicago appears to be wanting to buy grain/sell soy to encourage Midwest farmers to seed corn.
- Traders estimate that funds have bought 2,100 contracts of wheat and 4,100 contracts of corn while selling 4,200 contracts of soybeans. In soy products, funds have sold 3,600 contracts of soyoil while buying flat in soymeal. USDA announced the sale of 300,000 mt of US corn to China. This was the first sizeable sale of US corn to China in years. There have been smaller US corn sales that have had to be GMO approved by the China Government. Today’s purchase seems to confirm that US non-tariff barriers related to US GMO corn strains have been removed. We hear that the sale is for LH April and early May, a nearby position, which is an old crop surprise. China is still asking/working additional US corn. No commercial comment is available any new tonnages. It appears that China is willing to secure US corn as US Trade negotiators head for Beijing this weekend. China wants to be seen as keeping its pledges/promises on US ag purchases to be a trusted partner. The hope is to prod the Trump Administration to consider lifting US tariffs. We do NOT see the Chinese purchase of 300,000 mt as being a one-off event with exporters suggesting China is asking for offers of US ethanol/DDGs.
- Energy futures are sharply lower which has spurred selling across the commodity complex. The selling appears to be related to the weakness in the US stock market and a general wave of profit taking into the weekend. The fear of global economic weakness ebbs and flows, but dreadful data from Europe’s manufacturing sector was the catalyst for today’s macro break.
- US President Trump indicated on Fox News this morning that the US would likely complete a favourable trade deal with China. No time-frame was announced, but the point was that the President continued to be upbeat on negotiations.
- The midday GFS weather forecast offers no real major change over the next week. Cool and unsettled weather will produce showers and storms on the weekend with the best coverage occurring early next week across the OH Valley with totals ranging from 0.25-1.00″. A few sunny/cool days follow late next week before a new potent storm system produces another round of heavy rain across the Midwest. This system was weaker in the overnight forecast. The combination of melting snow and new rounds of heavy rain will worsen the flooding across the Missouri Valley and Delta into April.
- China is widely expected to secure additional quantities of US corn, ethanol and DDGs in coming business days. Corn has the bull story on China buying/Midwest flooding. Soybeans are down on active Brazilian cash selling due to the falling value of the Brazilian Real and worry that the US/China are nearing a deal.
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Fund positions disaggregated data