• HEADLINES: Chicago futures soar on spec short covering, Uncertainty over Russian grain flows.

• Global ag markets are sharply higher at midday as Russian comments regarding future wheat exports collide with general uncertainty over the Black Sea corridor during the summer months and the looming 2023 Northern Hemisphere growing season. Short covering has been the theme as wheat and corn pace the rally on a percentage basis. Spot Paris milling is up €12/mt (equivalent to $0.35/bu), with May again priced at a premium to Sep. Rapeseed futures in Europe are up €18-20/mt as that market’s RSI fell to the lowest level since summer 2013.

• Russian statements have been fine-tuned and an outright halt to exports is unlikely. Rather there is support for keeping fob offers above $275/mt (today’s price) to assure farmer profitability, and the previously mentioned reserve stocks lingers in the background. However, the Russian Ag Minister has yet to comment and there is just no way to be certain about Russia ag policy given bans in previous years. A slowing of exports from Russia makes little sense fundamentally, geopolitics stay front and centre indefinitely. A price floor does imply limited downside risk in US/EU wheat futures.

• US exporters this morning sold another 204,000 mt of corn to China for old crop delivery, bringing total Chinese purchases since mid-March to 2.57 million mt. Recent sales to China and others elevate the pace of physical exports in spring and early summer. We would expect this corn to ship prior to the arrival of Brazil’s safrinha corn harvest in July. Spot corn basis in Central IL is up to $0.33 over May Chicago, vs. $0.30 over Thursday and $0.15 over in late March a year ago. March 1 corn stocks data, to be released next Friday, is important.

• Spot Brazilian fob basis overnight fell another $0.05/bu, with Brazilian beans for April-May delivery quoted $55-60/mt below US Gulf origin. The Brazilian market faces record production and logistical (road) issues in major producing areas, which has triggered long-expected concern over producer storage capacity. The Brazilian cash soy market must stabilise before new length is added to Chicago soybeans on a lasting basis. But we would note that Brazil’s ship line-up is rising quickly, and excess stocks should be cleared by late summer. Keep in mind Argentina is likely to source some 8-10 million mt of soy from Brazil, which trims Brazil’s non-Mercosur export potential.

• Other news is lacking, and macro markets lean slightly negative. The US dollar index has stabilised at initial chart-based support. Spot WTI crude is $1.30/barrel at $68.70 with RBOB gasoline following. The Dow is flat, with European equity indexes down 1.5% amid fears of banking sector liquidity there. We look for a strong close today, but still caution against chasing daily moves until NASS stocks and seedings data has come and gone.

• The midday GFS weather forecast is wetter in the western Midwest into late next week but warmer and drier thereafter. Heavy rain is projected this weekend across the Delta and Central/Eastern Midwest. Heavy snow is forecast in NE, SD, IA, MN and WI next Wed-Fri. Moisture equivalent totals in the next 7 days are pegged in a range of 1-6”, with the greatest amounts favouring the mid-South and southern Midwest.

• The GFS forecast is favourably warm/dry in the 11–15-day period. This pattern change will be welcomed, but the EU model must follow with a similar forecast this afternoon. Central US weather takes on more importance beginning next week.

• The world enters the 2023/24 crop year with very tight corn and soy stocks, while adequate wheat supplies have been largely a function of abnormally high yields in Russia last summer. A pause/end in US Fed rates hikes is important. Whether stocks are allowed to build requires an absence of N Hemisphere weather threats and it is premature to count on US yield growth.

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