• HEADLINES:  Crude oil rally spurs a Chicago bounce; Plains weather too dry for HRW wheat; China to sell 3-3.5 million mt of reserve soybeans?

• Chicago futures are mixed to slightly higher at midday with volume in retreat. The uncertainty surrounding the war (Ukraine/Russian) along with the coming USDA crop report next week has produced back and forth trade. Amid limited fresh fundamental news, the market is marking time, awaiting improved world demand for wheat/corn (due to Black Sea losses) and understanding the Brazilian and N American weather patterns during April. Brazilian farmers report fancy winter corn crop yield potential with the right mix of weather conditions into mid-May. Chicago values are about flow and when crude oil rallies, so do the bio crops of corn/soyoil. We look for a mixed close with few wanting to add to their risk profile heading into the weekend.

• Chicago brokers estimate that have bought 1,200 contracts of wheat, 4,300 contracts of corn, and 3,300 contracts of soybeans. In the soy products, funds have bought 4,100 contracts of soymeal while selling 1,200 contracts of soymeal. The meal trade was very active in the first 10 minutes of the day with fund flows all being on the buy side. Chicago lacks any concerted selling outside of profit taking.

• Asian traders report that China is considering the release of 3-3.5 million mt of soybeans from their reserve due to domestic shortages and soaring soy product prices. Chinese crushers have been behind the curve in making forward purchases due to rising prices amid the 2022 S American drought. China will release the soybeans weekly with totals said to range from 400-500,000 mt. If approved, the Chinese soybean release could continue into June. We note that the soybeans must be replaced in 120 days, which translates into additional new crop buying from the US.

• S American corn premiums are weaker this morning with Argentine values down another 3-5 cents/bu. The premium leakage and cheapness of S American corn will cut into US corn export demand from June onward. June Argentine fob corn is said to be trading at $0.71 over with July at $0.56/bu over. This compares with the US Gulf at $1.60 over for June and $1.45 over for July. US corn is lacking competitiveness which will tug US corn export estimates lower. If Mother Nature cooperates, Brazil should have an additional 14-19 million mt of corn from their winter corn crop to harvest this year which partially helps to plug the hole from Ukraine’s absence via the Russian war.

• March 1 grain stocks will be the big driver on Thursday’s NASS Stocks/Seeding report. NASS stocks estimates have been impossible to forecast in recent years, and we fear that this trend continues. The loss or finding 100-200 million bu of corn and 20-40 million bu of soybeans is a big deal with 2021/22 US end stocks projected to be historically tight. US seeding estimates change into June.

• The midday GFS weather forecast is consistent with the overnight run.  The change in the forecast is that the Plains will see limited rainfall for the next 10 days which will add to their drought concern. The remainder of the Midwest/Delta will see near to below normal rainfall and variable temperatures. Highs will range from the 40’s to the lower 70’s. The drier weather and variable temperatures will allow Midwest fields to dry and isolated fieldwork to begin in early April. The Plains drought is a worry.

• It is more of the same, Chicago breaks and rallies are unable to be sustained. S American corn/soymeal are leaking lower, and fresh US corn/wheat export demand is difficult to find.  As seed starts to be planted across the US, Ukraine, Europe and China, the market will start to pay close attention to each new weather forecast. Chicago values are at historically high prices and looking for a fresh fundamental spark. Longer term our view stays bullish, but a break into the Northern Hemisphere planting season is likely.

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