• HEADLINES: Worry grows over Suez Canal reopening and record high ocean freight rates; Will it reignite world grain trade; Massive range for US soybean stocks estimate.

• Chicago is mixed at midday with soybeans, corn, and wheat futures trading either side of unchanged. Soybeans/soyoil have endured additional long liquidation while the grain markets are bouncing in thin volume trade. Wheat has paced the morning rally as traders try to assess the logistical/cost impact of the stuck container vessel in the Suez Canal on EU/Black Sea wheat exports to the east. Risk off remains the theme with soyoil falling back near limit losses.

• The exiting of corn/wheat and soyoil/soymeal spreads is ongoing. Rumours of S American soyoil imports into CA are widespread, but we would note that whether the soyoil is crude or refined, a 19% import duty will be charged. This hefty duty along with soaring freight rates makes such import deals difficult to justify economically. The same soaring freight cost makes the import of Brazilian soybeans into the US economically arduous. The rising freight costs makes the NASS soybean stocks estimate extremely important with stocks of 1,500 million bu or less causing an immediate need for demand rationing and a resulting sharp rally. Soy product pricing and soybean flat prices are all tied to the prospect of a large negative residual in the Dec-February quarter.

• Chicago brokers estimate that fund managers have sold 7,200 contacts of soybeans and 4,900 contracts of soyoil, while buying a net 1,200 contracts of soymeal. Funds have also bought a net 1,900 contracts of wheat and 4,400 contracts of corn. Active meal/oil spreading has been noted.

• The world will be closely watching whether the Suez Canal will be cleared this weekend with the spring high tide occurring Saturday. This will be best chance to float the sideways container ship and start the long process of returning Suez shipping to normality. Ocean freight rates are sitting at record highs and will soar if the canal stays closed. A lengthy closure would reroute shipping around the world and cause a dramatic cost increase for anyone in the EU or Black Sea that would be sending food supplies east. Moreover, the cost of energy could soar on the Mideast logistical disruption. Gauging efforts to unbeach this massive vessel will be closely followed this weekend.

• North America, Argentine and Australian wheat/grain could find themselves competitive to world importers on soaring ocean freight costs. Suddenly, EU and Black Sea exporters would not have a price advantage on a landed basis in wheat heading to the Mideast or East Asia. This has wheat trader’s attention.

• The average trade estimate for March 1 US soybean stocks is 1,543 million bu with the guess range being a massive 1,440-1,825 million bu. This range is more than 10 million mt of soybeans or 385 million bu from high to low estimate. We look for a zero second quarter residual, but the average guess is betting -50 million bu.

• The average March corn stocks estimate is 7,767 million bu in a range of 7,573-7,980 million bu (407 million range), while the average estimate for March 1 US wheat stocks is 1,278 million bu, down 10% from 2020. For the seedings report, the average guess is 93.2 million corn, 90 million soybeans, and 45.0 million acres of wheat.

• The midday GFS weather forecast is drier for Argentina and Southern Brazil and equally as dry for C and N Brazil. Limited rain is forecast for Brazilian winter corn areas for the next 10-12 days with generally above normal temperatures with highs running in the mid 80′s to the mid 90′s. Argentine highs range from the 70′s to the mid 80′s.

• Chicago is paying close attention to soaring world freight costs and how high ocean freight might rise if the Suez stays blocked. The weekend ship refloating effort will be closely monitored and reflected in Sunday’s trade. Otherwise, it is oil/meal and corn/wheat spread unwinding. Soyoil fell to another limit loss with values staying depressed on liquidation. Although the March Stocks/Seeding report will add to volatility, we doubt that it will usher in a sustained bearish Chicago price trend. Do not sell this break.

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