- HEADLINES: Markets rally on Black Sea uncertainty, Fund short covering; Additional heavy snow possible in Northern Plains next 10 days.
- Global ag markets have shrugged off morning weakness and are trading higher by varying degrees. Wheat has paced the advance on a percentage basis as speculative short covering accelerates, amid rising Black Sea tension, and even Paris milling futures are participating. We hear from Black Sea contacts who suggest that forward selling/pricing in Russia has slowed considerably following talk last week that the government will act to buy supply for its reserve, establish a floor price or be more active in restricting exports. We have no way of knowing the pace of spring/summer Russian grain exports, but it does appear that, on balance, Russia has become a less reliable market. There is also widespread talk that corn quality in Ukraine is in rapid retreat, which is a concern for EU importers and also implies comparing Gulf basis to Black Sea basis on Ukraine’s remaining supply is less valid.
- Spot WTI crude is up $2.00/barrel at $71.30. The Dow at midday is up 170 points.
- New crop contracts are leading row crop markets as focus shifts to the 2023 US acreage matrix. Recall winter wheat seedings last autumn were up 3.7 million acres year on year, and that wheat area expansion spilled into the principal Midwest suggests some crop will be left without.
- Work on expected returns validated the Outlook Forum’s call for enlarged corn seeding, but beans may need area expansion more. Spring wheat is also need of larger seedings as HRS stocks/use this year sits at the lower end of history. Planting intentions on Friday will be a big deal.
- US exporters in the week ending March 23 shipped 26 million bu of corn, vs. 47 million the previous week, 33 million bu of soy, vs. 26 million the previous week and 14 million bu of wheat, unchanged from the prior week. Corn inspections were lower than expected. Soy and wheat were line.
- For their respective crop years to date, the US has inspected for export 1,376 million bu of corn, down 34% year on year, 656 million bu of wheat, down 5%, and 1,818 million bu of soybeans, up 8% from last year. There is no compelling evidence to suggest USDA revises its annual forecasts in its April report. The pace of physical corn exports must increase rather quickly, but recently sold bushels will be exported from mid-spring to early summer. A boost in corn shipments is anticipated in April.
- Additionally, Plains corn basis at $1.00+ and firming Midwestern bids suggest that feed operations are again being forced to pull supply from farther afield.
- The midday GFS weather forecast is slightly further north with soaking precipitation this weekend as totals of 1-3” have been moved into IN and OH, but otherwise the outlook is consistent. A warming temperature pattern lies ahead for the S Plains, Delta and S Midwest beginning early next week, but additional snow across the N Plains and Upper Midwest will keep temperatures there well below normal. Zero/sub-zero lows are forecast in the Dakotas and MN into Thursday. Very heavy snow (10″+) is possible in the Northern Plains Sat-Wed. Zero precipitation is offered to the Plains HRW Belt in the next 10 days.
- Markets have run out of sellers as critical US stocks and seedings data looms. Already our work suggests Plains wheat yields will be sub-trend and row crop seeding requires soaking rain in the next 30 days. This along with a developing arid pattern in Central Brazil keep breaks supported nearby.