- Soymeal finished Wednesday’s trade off the early morning highs as May found resistance just under $400, but old crop meal was still $5-8/ton higher at the close. Old crop soybeans advanced 6-7 cents, with May marking a contract high close. November soybeans ended the month of February on an upbeat note, which also completes the price establishment period for 2018 crop insurance. Settlements through the month ranged from $9.915 early in the month, to today’s high of $10.3225, and the monthly average calculates to $10.16. This will be the best soybean price in four years. Not only is the price guarantee higher this year, but bushel calculations will increase as result of record yields in the past 2 years, while the 2012 drought yields will be dropped from the calculation. Good news from the grower perspective! The Argentine weather forecast stays dry with less than 1” of rain across the soybean belt over the next ten days. The outlook stays bullish until rains develop and more is known about crop damage.
- Argentina’s corn crop will lack the cool finish that materialised in the US during the end of last year’s growing season, and the trade continue to lower its production estimates. Many were waiting on a clearer picture of weather during the first half of March, but no change is indicated and hot/dry conditions will persist for at least another 10-12 days. Dryness is now historic, and yield models following worse than expected rainfall in February show that crop size there is likely between 31-32 million mt, vs. 41 last year.
- This week’s EIA report was not overly exciting, but it did confirm that export interest is ongoing, and that cumulative non-domestic disappearance remains record large. Export sales on Thursday are expected in a range of 55-65 million bu, and Argentine fob basis for Mar-Apr delivery is at new highs, and still some $.10-.25/bu above US Gulf quotes. Corrections are possible as the market reaches overbought territory, but we maintain US corn’s position in the world market is most important.
- US wheat futures led the way on Wednesday, rising 14-21 cents basis nearby futures. The spot Kansas-Chicago spread is testing the highs of 2016, upside risk remains unless a major Central US weather pattern shift occurs prior to April. The US weather forecast this evening is rather stagnant, and maintains near complete dryness across TX, OK, KS and CO over the next ten days. A correction is possible on Thursday following today’s emotional trade, and particularly as US weekly export sales will be rather lacklustre, but we caution against turning bearish until drought eases. It remains that the world cash market is following rising grain futures. New seasonal highs have been achieved in France, Germany and Russia, and even cheaply priced Argentina origin has rallied some $14/mt (8%) since early February. The US is no doubt losing export potential, but until weather changes there’s a real risk that HRW yields fall to 34-36 bushels/acre, vs. 42.5 last year and 49.5 in 2016/17. Spot Kansas increasingly looks to target an open chart gap at $5.30.