- HEADLINES: Chicago liquidation accelerates on March deliveries and chart breakdowns; China securing Brazilian soybeans; Turkey buys 790,000 mt of Black Sea wheat.
- Chicago corn, soybean and wheat futures are sharply lower. Chicago grain futures had dropped hard for the past 3 trading sessions with soymeal/soybeans initially holding on dry Argentine weather. Deliveries against March soybean futures and losses on long grain positions sparked selling of the prior stalwarts, soybeans/soymeal, as key chart levels were breached.
- Soybean futures fell below their 50-day moving average ($15.09 May) with corn taking out its December low, while Chicago wheat futures falling to its lowest price since September of 2021. Spot Paris wheat futures are trading at their lowest value in a year, and the trading mentality has been risk-off on budding losses. Only Chicago soyoil futures are holding due to oil share spreading amid the sharp drop of soymeal.
- The morning trade has been active with end user scale down pricing noted below $6.30 May corn and $14.60 May soybeans. The drop in corn futures has pushed ethanol grind margins back into the green, with cash soybean bids holding at premiums above Chicago across the W Midwest. Cash is still tight with soybean basis bids back to rising.
- We look for a sharply lower close as the selling in soybeans/soymeal accelerates into the close. Chicago has a heavy feel as funds offload stale long positions.
- Chicago brokers report that funds have sold 2,100 contracts of wheat, 13,000-14,000 contacts of corn, and 7,800 contracts of soybeans. In the soy products, funds have sold 7,200 contracts of soymeal while being flat in soyoil. The fund selling in soybeans/meal and corn was aggressive from the morning reopening.
- The wheat market was the first to drop, and it should be the first to bottom as nearby corn/soybean selling relents. KC July wheat is back to testing support against $8.00 with Black Sea fob wheat prices little changed this week. 12.5% Russian wheat is offered at $297/mt with bids at $295 while 11.5% Russian wheat is offered at $290/mt according to world exporters. Into last week’s wheat high, US/Paris wheat futures were rallying as fob offers declined. This week it is US/Paris wheat futures declining as Russian fob offers hold steady. US and European premiums relative to Russian offers are narrowing.
- Turkey purchased 790,000 mt of Russian/Ukraine wheat at $308-319/mt basis CIF for delivery to various Turkish ports. Turkey can no longer secure any additional wheat but can cancel purchases until the sales contracts are fully signed. The Turkish wheat purchase is one of the largest of the year. Russia was the primary seller of the tender, and based on a growing sales book, Russian exporters will show reluctance in dropping offers to fulfil new business.
- Ukraine has asked the UN to start the negotiations on extending the Black Sea Export Corridor deal. No comment on the start of negotiations has been returned from the UN, Russia, or Turkey. Last Thursday’s US/EU 1 Year Anniversary sanctions on Russia included key banks to finance Russian grain exports and coaster freight from the Azov Sea. Russian President Putin will argue that its grain is no longer offered unfettered access to the world market. This could make coming extension negotiations more difficult.
- The midday GFS weather forecast is like the overnight run with limited rainfall for Argentine crops into March 10. There is a chance of a few light showers of 0.1-0.8” in the next 48 hours, but then the forecast then goes hot/dry. High temperatures reach back into the 90’s/lower 100’s. Argentine crop stress is becoming acute on reproducing corn/soybeans.
- Chicago grains are liquidating. We see initial support below $6.30 May corn and $14.60 May soybeans. Oil share spreads will perform into the summer. However, before one gets too bearish, the Black Sea Grain Export Pact must be extended, and Northern Hemisphere spring weather must be deciphered before lower grain prices are justified. This no place to be making grain sales. Soybeans could liquidate through Thursday. Short term trading lows will potentially be scored before the weekend.