- Soybeans held a narrow range and closed firm on Thursday. Oversold conditions ahead of USDA reports and reports that China had booked 2 million mt of US soybeans offered support through Thursday. Other market news was limited, and trade volume was light. Heading into the final weeks of the Argentine growing season, crop ratings remain strong. The Buenos Aires Grain Exchange reported that 51% of the crop was rated as good/excellent, versus just 2% a year ago. 39% of the crop was reported as mature versus the five-year average of 44%. Harvest progress was estimated at just 2% or 7% behind a year ago, with the exchange noting that cool weather was extending the growing season. The crop continues to add yield potential. Record large US soybean stocks are expected in Friday’s NASS report, so we expect that it will be the acreage figure that drives the initial price response. Spring weather will drive changes in acreage and the results of the China trade deal will determine the longer-term price direction.
- Chicago corn futures ended fractionally higher in weak volume. There simply isn’t much to do ahead of Stocks and Seedings data and high-level Government meetings between the US and China in Beijing. US/China progress continues, although additional corn demand cannot be confirmed. Funds were net buyers of 1,000 contracts. US weekly export sales totaled 36 million bu, up 2 million on the previous week and some 6 million above the pace needed to hit the USDA’s target. This included China’s recent purchase of 300,000 mt. We do mention that Argentine corn is offered cheaply for early/mid-summer arrival. Basis there for July delivery has fallen to $0.16 over Chicago futures as harvest surpasses 10% complete. An early low in Argentine basis levels could form amid reduced Brazilian corn production. We doubt NASS data on Friday will be overly exciting. More important is US/Chinese trade policy and whether active precipitation continues across the Central US beyond the first half of April. It is noteworthy that spot corn has held $3.70 despite a record fund short position. A fundamental spark is needed to move funds.
- Fund selling in Chicago wheat returned ahead of Friday’s USDA data. There is again little new wheat-specific news available. Funds sold 3,5000 contracts. Needed rains will fall across the driest areas of Eastern Australia over the next 48 hours. This is rather timely as planting begins in April. However, dryness returns and will be present throughout the 3-15 day period. The Aussie trade is well aware of El Niño’s correlation with heat/dryness there during the growing season. And the EU/Black Sea forecast is drier than previous runs across E Europe and the entirety of Ukraine. Cumulative rainfall in E Europe/Ukraine into April 11 is pegged at 45-60% of normal. Grain basis in Ukraine has been firm amid less than desirable spring rains. Interior US HRW basis is firm and has rallied in the last week. The cash market is not reflecting an oversupply of high protein wheat. May CME’s 20-day moving average sits at $4.57, and we maintain that a range of $4.50-4.95 into spring. A US/China trade deal would open the market to a larger rally effort.