- Chicago ag futures are mixed at midday with corn and wheat higher, while soybean futures have traded either side of unchanged. Volume has been modest.
- The US Central Bank provided an emergency 50-point basis cut in lending rates which surprised the world financial marketplace. The DOW rallied 200 points following the Fed’s rate cut but is down 400 points at midday.
- The emergency Fed rate cut is worrying the market that future economic growth rates could decline dramatically amid Covid-19. The US Central Bank is trying to get ahead of a slowdown in world economic activity. The problem is that the Fed cannot cure the world of Covid-19 and that only a vaccine/treatment via science can end or slow the virus’s spread.
- The US Central Bank can buffer the impact, but the unknown is how much the supply chain or demand will adversely be affected. It is just too early make any comment about the degree of US economic slowing, but traders are worried about the ongoing spread of community Covid-19 within the US and the world.
- Chicago brokers estimates that fund managers have bought 11,000 contracts of corn and 5,000 contracts of wheat while being flat in soybeans. Funds were active grain buyers right from the reopening. Funds have also bought 1,200 contracts of soymeal and 2,600 contracts of soyoil.
- Rumours abound that China is asking for FOB offers of; US corn, spring wheat and sorghum. We cannot confirm any actual US sales. Several US exporters report that their phone has not rung from China for weeks, but they are hopeful that China will be calling following the start of issuing of duty exempt import licenses in coming days.
- We note that China has not ended its antidumping policy in US DDGs. which is preventing interest for this meal. There are open TRQ import licenses that could be used for 2.5-3.0 my of world corn. If China needs corn immediately, they can take it off the PNW (even with high foreign matter), but Argentine fob corn is cheaper by 17 cents/bu for April and 20 cents cheaper than the Gulf for May/June. By July, US Gulf corn is 30 cents more expensive than Argentine fob offers. The window for US corn exports is closing quickly and China’s TRQ buyers do have cheaper sources.
- Black Sea fob wheat offers keep sliding with bids at $208 and offers at $212/mt. Russia/Romania both have old crop wheat to sell and have not been able to uncover new demand. Russian wheat offers peaked in late January at $230/my. New crop Russian wheat offers rest at $195/my in a wide bid/offer spread. The market is looking for a bid with limited world demand noted.
- The midday weather forecast is similar into mid-March with rains starting to return to Central Argentina next week. Daily showers will continue across Northern Brazil while dryness persists across Argentina, Paraguay and Southern Brazil. The 11-15 day forecast calls for improving rain for C and S Brazil. It is important that better rain returns to S Brazil and Argentina from mid-March onward as heat looks to be applying stress to reproducing Argentine corn and soybean crops this week.
- China rumours are helping Chicago corn values as short sellers do not want to endure a headline. May corn futures are back to resistance and non-China grain import demand is in fast retreat. We expect a slowing US grain/soy sales pace in Thursday’s USDA weekly FAS Sales Report.
- Chicago corn and wheat cannot rally too far amid cheaper world fob offers. US corn is non-competitive beyond March.
- Brazil has been selling China soybeans into late May. China has bought a record number of Brazilian soybeans, which does not bode well for nearby US purchases. The US soybean weekly export pace is likely going to slide dramatically in coming weeks.