- Chicago grain futures are mixed but mostly lower at midday. Overnight strength in beans and wheat failed to carry through in morning trading as energy markets drift lower. Spot WTI crude is down a full $1 per barrel (5%), with ethanol and RBOB gasoline contracts following. It should be noted that weakness in energy markets is more structural that the spread of Covid-19. The ethanol landscape remains in disarray and will continue as such into summer.
- Corn remains the ag market’s laggard. Heavy, and needed, rainfall worth 1.2-2.5″ fell across the drier areas of Mato Grosso do Sul and Western Parana over the weekend. Nearby safrinha corn dryness concerns are being restricted to pockets of eastern Parana and Sao Paulo. Regular rains will be needed throughout the month of April, but we look for vegetation health in Central Brazil to improve markedly this week.
- Meal futures remain supported following Sunday night’s sharp rally in China and as the trade further digests the coming shortfall in US DDG production. Work suggests that DDG production in 2019/20 could fall 2 million mt from USDA’s forecast.
- Otherwise, it is tough to find new bullish input. The slowing of Russian wheat exports will be a political decision, which is impossible to forecast, while it is premature to be overly concerned about Black Sea dryness as high temperatures in E Ukraine and Southern Russia will be capped in the upper 50s/low 60s. Black Sea dryness will be more closely monitored in the second half of April.
- Kazakhstan this morning has lifted its ban on flour exports and instead will move to a quota system for the duration of the 2019/20 crop year. Millers there insist wheat stocks are more than adequate.
- US export inspections through the week ending March 26 included 50 million bu of corn, vs. 34 million the prior week, 15 million bu of soybeans, vs. 22 million the prior week, and 13 million bu of wheat, unchanged on the prior week. Only 75,000 bushels of soybeans were inspected for shipment to mainland China.
- For their respective marketing years to date, the US has shipped 711 million bu of corn, down 39% from this week a year ago, 1,161 million bu of soybeans, up 8% on last year, and 752 million bu of wheat, up 9%. The pace of corn sales and shipments is in better alignment with the USDA’s 1,725 million bu forecast. US exporters sold 285,000 mt of soybeans to Mexico for old crop delivery this morning. Yet, a robust soybean shipping campaign is needed this summer to prevent a 100 million bu downward revision to 2019/20 US soy exports.
- NASS will release crop progress/condition reports from select states today.
- This will include corn harvest progress in ND as well as winter wheat crop ratings across the Plains, Midwest and Delta. Plains winter wheat ratings are pegged steady/higher on the prior week.
- The midday GFS’s US weatherw forecast is consistent with the morning run. An active pattern of rainfall will impact the Delta/Southeast through the first 10 days of April. Midwest precipitation will be more light/scattered in nature, with accumulation in excess of 1.5″ confined to MN. Temperatures will lean normal/above normal. Soil temperatures will be warming.
- We look for a weaker close but conviction will be lacking ahead of Tuesday’s stocks and seedings data. Dec-Feb corn feed/residual use will be a focal point.