- HEADLINES: Markets relax, prep for NASS data; EU balance sheet released in error this morning; US dollar testing mid-March low.
- Chicago ag markets are steady to lower midday as the complexity of markets, changing Russian policies, less than ideal weather in the US and abnormally strong interior basis levels, take a back seat to NASS stocks & seedings data due Friday. We reiterate that acreage estimates vary wildly, with some even forecasting a fairly sizable change to winter wheat seedings, and there is no doubt volatility will be massive in the last two hours of trading tomorrow. We do note that winter wheat seedings rarely change from January to March, which implies some 3.7 million acres have been stripped from row crop production. We also note that acreage enrolled in the CRP program at the end of February totalled 23.0 million, vs. 22.1 million last year and vs. 20.07 million in winter 2021. One crop will be left without needed expansion.
- Also lingering in the background is additional weakness in the US dollar index, which this morning is testing the lows of early March at 102.2. A close below 101.9 opens up additional downside risk, chart-wise, and a test of January’s lows are probable in the next 30 days.
- The exit of index funds from the US ag market have largely been a function of a rising dollar/rising interest rates, and whether this trend is reversed is important. Crude oil midday is up $0.80/barrel. The Dow is up 50 points and scored a new weekly high this morning. Fears of banking sector issues/liquidity have been eased.
- US export sales in the week ending March 23 were broadly in line with previous expectations. Corn sales totalled 41 million bu, vs. 122 million the previous week, amid a relative slowing of Chinese purchases. Note that sales of just 18 million bu/week are needed to validate USDA’s annual target, and as another 178,000 mt of old crop US corn were sold to China this morning, it is likely that weekly sales during the summer months must average only 10-12 million bu, a slow but reasonable pace even assuming record large Brazilian production.
- US soybean sales through the period totalled 13 million bu, vs. 6 million the previous week. China last week secured 5.6 million bu of US origin beans. Meal sales were an 18-week high 378,000 mt, vs. 121,000 the previous week. Wheat sales totalled 6 million bu, mostly HRW & SRW, vs. 5 million the prior week.
- For their respective crop years to date, US exporters have sold 1,416 million bu of corn, down 33% year-over-year but a rather normal 77% of the USDA’s annual forecast. Exporters have sold 1,828 million bu of soybeans, down 10% from last year, and 662 million bu of wheat, down 5%.
- Paris milling wheat futures have reversed early morning gains. The EU Commission’s initial supply/demand update was published in error. EU wheat stocks were actually raised 1 million mt to 18.6, not lowered 2.6 million. EU wheat exports were left unchanged at 32 million mt.
- For reference on Friday, the trade’s average guess on March 1 US corn stocks is 7.5 billion bu, vs. 7.8 billion last year, with soy stocks pegged at 1.7 billion, vs. 1.9 billion year, and wheat stocks at 930 million bu, vs. 1.03 billion last year. Corn acreage, on average, is estimated at 90.9 million, vs. 88.6 million in 2022, with soy at 88.2 million, vs. 87.5 million last year, and all-wheat acres at 48.9 million, vs. 45.7 million in 2022. The wide range of estimates implies the potential for intense price movement just after the data’s release. The expansion of Midwest winter wheat acreage, and associated plans to enlarge double cropped soy production, implies the potential for a bullish surprise in corn seeding intentions.
- The midday GFS weather forecast is similar to the overnight run in projecting heavy rain/snow across the N Plains, E Midwest and Delta into April 6-7. Warming occurs briefly in the Midwest early next week but below-normal temperatures resume thereafter. Freezing lows persist across the N Plains into mid-month.
- The burden placed on US weather this summer will be fine-tuned Friday morning via stocks and seedings intentions. Premium can’t be shed entirely until early July crop ratings are published. Volatility provides opportunity over the next 45-60 days.