- HEADLINES: USDA confirms that China secures 1.0 million mt of US corn; European rapeseed oil at record $1.02/pound, Dryness for the Plains/Central Brazil.
- Chicago values are sharply higher as premium is added as the Russian war against the Ukraine rages on. Corn, soybeans, and wheat futures are all posting sharp midday gains, even with China on holiday. The volume of Chicago trade has expanded with traders preparing for the start of the Goldman Roll on Thursday. New money also appears to be entering the commodity space with a host of raw material markets rallying including the energies. It is “risk-on” in energies, metals, and grains as Russian/Ukraine cease fire talks appear to be stalled.
- Also, worrisome was the weekend damage and intentions of Russia to control Ukraine’s Black Sea ports. Odessa damage assessments vary from exporter to exporter, but all are worried about a future onslaught. The Russian war shows little sign of ending with US President Biden calling Putin a war criminal for the civilian atrocities north of Kiev.
- Chicago brokers estimate that funds have bought 4,300 contracts of wheat, 6,700 contracts of corn, and 5,100 contracts of soybeans. In the products, funds have bought 3,200 soyoil and 4,600 contracts of soymeal. Also, end user pricing was noted in meal early this morning. Other than profit taking, new selling is difficult to uncover with the rally not sparking much farm selling.
- The USDA announced that China was a buyer of 1,084,000 mt of US corn which included 676,000 mt of old and 408,000 mt of new crop. US exporters suggest that another 2.5-3.0 million mt will be added in the coming days and weeks. In total, it appears that China has purchased 3.5-4.0 million mt of US corn. We would guess that 60% of the sale is old crop for mid to late summer shipment. The China corn purchase boosts the case for USDA to raise their 2021/22 corn export estimate by 50-100 million bu in Friday’s report.
- CONAB’s April Crop Report will be out on Thursday with WASDE out with their report on Friday. The April 8 WASDE report does NOT include new crop balance sheets, but we look for WASDE to raise old crop US soybean/corn exports based on pace analysis and another 30 days of the Russian war against Ukraine. WASDE must take down Ukraine corn exports by 3-5 million mt due to the ongoing war. The cut in Ukraine corn exports will boost the US’s. It is rare that you have consecutive weeks of important USDA data jostling the marketplace.
- A frost/freeze occurred across European ag areas on the weekend. It will take a week to assess any crop damage, but like last year, there is worry that the top end could have been taken off wheat/winter canola yields.
- Although winter Brazilian corn has been able to catch enough moisture heading into early pollination, dryness across the Mato Grosso, Goias and MGDS looks to deepen in the coming dry 2-3 weeks. The timing of the dryness could not be worse with corn pollination starting. April/May rains are desperately needed.
- European rape oil values reached a record $1.02/pound today. This high cash price along with sun oil trading above $2,200/mt ($1.00/lb) makes US soyoil appear cheap at $0.70/lb. Amid rising S American soyoil premiums, the break in soyoil futures late last week was corrective in a longer-term bull market.
- The midday Central US GFS weather forecast runs are consistent with limited rainfall for the Canadian Prairies and the US Plains over the next 2 weeks. The forecast warms dramatically in the 7–10-day period with 80’s/low 90s forecast for the Southern and Central Plains. The lack of rain, strong winds and warming temperatures look to add further stress to HRW wheat. The E Midwest holds in a wet/coolish upper air flow.
- December corn has reached above $7.00/bu amid a need for additional acres and the largest China corn order in nearly a year. KC wheat is holding firm with key crop condition reports due out from NASS after the Chicago close. China returns from its holiday on Wednesday (Tuesday evening in the US) with fresh demand for US soybeans expected. Dryness in the Plains and Central Brazil must be closely monitored. We continue to remain bullish.