- HEADLINES: China stays active seeking Ukraine corn/Canadian canola/Brazilian soybeans; Ukraine to enlist/draft farm workers; Managed money grain short into key USDA reports.
- US/Paris wheat futures higher on bottom picking and worry about future EU/Ukraine production; Brazilian farmers use the Chicago rally to sell recently harvested cash soybeans, but premiums keep rising. China buys Canadian canola for the first time in months and stay active booking Ukraine corn with another 2-3 cargoes sold. Chicago has firmer undertone based on fund short covering need.
- Chicago grain futures are higher at midday. May corn futures rallied and tested the 20-day moving average at $4.33. US wheat futures rebounded from prior contract lows while soyoil tested last week’s high. Hedge related selling in soybeans/soymeal pulled Chicago values off early session highs, but fund managers are feeling that their record large net short position is maybe too aggressive ahead of a new Northern Hemisphere growing season. Look for managed money to pare back their grain short into Friday’s USDA March report, and potentially into the end of the month if Friday’s data is not overly bearish. Fund managers are trying to measure their risk vs reward ahead of a new growing season.
- Chicago brokers estimate that managed money has bought 4,600 contracts of wheat, 8,100 contracts of corn, and 3,600 contracts of soybeans. In the products funds have bought 2,200 soyoil and sold a net 1,100 contracts of meal.
- Ukraine has likely sold its last cargo of wheat for the 2023/24 crop year and news that its military will start pulling conscripts from the farm has cash traders wondering about spring planting totals. To date, Ukraine has stayed away from selecting men from agriculture for the war on the need to produce grain and food. However, Ukraine military numbers are in sharp decline and the government will pull farmworkers and farm owners into the war. We have no way of knowing how this will impact Ukraine grain production, but the timing of the decision could not come at a worse time ahead of spring seeding.
- China is starting the week (the same way they ended last week) with the purchase of 2-3 cargoes of Ukraine corn and fresh interest in Brazilian soybeans. And China also booked 2-3 cargoes of Canadian canola for the first time in months as price reached levels that were deemed attractive. China’s new offtake of Canadian canola suggests a seasonal canola low is forming. China is importing record tonnages of world feed grains and elevating recent soybean purchases from Brazil and Argentina. We are not sure why China’s demand has taken a turn in the past week, but our count on Ukraine corn is starting to add up close to 1.5 million mt in the past 10 days.
- Brazilian soybean export premiums are up another 2-4 cents/bu even as the farmer has sold sizeable quantities of new crop soybeans this morning. The basis increase in surprising the Brazilian industry when a year ago, premiums were in the ditch on record large production. We note that Brazil’s CONAB will update their crop estimate on March 12, 4 days after the USDA March report.
- Rainfall in India for the past 30 days has run well above normal, and thunderstorms could have included wind and hail, but it is difficult to determine how much quality or quantity damage has been produced by the above normal rainfall. We would caution against making big downward adjustments to Indian wheat production.
- How short do fund managers want to be heading into a new growing season with key NASS reports? The March WASDE is on Friday with the all-important Stocks and Seeding Report due March 28. Excluding today there are 17 trading sessions before the NASS March 1 Stocks/Seeding Report with a long 3-day Easter Holiday weekend to follow. Spring planting season will start immediately following with Midwest farmers able to seed on the Revenue Insurance dates of April 10-15. Chicago price risks are to the upside with May corn futures not having pushed above its 20-day moving average since Dec 12. A close above $4.335 May corn or $11.73 May soybeans, or $46.11 May soyoil futures turns short term trading trends upwards.