- HEADLINES: Paris wheat surges to new contract high; Indian wheat export confusion: US March census corn/soyoil exports surprise.
- Chicago futures are mixed at the noon hour as corn/soybean futures sag on the prospect of improved US seeding weather across the C and E Midwest, while wheat futures hold solid gains. There remains some political uncertainty in the news as to the Indian wheat export ban/restriction. The volume of trade has been more active with funds and money managers back on the long side of the market following the sharp rally in energy values. Crude oil is up $4/barrel and following the US Central Bank’s hiking of its lending rate, we expect that capital flows will return to the long side of raw material markets. The last few days of break is based on risk reduction. Once the Fed has raised rates, it Is the coming April inflation rate and strong US economic growth outlook that will pull fresh funds back into risk assets. We look for a higher Chicago close with increased volatility into the close based on the US Central Bank’s interest rate decision.
- Chicago brokers report that funds have sold 1,200 contracts of corn and 2,200 contracts of soybeans, and 4,200 contracts of soymeal. Funds have bought 3,200 contracts of soyoil and 5,100 contracts of wheat. Funds have been active buyers of wheat on any correction.
- There are cash rumours this morning that China is back asking for offers on US soybeans (old/new crop) and new crop US corn. The break in Chicago new crop corn futures has caused Chinese importers to have renewed interest following their 3-day Golden Week Holiday. China’s State importers want to get ahead of crushers in making fresh purchases. The morning Chicago soybean break uncovered fresh Chinese interest.
- Census reported that the US exported 117.1 million bu of soybeans and a far larger than expected 266.5 million pounds of soyoil in March. This compares to 84.3 million bu of soybeans last year and just 155.8 million pounds of soyoil. March US Census soymeal exports were close to last year at 1.0 million short tons.
- US March corn exports are running far ahead of weekly FGIS totals. The US exported 293 million bu of corn in March, 36 million bu more than weekly inspections. US Census corn exports through March are a record 256 million bu more, largely due to massive US corn exports to Canada in cross border trade. In fact, US corn exports for the crop year to date stand at 1,417 million bu vs 1,483 million bu last year. The US Census export pace is only down 66 million bu, which argues that the WASDE US corn export estimate of 2,500 million bu is too low by 175-200 million. We expect WASDE to raise its corn export estimate by 100 million bu on May 12.
- The Oklahoma Grain/Feed Assoc in a survey pegged the state’s HRW wheat yield at 58 million bu, down 51% from last year. Small heads and a lack of tillers produced the very disappointing crop yield. Texas yield losses are even worse.
- There is one thing that you can count on in India, confusion. Sudhanshu Pandy, Sec of public food distribution, stated that India has no plan to curb wheat exports as the country has enough stocks for welfare programs, despite the sharp fall in production. However, Mr. Pandy does not make official export policy. We understand that an export ban is likely amid a wheat crop that looks to be well below 100 million mt. India may have to import wheat if the crop is smaller than 97 million mt as yields have fallen sharply amid the record heat.
- Frequent storm systems will be passing across the Central US over the next 10 days. A ridge of high pressure will be lifting the Jet Stream northward across the Eastern US with warmer temperatures to evolve by the weekend. There is not enough drying weather in between the systems for all out planting. The slowest area will be the NW Midwest/N Plains where rain totals will be the heaviest. The 2022 US corn/soy crops will be late seeded.
- The new EU sanctions against Russia are sure to cause an increase in Ukraine aggression by Russia. We see high odds that India will ban exports to let sellers out of existing export contracts. The Indian wheat crop is more than 50% harvested and later maturing wheat will yield less than the early cut varieties. Paris Sept wheat is at a new contract high. We see any break in corn/soy as temporary on strong domestic/export demand. US ethanol margins are back to $0.90/bu with cash crush margins in soybeans above $2.70/bu and China returning from holiday and being short bought. Look for increased volatility surrounding the US Central Bank rate hike, but Chicago is a buy the break market, especially in new crop corn. The Brazilian corn crop has lost 10-12 million mt due to the ongoing drought and latent US seeding limits any break in December corn below $7.25. The selling in December corn is due to wheat/corn spreading.