- Chicago values are weaker by varying degrees, and on a percentage basis Kansas wheat is leading the way down. Thursday’s upward revision to HRW stocks is noted, and there is now a much larger buffer against forthcoming yield loss. Uncertainty over world trade is also producing a risk-off mentality in ag futures, and also this afternoon’s CFTC (commitment of trader’s) report will feature additional boosts to funds’ net long positions in corn and soybeans. We do note that there is interest in old crop bean exports. Following massive beans sales of 92 million bu through the week ending March 1, which is counter seasonal, and also (by far) a record for that particular week, exporters have sold another 388,000 mt of old crop beans to China and unknown destinations. Exporters have also sold 260,000 mt of corn to unknown destinations The Buenos Aires Grain Exchange on Thursday lowered their Argentine soy crop estimate to 42 million mt, down 2 from the previous week and a sizeable 5 million below the USDA’s forecast. This reflects this year’s historical dryness.
- BAGE lowered its Argentine corn estimate to 34 million mt, down 5 from the previous month and 2 million mt below the USDA’s forecast. BAGE’s bean number is low enough to spur some shuffling of the world trade matrix, and so we anticipate a boost in US spring sales and shipments. The point is that while the USDA will be rather measured in fine-tuning S American production estimates, the trade still may not be low enough with its S American surpluses in 2017/18. The coming pattern shift in Argentina won’t much affect potential, and in fact may work to slow harvest across fringe producing areas in far NE Argentina. The midday US weather forecast is little changed from the morning run. Widespread precipitation is featured across the Dakotas, much of the Midwest and mid-South March 17-23, but a westward expansion in moisture remains unlikely. Assuming the model verifies, cumulative rainfall in KS, CO and across the TX and OK panhandles will range from just trace amounts to 0.20”. Moisture deficits will be widening, not narrowing, in the weeks ahead. Recall crop conditions in select Plains states will be updated weekly moving forward. Crude oil at midday is up $1.60/barrel and has recovered much of the prior two day loss. EU milling wheat futures look to settle down €1.25-1.50/mt amid losses in the US and a moderate rally in the €uro. The US$ is trading near unchanged.
- The market today is shedding length and risk premium, though we caution against turning overly bearish (particularly in the case of corn) until US acreage and spring/summer weather patterns are better known. Wheat and soy’s premium to corn looks to erode in the weeks/months ahead.