- Red persists in Chicago this morning with the only green showing in soyoil on meal/oil spread unwinding. Marketing year low US soybean sales and marketing year high US soymeal/soyoil sales have traders debating future US soy crush rates. US domestic biodiesel demand is expected to accelerate amid the warming of temperatures this spring and a strong case can be made for raising US soybean crush rates by 25 million bu and cutting US soybean export estimates by 50 million bu. The USDA February WASDE report is due out a week from today and traders have started debating world crop production and US balance sheet changes. Otherwise, fresh news is rather limited and traders will take their cues from S American weather forecasts going home.
- Chicago floor brokers estimate that funds have sold 8,600 contracts of soybeans, 6,000 contracts of corn, and 4,700 contracts of Chicago wheat. In soy products, funds have sold 4,200 contracts of soymeal and 900 soyoil.
- Technically, March soybeans fell below the 50 day moving average at $9.84 which triggered a slew of sell stops which pushed the market down to the 200 moving average at $9.80. This level also failed to hold, which sparked another layer of selling. End user pricing was uncovered on the break and the market is trying to stabilise. Corn and wheat have followed the complex lower.
- The FAS weekly export sales report showed US wheat sales of 10.6 million bu, US corn sales of 72.9 million bu and soybean sales of 13.2 million bu. The US soybean and wheat sales were disappointing, while the corn sales were better than expected. For their respective crop years to date, cumulative US wheat sales stand at 750 million bu (down 11% or 91 million), US soybean sales at 1,602 million bu (down 249 million or 13%) with US corn sales being 1,270 million bu (down 313 million or 20%). We note that the US sold 9.5 million bu of sorghum with crop year sales at 204 million bu, 76 million or 59% better than last year on strong Chinese demand. US cumulative soymeal sales are the second largest on record.
- The weekly US Drought Monitor indicated a worsening drought outlook for the Central US with the GFS weather forecast calling for an ongoing dry weather trend for at least the next three weeks. The drying trend will raise drought worries starting in March with US winter wheat condition ratings in retreat. The S American weather forecast is little changed from the overnight run.
- This is the kind of market that you get when you trade changeable and low confidence extended range weather forecasts. It had better rain across Argentina and S Brazil in mid-February or Chicago will quickly add considerable weather premium in price. Amid a weakening US$, we look for new money coming into commodities in the new month. Don’t sell Chicago breaks amid an expanding drought across the Central US and Argentina is the best advice we can offer at this time.