- A mixed Chicago start has returned to firming midday prices as concern over Trump Administration trade sanctions temporarily wanes and the market focuses back on the Argentine drought and grain logistical snarls in the Black Sea. Funds are back on the buy side of the marketplace in a new month as they continue to build their long position. Wheat has been the upside leader as funds scramble to cover the last of their short positions. The volume of trade is below prior days through midday, but market volatility persists. Until there is clear indications of rainfall across the drought stricken Argentina or the Central US Plains, any Chicago price drops will be a correction to an overall bullish trend.
- Chicago brokers estimate that funds have bought 4,300 contracts of wheat, 4,200 contracts of corn, and 3-4,000 contracts of soybeans. In meal, funds sold 2,900 contracts early and then covered, while selling 2,900 soymeal.
- This morning FAS announced that US exporters had sold 120,000 mt of US soybeans to China with half of the sale in the 2017/18 and half in the 2018/19 crop year. And 126,000 mt of soybeans were sold to unknown destination, also split evenly between the 2017/18 and 2018/19 crop years.
- US export sales for the week ending February 22 were; 7.0 million bu of wheat, 69.0 million bu of US corn, and 33.1 million bu of soybeans. For their respective crop years to date, the US has sold 795 million bu of wheat (down 113 xm or 12% from last year), 1,547 million bu of corn (down 162 million or 9.5%), and 1,674 million bu of soybeans (down 255 million or 13%). Growing US corn sales data pace argues for a 50 million bu increase in the 2017/18 US corn exports while slowing US soybean sales argues for 50-75 million bu decline in exports. US weekly soymeal sales were a modest 139,000 mt of soymeal and 16,600 of soyoil.
- Black Sea wheat prices have risen sharply in recent days amid logistical snarls and sellers that are panicking on the new crop via concern over bitter cold temperatures and potential winterkill damage. The sellers have run to CME’s Black Sea wheat futures to cover sales with guaranteed performance. The cold will persist across Europe and the Black Sea to further slow arrivals of grain from the producer. Today’s Black Sea grain market offers what can happen when too many get on one side of the marketplace, and weather conditions change. We have no way of measuring Russian/Ukraine winterkill damage until spring. The current Black Sea market is more of short squeeze, rather than any major change in the abundance of world wheat.
- President Trump is threatening to place US tariffs on steel/aluminum imports. An announcement was slated for the morning, which was cancelled and then held to only discuss the topic. Any steel tariffs were a threat to raising the US trade tensions with China, a key steel exporter. An announcement is pending.
- The midday GFS weather forecast is as dry as the overnight run with limited rain chances for the next 10-14 days. There could be a few lighgt showers in the far west and south, but no soaking rain is slated for the key Central Argentine crop areas. The Argentine drought will deepen with high temperatures ranging from the mid 80’s to mid 90’s. The 2018 Argentine drought is now historic, the worst in decades. Rain late in late March will offer a diminished crop benefit.
- Chicago continues to firm on arid weather forecasts for the US Central Plains and Argentina. Yield declines in Brazilian soy will likely produce a crop no larger than 113-114 million mt, even with the expanded planted/harvested acres. This is a realizing bull market with May soybeans targeting $10.85-11.00, $5.15- 5.25 May Chi wheat, and $3.90 in May corn.