- Chicago values are mixed to start the week with soybeans catching a bid on the drier than expected Argentine weather forecast, while the grains sag on the potential for better rains across the Plains and a US corn cash pipeline that is adequately supplied. The volume of Chicago trade has been moderate with the charts looking corrective amid a speculator that is heavily long. Our concerns are that Chicago rally efforts will be laboured as most of the Argentine crop losses have been discounted. The USDA will likely cut their Argentine crop estimates even more in April, but traders have been discussing 39-42 million mt soybean and 30-33 million mt corn estimates for weeks. The Argentine Government can release their initial crop estimate in late March, but they often wait until April. As of today, the Argentine Government is not providing any guidance on a release date. Research argues that Chicago values will chop in a range of $10.20-10.75 in May soybeans, $3.80-3.95 in May corn and $4.65-5.05 in May Chicago wheat. The market is caught between the decline in Argentine crop production and US seeding intention and spring weather across the Northern Hemisphere. We caution against being too bearish or too bullish on Chicago prices.
- Chicago brokers estimate that funds have sold; 4,600 contracts of corn, 2,100 contracts of soybeans, and 3,200 contracts of wheat. In soy products, funds have sold 2,100 contracts of soymeal and are flat in soyoil.
- US soybean and wheat export pace remains disappointing and further WASDE reductions are possible. Chicago traders are still awaiting retaliatory measures from China and other world metal exporters in response to US tariffs on steel/aluminum. The ASA claims that US soybeans could be targeted, while others point to US coal and other products. There will be a retaliatory response, but it is far from certain the goods included and timing of any announcement.
- US fob soybeans for April and May are some 18-20 cents cheaper per bushel than Brazil. The cheapness of US soy will keep them competitive into spring, and the US soybean sales pace is expected to remain seasonally elevated.
- It is hard to have passion on Chicago price direction until after the Mar Stocks/Seeding report. Research calls for a range trade as large US corn /soy stocks help buffer Argentine losses, and Chinese demand for Brazilian soybeans slows from the heady pace of recent weeks.