- Lower has been the Chicago theme this morning. Corn/wheat failed to sustain overnight gains while the soy complex tries to push lower without conviction. Private Brazilian soy crop estimates are in decline and hedge fund managers argue that if the US/China can continue to make progress on trade and IP/IT issues, that China’s Government could return for the purchase of US soybeans. We argue that it would be US grains/other ag products that would be on top of China’s shopping list. The key here is that the US/China need to score enough progress to keep the talks going beyond March 1. It is the US/China trade talks and hope for progress that will determine late week Chicago prices.
- Chicago brokers report that funds have sold 4,900 contracts of wheat, 7,200 contracts of corn and 3,000 contracts of soybeans. In soy products, funds have sold 1,300 contracts of soyoil and 600 contracts of soymeal.
- Bitter cold across the Central US and minimum temperatures of 0 to -15 degrees will produce winterkill risks for HRW/SWR wheat in the southern half of the Midwest, the eastern half of Nebraska and NE Kansas. The dramatic cold followed by and equally dramatic warm-up this the weekend, and secondary cold surge in early February looks to stress US winter wheat. Amid US winter wheat seedings at a 110 year low with crop condition ratings well under average heading into dormancy, the outlook for US 2019 winter wheat yield is questioned.
- Jordan finally booked 120,000 mt of optional HRW wheat for April at a price of $271.50/mt. The price allows for US HRW wheat to be a source of supply, while rising Russian wheat prices makes their wheat doubtful. Russian fob price offers are tough to uncover beyond March, but April offers range between $255-258/mt. Russian forward offers takes themout of the world market and makes their export estimates of 36-37 million mt doubtful.
- Argentine fob corn offers have fallen below the US through June which is likely to end the US’s hold on world corn trade. US June FOB corn is offered at $170/mt with the US Gulf at $176/mt. On a spot basis, Argentine corn is offered $1/mt cheaper at $173.00. The Argentine export competition will make it difficult for WASDE to raise 2018/19 US corn exports.
- Egypt’s GASC purchased a combination of Romanian and French wheat in their latest tender for March shipment. The Romanian sale would seem to clear up their old crop offers. Freight offers to GASC were down sharply from their last tender which masked the gain in fob price offers. The world wheat market keeps rising while Chicago has held unchanged or is lower. The rising world wheat market limits the downside price risk in US futures, the morning break is a wheat bear trap.
- The midday GFS S American weather forecast is wetter than the overnight run. The pattern of a high-pressure ridge across NC Brazil and a low-pressure vortex across Argentina persists this week. However, a weakening and eastward progression of the ridge offers a pattern change on the weekend. The jet stream lifts northward and confidence in normal N Brazilian rainfall and less Argentine rain is growing. This drier trend for Argentine weather is welcomed.
- Russian interior and export wheat offers keep rising which has pulled this key supplier out of world trade. Corn is a follower while improving S American weather looks to cap soybean rallies.