- Chicago futures are mixed to lower at midday, with heavy fund selling ongoing in corn and wheat. Soybeans have found support amid Chinese demand, which sources suggest is sizeable this morning. The dollar has soared to a new 12-week high, which has aided fund selling in grain futures. China this morning has likely source another 3.5 million mt of US beans from both the Gulf and PNW. We hear that 2.0-2.5 million will be marked for summer delivery from the Gulf, with the remainder scheduled for autumn from the PNW. This in turn suggests that China’s recent pledge to buy another 10 million mt of beans will be split roughly evenly between old and new crop positions. Chinese interest in corn and wheat remains lacking. Gulf corn basis continues at lofty levels amid weather and transportation issues, which won’t be solved in the near term.
- US export sales through the week ending Feb 28 were supportive for corn/wheat and disappointing for soybeans. Corn sales through the period totalled 38 million bu. This is down 9 million from above the pace needed to meet the USDA’s forecast. Wheat sales totalled 23 million bu, up 5 million from the prior week and near double the required pace. Bean sales totalled a meagre 11 million bu, vs. 81 million the previous week. China during the week secured 5 million bu, but cancelations worth 6 million were reported by unknown destinations. Of note, white and spring wheat sales are beginning to lag, while SRW and HRW sales have been excellent. HRW sales totalled just over 10 million, and so now only 2 million per week is needed to meet the USDA’s annual HRW forecast.
- For their respective crop years to date, the US has sold 1,595 million bu of corn, down 1% from last year; 1,443 million bu of soybeans, down 18%; and 830 million bu of wheat, up 3% from a year ago. Wheat sales of 20-25 million will be common in the next several weeks.
- The US’s 2018-19 winter (Dec-Feb) was the wettest on record. There is still no indication that cold/wet weather ends prior the very last week of March. The CFS model’s longer term guidance shows a potential pattern change to warm/wet weather in April, but already we wonder if corn and spring wheat can be seeded across the North prior to May. The process of snow melt, evaporation and warming soil temperatures will be lengthy.
- The EU/Black Sea forecast remains benign. Well above normal weather will continue there into late month, while temperatures averages some 8-12 degrees above normal in Ukraine and Russia. Very little rain, however, is offered to the whole of North Africa. Steep soil moisture deficits persist in Australia.
- The GFS S American weather forecast is drier in pockets of Central and Northern Brazil, but otherwise the model lacks any major crop threat. Recall the EU model remains much drier in Brazil, and we doubt the two come into agreement before the weekend. Argentina’s forecast is favourable, with soaking rains due on the weekend. Complete dryness and cool-ish temperatures follow.
- Bearish momentum continues in corn/wheat. We only add that current fund positions are only prepared for ideal Northern Hemisphere weather and the absence of Chinese demand in 2019. Expect a volatile spring and summer, as it remains that there is little room for yield error in the US and elsewhere.