- Chicago grain futures were mixed on the opening but have rallied at midday on speculative buying. The inability of Chicago to decline after the opening helped put ”bullish heart” into grain values. Traders are aware of the large net short positions of funds and with farmers holding back on any additional marketing, Chicago is running out of new sellers. And in the background was US President Trump indicating that US/China trade talks are advancing, but he is unwilling to call the deal done. Chicago has a firm feel in the grains, but soybeans are lacking fresh US export demand. There has been no indication that China is going to secure the rest of their promised 7.5-8. 0 million mt of US soybeans this morning. Rumours persist of Chinese demand under the US cash market on weakness in a new crop position. We look for a mixed settlement awaiting fresh US/China Trade Deal news.
- Chicago traders estimate that funds have bought 5,500 contracts of wheat, 6,000 contracts of corn, and 4,100 contracts of soybeans. In soy products, funds have bought 2,000 contracts of soymeal while selling 900 soyoil.
- FAS US export sales for the week ending March 7 were; 9.7 million bu of wheat, 14.6 million bu of US corn, and 70.2 million bu of soybeans. Crop year to date sales stand at 839.4 million bu of US wheat (up 24 million or 2.9%), 1,610 million bu of corn (down 107 million or 6%), and 1,513 million bu of soybeans (down 297 million or 17%). The US confirmed the sale of 1.7 million mt of US soybeans to China for the 2018/19 crop year. This helps ink in that China booked 2.0 million mt of US old crop soybeans last Thursday. This leaves 8 million mt of their 10 million purchase pledge.
- We note that China booked 23,800 mt of US pork last week helping to fuel speculation that the recent strong rally in China cash meat prices has pushed the Government into importing US pork to cool building food inflation. It is not only pork prices in China, their poultry/beef prices are also rallying strongly on the diminished Chinese pork supply due to African Swine Fever. US hog futures have rallied sharply this week on the emerging Chinese import demand. Cow/Calf producers in the Plains are reporting a sharp increase in calf mortality from extreme wind, snow and cold. Some producers are fearing the loss of upwards of 50% of their February/March calf crop. Wheat producers in TX and Ok report blowout of wheat following winds of 60-80 mph. The system is now pushing through portions of the W Midwest with wind gusts to 50-60 mph.
- A massive storm system is located over the W Midwest which will push eastward through the Lake States into Friday. The storm will produce blizzard conditions and excessive rainfall from across the N Plains and W Midwest. Strong winds and another pull of arctic air follows. As the storm exits Friday, a 7-8 day period of mild/sunny weather will evolve. However, several new storm systems are offered during the 11-15 day period which looks to return the Central US to a cool/wet profile.
- The market’s confidence in a US/China trade deal is increasing. Traders expect that as China Parliamentary Meetings end on Friday, Government Leaders there will be able to devote more time to finishing the US/China trade deal. We remain hopeful that both sides can announce a signing date in the next few weeks. The deal will completely change the outlook for US ag goods pricing if China pledges to secure $50 billion of US ag goods. NOPA is expected to release their February crush report on Friday with the CFTC likely to reflect a further build in managed money net short positions.