- Soybeans were mostly higher through the day on Thursday and 4-5 cents higher at the close. Rumours continued that Chinese buyers are preparing for large US Ag purchases in anticipation that tariff’s on US commodities will be removed in the near future. Corn gained on concerns for Midwest and Delta flooding, and soybeans kept pace on fund short covering. The weekly Export Sales report did not offer much inspiration, with a routine weekly sales total. However, the pace of export commitments is slowly falling in line with the USDA’s annual export forecast. Cumulative exports are down 30% from a year ago, but outstanding sales are record large at 13 million mt. A steady weekly export rate is needed to reach the USDA’s annual forecast. Funds are heavily short Chicago soybeans, with major moving averages just above the market. A steady/higher close on Friday will have soybeans higher for the week, with major USDA reports out next Friday.
- May corn rallied 5 cents, breaking through its 20-day moving average for the first time since late February. There are rumours of Chinese demand, and while still little is known about US-China trade details, our contacts do suggest a host of new buying/pricing occurred Thursday evening. And the trade is fully aware of how the hog market has changed in recent weeks. US corn export sales through the week ending March 14 totalled 34 million bu, more than double the prior week. Only 30 million per week is needed to meet the USDA’s 2,375 million bu forecast. This is an obtainable pace despite S America’s looming crop. Recall global corn consumption in 2018/19 is by far record large. The US weather forecast shows little change in the near and long term. Widespread heavy rain and cool-ish temperatures return in late March/early April. NOAA’s spring forecast is wetter than normal in all areas, but particularly wet across the Southeast and Western Plains. We reiterate that managed funds are short an estimated 225,000 contracts ahead of a growing season and as US-China tension begins to thaw.
- US wheat futures ended steady to higher amid noticeable strength in corn and as seasonal trends in world markets turn a bit more supportive. Weekly US export sales were a disappointing 11 million bu, but again HRW sales were decent 5 million bu. Recall HRW sales need to average only 1.5 million bu per week to meet the USDA’s target. Rumours of Chinese interest in US corn follows a surge in hog values, and so funds are beginning to pay more attention to potential ramifications of China buying massive tonnages of US ag products. Wheat will be included, but we hear of nothing concrete with respect to China even pricing wheat. Western Europe will stay dry for another 10 days before a potentially wetter pattern emerges. Normal/above normal rain is needed in W Europe, N Africa and E Europe in April and beyond. Our bet is that wheat has scored its seasonal bottom ahead of the growing season, in which trend Black Sea/EU yields are needed to build exporter stocks.