- HEADLINES: US soybean and corn sales record large for early March; GASC books 360,000 mt of East European/Black Sea wheat; Midday GFS weather forecast wetter for Argentina.
- Chicago futures are mixed in midday trade with corn/soybeans firm, while wheat and soymeal futures decline. The volume of trade is diminished with all eyes on S American weather and the potential for elevated fund participation next week. Fund managers will be able to raise their exposure to corn, soybeans, wheat, and soy products by nearly 75% starting Monday. We look for a mixed close as US equity prices as measured by the DOW scores another record high. Commodity values in terms of stock valuations appear to be historically cheap.
- Soyoil futures scored a new contract high on the decline in world vegoil supplies with palmoil values at a 13-year high. Research indicates that soymeal futures are nearing a low as end users reach for additional soymeal as crush for canola, cottonseed, and other oilseed crops slows. And US crushers are having difficulty replacing stocks amid limited farm selling. The meal market should bottom against the November highs at $400-404/ton.
- Chicago brokers report that funds have bought 3,200 contracts of corn and 2,100 contracts of soybeans, while selling 6,700 contracts of wheat. In the products, funds have sold 1,900 contracts of meal and bought 4,200 soyoil.
- The US weekly export sales report offered 12.1 million bu of wheat sales, 15.6 million bu of corn, and 12.9 million bu of soybeans. All were above trade expectations. And we note that 2021/22 corn sales were 11.3 million bu with soybeans at 7.8. Interest is growing in the new crop position as Chicago futures rise.
- For their respective crop years to date, the US has sold 2,343 million bu of corn (up 1,237 million or 112%), 2,220 million bu of soybeans (up 961 million or 76%) and 886 million bu of wheat (up 18 million or 2%). The US has sold a record 90% of its annual US corn export estimate of 2,600 million bu while selling 99% of its soybean forecast. By late March, the US will likely have sold more beans than USDA is forecasting it will export which will raise questions on the validity of the USDA estimate. We continue to forecast US soybean 2020/21 soybean export rate at 2,350 million bu, 100 million bu larger than USDA which pulls stocks down to below pipeline level of 40 million bu. The longer the soybean market waits to ration demand, the more acute the ultimate rally.
- Finally, US exporters continue to discuss that China’s COFCO has secured another 1.5-2.0 million mt of US corn for summer shipment. COFCO has bought the corn in the US domestic corn market but does not need to announce a US sale until its loaded or ready to be nominated as being shipped to China.
- GASC secured 360,000 mt of wheat at an average price of $283.16, which was down $10.83/mt from their last tender in early February.
- The GFS weather forecast is wetter for Argentina next weekend as it has added back 1-2.00″ of rain for S and C Argentina. The models are pushing heavier rain potential backwards in time which reduces confidence, but the midday GFS is more like the overnight Euro model. The 6–7-day forecast offers limited rain with high temperatures in the 80′s to lower 90′s into March 18. Thereafter, the GFS upped rain totals to 1-2″ for S Argentina during March 19-21. Dry weather follows in the 11–15-day period.
- The GFS forecast stays wet for Northern Brazil with 10-day rains of 3-6.50″. And the 10–15-day period is especially wet for N Brazil with another round of heavy rain. Winter corn needs sunshine and less rain to promote root growth.
- Wheat futures are in liquidation on the pending abundant rain for the US Plains. The N Plains misses out on the moisture but HRW areas will get a welcome 1-3.50″ of rainfall. S Midwest and Delta corn seeding will be delayed by surplus soil moisture. Soyoil is the bullish stalwart of Chicago with meal likely to join in the party as US crush rates decline. This is no place for new sales!