- HEADLINES: War premium comes off on Ukraine/Russia peace talks; US weekly exports disappoint on corn/wheat; China back buying us soybeans.
- Chicago futures are sharply lower at midday in a macro market/risk off decline based on the coming NASS Stocks/Seeding Report on Thursday and the acute selling in energies. Russian and Ukraine negotiators are meeting face-to-face in Turkey to see if they can achieve a cease fire/peace accord. It appears that Ukrainian President Zelensky will be willing to cede some of E Ukraine as part of the bartering process, which has offered some hope.
- However, the Russian negotiating position is unknown, but what became apparent on the weekend is that Russia does not have a military might to contain or manage Ukraine. This skewed the Russians to focus on the Donbass, rather than entirety of Ukraine. This has also raised hope that Ukraine spring plantings could push ahead in C and W Ukraine. Last week, it was war on, this week with cease fire negotiations underway, it is less certain.
- Chicago brokers estimate that have sold 4,000 contracts of wheat, 5,100 contracts of corn, and 7,300 contracts of soybeans. In the soy products, funds have sold 4,500 contracts of soymeal and 5,200 contracts of soyoil. Funds have been risk off in their positioning heading into the end of the month and quarter.
- The USDA/FAS announced that 127,920 mt of corn was sold to an unknown buyer (rumoured to be either S Korea or Japan), and 132,000 mt of old crop soybeans to China. We hear this morning that China has been active in booking both old and new crop US soybeans on the break. China is short bought on soybeans and willing to use sharp down days to extend their forward coverage.
- Asian sources indicate that China will be auctioning off 500,000 mt of soybeans from its reserves over the next 7 weeks for a total of 3.5 million mt. The auctions are to help boost domestic supplies. China has 120 days to replace the soybean reserves and will likely look to new crop with the July/November soybean spread trading outwards to $1.81/bu premium. China is active in securing US soybeans amid the S American shortfall due to drought.
- US export inspections for the week ending March 24 were 63.2 million bu of corn, 23.1 million bu of soybeans, and 12.5 million bu of wheat. The corn and wheat export totals continue to lag trade expectations considering the Black Sea demand shift. For their respective crop years to date, US corn exports stand at 1,142 million bu (down 196 million or 15%), soybean exports are 1,596 million bu (down 398 million or 20%), with US wheat exports at 621 million bu (down 126 million or 17%). The Chicago markets were expecting larger export demand amid the Russian war, which has yet to materialise in any sustained way. Most importers are finding supply elsewhere or using their own stores to make it to the next crop cycle. Therefore, the Brazilian winter corn crop and Northern Hemisphere weather will be highly important in the weeks ahead.
- The midday GFS weather forecast is consistent with the overnight run. The change in the forecast is that the W Plains will see limited rains over the next 10 days which will add to their drought concern. The remainder of the Midwest/Delta/E Plains will see near to above normal rainfall and variable temperatures. Highs will range from the 40’s to the lower 70’s. The Northern and Western Plains will endure a deepening drought, but the Delta will endure too much rain. Several storm systems are forecast to produce 10-day rainfall of 2.50-5.00”. This rain will cause early corn seeding to be slow/behind normal seeding dates. The Delta demands warmer/drier weather to facilitate spring seeding.
- The coming mixture of war politics and weather will raise Chicago volatility in the weeks ahead. We have doubts that a peace accord can be reached nearby. Rockets that are hitting Kiev that does not indicate that Russia is shifting their war effort to the east. We would not advise new spec grain positions ahead of the USDA Report on Thursday. However, we believe that post the report, end users and importers will both be looking to secure any Chicago weakness. Look for choppy trade into Thursday.