- HEADLINES: Market chop continues; NOAA US spring forecast implies drought shrinkage.
- Chicago ag markets are mixed but uneventful at midday. Row crops and KC wheat have found relative support, while Chicago wheat extends its correction on a weaker Russian Rouble and an otherwise lack of fresh input. We note that March Chicago wheat neared overbought territory Tuesday evening, and so a correction was warranted. Key is whether that contract can hold initial chart-based support at $7.58.
- US export sales were decent for corn, meal and soybeans but disappointing for wheat. Corn sales in the week ending Feb 9 totalled 40 million bu, vs. 46 million the previous week but against an average of 29 million needed to meet the USDA’s forecast. It is important that corn sales stay at/above 40 million throughout the next 3-4 months to prevent a further trimming of USDA’s forecast. Soybean sales were 19 million bu, vs. 17 million the previous week and right at the level needed to justify the USDA’s currently projected 1,990 million bu. Wheat sales totalled only 8 million bu, vs. 5 million the previous week. Meal sales were a three-week high 271,000 mt.
- For their respective crop years to date, the US has sold 1,095 million bu of corn, down 40% from last year, 1,767 million bu of soybeans, unchanged, and 607 million bu of wheat, down 5% year-on-year. Annual corn exports are most in danger of being revised downward, though on paper US corn is competitive with S American origin through May/June.
- Otherwise, this month’s global climate updates lean favourable for potentially massive gains in supply in calendar year 2023. NOAA’s updated monthly climate forecast leans wet across the PNW, Northern Plains and principal Midwest. A rather normal Midwest climate is probable throughout the spring months, and the coverage of drought is expected to shrink further between now and planting. A drier pattern will be desired in mid/late March across the Delta region, but water availability will not be an issue outside of the US HRW Belt. Recall normal rainfall is likely to persist across Central Brazil’s safrinha corn belt over the next 90 days. The end of La Niña will be a big deal for the world of agriculture next marketing year.
- Spot WTI crude oil is up $0.30/barrel at $78.90. Like corn, energy markets have been bound to strict ranges since late 2022. The Dow at midday is down 220 points following a higher-than-expected rise in producer prices of 0.7% month-on-month, vs. the trade’s guess 0.4%. Higher for longer remains the mantra of benchmark US interest rates. Spot Paris milling wheat is down €1.25/MT . We do note that Paris corn is at parity with wheat, which is unusual for mid-February.
- The midday GFS weather forecast is unchanged from morning. Rain will exit northern Argentina in the next 24 hours and give way to a lasting period of dry but mild conditions. The GFS forecast features little/no rainfall in Argentina between Feb 17 and March 3. Brazilian rainfall intensifies this weekend and next week, but meaningful harvest and safrinha corn seeding delays will be regional in nature. Abundant moisture will be available for early corn growth in late Feb/early March.
- Major declines in Chicago values are typically avoided in February, but unlike a year ago in late winter/spring, the collapse in Brazilian soy basis, marketing year lows in Russian interior wheat prices and the lack of glaring climate threats outside of Argentina will act as heavy weights on rallies.