- HEADLINES: Rumours of Chinese purchases of US sorghum/corn abound; Russia says no deal on black sea corridor without unfettered Russian ag trade.
- It has been a mixed morning in Chicago with corn/wheat sagging to new lows for the decline while soybeans/products hold in the green. The volume of trade has been active with funds aggressive on the sell side of the grains, while Chinese pricing in Brazil has placed a bid under Chicago soybeans. We look for mostly higher close as the Chicago tries to carve out a tradable bottom. Following a $0.66/bu drop in corn, $0.75 drop in soybeans and $1.00 drop in US wheat futures, traders wonder if price has reached levels that is stoking fresh demand.
- There are cash connected rumours that China initially showed interest in several US spot cargoes of Gulf soybeans while interest for US corn was noted at mid-morning. No commercial is willing to report if the corn interest is from the private and state buyers, but the Chicago break has pushed Chinese corn import margins back into the green. We suspect that any fresh Chinese interest for US corn is from privates that hold TRQ import licenses The March/May corn spread pushing out to a 3-cent premium suggests that cash demand has occurred, the question is for whom and in what tonnages.
- There are also rumours that China has purchased up to 5 cargoes (300,000 mt) of US sorghum with delivery in May/June from the US Gulf. The break has caused China to be more active in their purchase of US sorghum with rumoured totals being the largest in months.
- Chicago brokers report that funds have bought 2,100 contracts of wheat and 3,800 contracts of soybeans, while selling 4,100 contracts of corn. In the products, funds have bought 1,500 contracts of soymeal and 2,900 contracts of soyoil. The fund selling of corn futures was over 9,000 contracts at mid-morning.
- US weekly ethanol production was 1% above last that consumed 295 million bu of corn. The USDA is forecasting that for the remainder of the crop year, the US weekly ethanol grind must equal 295 million bu. There are rumours that the Biden Administration is preparing to allow E 15 to be statutorily sold year-round which could add 200-300 million bu to the annual US corn grind in 2023/24. US ethanol stocks fell to 1,039 million gallons, down 1% from 2022. We see the pace of the US 2022/23 corn grind as being in line of their 5,275 million bu annual estimate.
- Sources indicate that Argentine crops are suffering acutely as the hot/dry weather shows no sign of relenting. Extreme drought persists into at least mid-March. The USDA/WASDE will offer up sizeable cuts in Argentine soybean/ corn crop estimates in their March 8 report. WASDE pegged the Argentine soybean crop at 41 million mt and corn at 47 million mt on February 1 with private sources pegging the harvest at 31-32 million mt of soybeans and 39-41 million mt of corn. Such losses raise the importance of US/Brazilian corn production into July.
- The midday GFS weather forecast is like the overnight run with limited rainfall for Argentine crops into March 11. There is a chance of a few light showers of 0.1-0.8” in the next 48 hours, but then the forecast then goes hot/dry. High temperatures reach back into the 90’s/lower 100’s. Argentine crop stress is becoming acute on reproducing corn.
- Margin has come back to US ethanol producers while expectations for 2022/23 US soybean, corn, or wheat exports are low. Chinese interest for US sorghum/corn is a bullish surprise, though sales tonnage rumours vary. Another round of blistering heat is the death knell for some Argentine crops amid a dire drought. A tradable Chicago midwinter low is forming. Russia has indicated that it will not continue the Black Sea Export Corridor Deal without free Russian exports of grain/fertilisers.