• HEADLINES: Corn, soy continue recovery; Crude testing $80 per barrel.

• Chicago grain values are again mixed but generally firm at midday as market focus stays on falling Argentine crop estimates and the performance of nearby corn/soy spreads. We have previously highlighted the uplift in crush margins, while Central IL is still bidding $0.28 over for corn for spring delivery. Spot beans in Decatur are quoted at $15.50, and still processing margins are profitable. A transition to adequate supplies is probable in 2023, but this requires confirmation of both favourable weather in Brazil in April and the lack of threats in the Northern Hemisphere between May and Sep. We also note that spot corn and Chicago wheat contracts remain oversold and a further reconciliation with this lies ahead.

• FAS’s daily reporting system was void of new demand, but amid recent rumours of US corn/sorghum sold to China and a rally in Ukrainian fob basis there does exist a window for improved US corn export demand. The market must see/feel this demand be funnelled to the US, but it is just difficult to be bearish of May Chicago corn below $6.50 given the potential for exports.

• Focus on Argentina has rightly been centred on historic drought, but corn and soy harvests there will also be pushed back into early summer following this season’s planting delays. Our bet is that the corn harvest in Argentina will not reach 30% complete (which covers domestic use) until the second half of June. Argentine corn is not offered competitively into the world market until July.

• Macro markets lean supportive. Spot WTI crude is up $0.80/barrel at $79.00 and is again trading firmly above its 20 and 50-day moving averages. A test of $80 lies ahead. The Dow at midday is trading 160 points higher. Paris milling wheat and corn futures are down €0.75-1.25/mt. European rapeseed futures have followed soybeans to solid gains. The Baltic Dry Ocean Freight Index, a widely followed proxy for global demand/trade, has scored a newer 7-week high and has rallied 116% in the last two weeks. China is digging out of its Covid hole and has triggered a boost in the movement of goods.

• Other news is lacking. The Northern Hemisphere growing season lies just ahead, with some reporting that corn planting has started in earnest in pockets of Louisiana. Markets in the next 30 days will be defined by Northern Hemisphere weather patterns, while late March’s USDA stocks and seedings report will be important in determining final old crop supply availability and the 2023 acreage matrix. Firm interior basis levels suggest corn and soy stocks will be tight. Water availability will not be an issue in the Midwest, but problems linger in US Plains, Western Europe, and India.

• The midday GFS weather forecast is much wetter in northern Argentina, with 10-day totals of 2-4” offered to northern Cordoba and Santiago de Estero. The core of Argentina’s ag belt stays warm/arid into March 13. Confidence in the details of precipitation intensity/location is low, but northern Argentina has been the target for intermittent rains this growing season. Relative dryness in Central Brazil allows for normal soybean harvest progress nearby. Soaking rain returns to Mato Grosso and Goias in the 6–10-day period.

• This week’s emotional break in corn and wheat is overdone, Gulf SRW is offered below French for new crop delivery, basis fob, while there is still little tolerance for US wheat/soy yields this summer. Rallies are selling opportunities, but there is more short-term upside than downside risk in grains at current prices.

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