• HEADLINES: Soybeans end lower in late week trade: Spot Chicago corn trades below $4.00 for first time since 2019; Liquidation ahead of first notice day: Chicago wheat corrects as corn drops; SRW basis firms.

• Chicago soybean futures remained under liquidation pressure on slow US and Brazilian export demand. China has not been an aggressive buyer this week.

• The holiday delayed US weekly Export Sales report showed soybean sales fell to a marketing year low of 2 million bu, as world demand shifted to Brazil. Soymeal exports continue to hold above average, and the cumulative is record large 5.9 million short tons. Outstanding sales are 27% above a year ago, and export commitments are record large at 9.9 million tons. The problem for the market is that record large production has kept pace with export demand into May.

• Soybeans are deeply oversold, but the market lacks news to fundamental trigger a rally. We see the 2024 Brazilian soybean crop under 145 MMTs.

• Global corn markets ended lower for a third session, with cash selling ahead of March’s delivery period noted. The Brazilian market also ended sharply lower in concert with the recent collapse in Chicago values. US export sales in the week ending Feb 16 were a 6-week low 32 million bu, vs. 51 million the previous week. March liquidation has dominated this week’s trade.

• Corn futures are dangerously oversold ahead of key Brazilian weather and N Hemisphere planting. The technical indicator, RSI, is the lowest since July 2014. Managed funds on Tuesday were short a record 341,000 contracts and we estimate funds’ current short at a massive 367,000 contracts. Additional liquidation ahead of March’s expiry is possible, but a complete readjustment of the marketplace occurs if hot/dry March climate forecasts across Brazil are proven correct. Brazilian weather becomes a priority beginning in March. We view this market as being extremely complacent with regards to forward supply risk.

• World wheat futures weren’t immune to summer row crop liquidation. Breaking wheat specific news was lacking, but we would note that interior US SRW basis continues to firm. The hunt for supply ahead of enlarged exports to China is ongoing. Additionally, our long-term thinking strongly suggests the world/exporter balance sheets stay historically tight. A wide-swinging market continues until the N Hemisphere harvest starts. New Russian sanctions will likely not slow Russian wheat sales/exports.

• Managed funds on Tuesday were net short a combined 110,000 contracts in Chicago and KC. Funds combined short on Friday is estimated at 137,000 contracts, the largest since November. The 2024 growing season is imminent. Upside targets are unchanged at $6.50 basis May/July Chicago. Black Sea weather becomes critical in May/June and will be closely monitored. Any issues create a new world wheat landscape due to tightening new crop exporter supplies.

To download our weekly update as a PDF file please click on the link below: