- HEADLINES: Chicago soyoil pushes above key 50-day moving average; May corn tests resistance at $4.45 and above; GFS weather forecast drier for Central Brazil at midday.
- No new daily China wheat cancelations of US SRW: Widespread debate on which Brazilian crop size estimate to trust, CONAB or USDA. Short covering featured across Chicago with sizeable purchases of soybeans as May tests $13.00 and May soyoil jumps above the 50-day moving average at $47.03. Look for resistance above $4.48-4.52 May corn in a test of the January lows.
- It has been a firm morning in Chicago with soyoil and soybeans breaking above initial chart-based resistance. CONAB is finding that its March Crop estimate is getting more trader “windage” that it might normally receive by coming out after the USDA report. Normally, CONAB releases its monthly crop estimates on the same day as WASDE, which means that the USDA report supersedes the Brazilian forecast. The several day delay in releasing CONAB’s monthly forecast has offered it a crop platform to be debated by the trade. Questions abound on who to trust in estimating the Brazilian corn and soybean crops.
- The 8.2 million mt CONAB soybean crop difference with USDA has important impacts on 2024/25 US soybean exports on the size of the Brazilian soybean export tail. And if the Brazilian corn crop is 112.7 million mt, it too will serve as boost to US corn exports in the September-January timeframe.
- Chicago brokers estimate that funds have bought 4,900 contracts of corn, 5,200 contracts of soybeans, and 2,400 contracts of wheat. In the products, funds have bought 3,200 contracts of soyoil and 1,300 contracts of soymeal. Oil share is back testing 41% as May futures try to close above the 50-day moving average for the first time since early September.
- Increasingly, producer surveys are suggesting that US farmers will plant more soybeans, cotton, and other minor crops since corn/sorghum/spring wheat just do not offer much profit enticement. In the Delta it is all about cotton and soybeans, with farmers really cutting back hard on their intended corn acres due to cost and margin. In the Northern Plains, it is the same crop theme in that corn is too costly with profit margins that are close to breakeven. As farmers ink farm revenue insurance coverage, analysts are questioning whether 2024 US corn seeding will drop closer to 90 million acres with soybeans rising to 87 million acres or more. Heading into the March 28 report, we expect that it is corn that will see the additional short covering due to all the producer and insurance industry talk of fewer seeded acres.
- US Consumer prices rose 3.2% in February, slightly more than expectations that were calling for a gain of 3.1%. This was the second straight month of firmer than expected inflation which will likely keep the US Central Bank on hold through its June meeting. The risk is not one of the US Central Bank raising rates further but holding them higher for longer. We believe that US Central Bank will only cut its lending rate by 1 or 2 times later this year.
- The midday GFS weather forecast is drier across Central Brazil with limited rainfall for Paraguay, MGDS and Parana with heavy rainfall impacting RGDS and far NE Argentina with 10 day totals of 3.50-6.50”. Our confidence is rising with respect to the coming lengthy period of below normal rainfall and above normal temperatures across a majority of Brazil’s safrinha corn belt. There are hints of better rains across N Brazil in late March/ April, but the strength of Brazil’s monsoon will begin to wane thereafter. Also, closely follow Southern Brazilian rain and the potential for flooding with soil moisture already saturated across RGDS. The Argentine weather forecast leans favourable to yield/crop production into April.
- Key today will be whether May soyoil can close above the 50-day moving average at $46.95 for the first time since September. Funds are short an estimated 58,000 contracts of soyoil futures as of yesterday’s close. May corn came close to testing its 50-day moving average at $4.48 while May soybeans neared psychological resistance at $12.00. Chicago values should consolidate recent gains, but any setbacks will be well supported amid concerning Brazilian weather for late soybean and winter corn production.