- HEADLINES: Chicago mixed with volume in retreat on the break; Key is the close and whether May corn can settle above $4.42, the 50-day moving average.
- Chicago values are mixed at midday. May corn futures failed to accelerate through the 50-day moving average while selling in soyoil futures pulled soybean prices lower. A close above the 50-day moving average in May corn ($5.42) is needed to confirm a new leg up. Otherwise, Chicago is holding in a sideways trading pattern with neither the bulls nor the bears able to gain more than a day or two of traction. The Chicago close is important today with the bears nervous as chart patterns continue to improve.
- Chicago brokers estimate that managed money has sold 3,200 contracts of soyoil and a net 900 contracts of soybeans. The funds have purchased a net 2,600 contracts of corn, 300 contracts of wheat, and 1,300 contracts of soymeal. Managed money trade is slowing at midday.
- US weekly export sales were better than expected in the summer row crops. The US sold 46.7 million bu of corn, 18.2 million bu of soybeans with net wheat sales cancellations of 4.0 million bu. China purchased 11.2 million bu of US soybeans last week and shipped out 22.3 million bu. China has now secured 812 million bu of US soybeans with just 838,000 mt of open purchases remaining to be shipped. There are 55 million bu of US soybeans sold to unknown destinations, but the risk of sales cancellation or switching in the coming months is far less than in recent years. Based on the sales and shipping pace, we estimate that USDA’s soybean sales pace is too high by 25-40 million bu. US soybean sales through March 14 are down 340 million bu or 19% from last year due to the long Brazilian export tail from last year’s record harvest that cut into early season US sales.
- US corn sales at 1,641 million bu are up 266 million from last year or 19%. There is 691 million bu of open US corn sales that has yet to ship with Mexico holding nearly 300 million bu of that total. Mexico is unlikely to switch US corn purchases to S America on logistical costs. China made no new US corn purchases, but China’s US sorghum purchases are record large at 181 million bu.
- Chinese wheat cancellations were included in this week’s data which produced net sales cancellations of 4.0 million bu. US SRW wheat sales were cut by 8.7 million bu while HRW/HRS sales increased by 4.2 million bu. The US has now sold 676 million bu of wheat for the crop year, up 20 million bu from last year or 3%. China shipped out 1 cargo of US SRW wheat last week and another vessel is expected to load this week. China has 21.5 million bu of US SRW wheat sales on the books that is expected to ship prior to the end of the crop year.
- Indonesia’s biodiesel consumption in the first 2 months of 2024 rose by 16% to 2.17 million mt. It is now mandatory that 35% of Indonesian biodiesel supply is blended with palmoil. 4.5 million mt of palmoil will be used in 2024.
- Season US weather forecasts were released by NOAA today. They reflect summer Plains dryness and Western and Southern US heat. It is far too early to be accurate in the forecast as El Niño rapidly transitions to La Niña. Our bet is that the Central US will endure extreme heat, just like the winter.
- Dry weather holds across S Brazil and Argentina for the next week with limited rainfall. We note that Parana is in that dry trend which could cause new stress on winter corn production. Otherwise, near to above normal rain falls across N Brazil with totals 3.00-8.00” and locally heavier amounts. The rains across Northern Brazil will help replace soil moisture for the winter corn crop. The drier weather is needed for NE Argentina and Southern Brazil due to recent heavy rainfall and regionalised flooding. The dryness across Parana must be monitored as the monsoon starts its seasonal retreat in April.
- Two steps forward and one back best explains Chicago price action in recent weeks. Gold and the US stock market are pushing to new record highs. As a host of asset prices rise, Wall Street types are looking at grains and trying to measure the opportunity with a new Northern Hemisphere growing season ahead. In fact, several macro funds have been dipping their toes in the grain markets, but a real investor story requires a few supply shocks via adverse weather. A late day Chicago rally will encourage the bulls that additional short covering could evolve heading into the weekend.