- HEADLINES: Chicago futures fall to test February lows; GFS weather forecast dry/cool into April 25; SW Russian dryness to worsen.
- Chicago futures mixed (AGAIN) in reversal of Wednesday’s trade as wheat holds; Summer row crop futures sag on new chart-based selling; Central US cash corn and soybean basis steady to firm on limited farm selling.
- It is a mixed Chicago trading session with summer row crop futures weaker while wheat holds a modest rally. Morning trade volume has been better than recent days on new chart-based selling in soybean/meal futures. Soyoil is holding its February lows, but the selling in soybeans could push oil to new lows before a lasting recovery. Seasonally, bottoms tend to be formed in soyoil in the next few weeks as US biodiesel demand increases. Moreover, the price focus of the soybeans shifts from S America to the US as a new growing season is underway. Central US weather is cool/dry which facilitates seeding progress. The coming coolness will slow corn germination/emergence, but the market sees getting seed in the ground as bearish. May corn futures are back to testing key support under $4.26 while May soybeans test their late February lows. Grain traders always ask themselves the type of bottom that is being formed, a “V”, “L” or a “U”? Traders will be watching the late February lows.
- China cancelled two cargoes of US SRW wheat in the weekly export sales report and shipped out one cargo last week. China has open US SRW sales of 300,000 mt with 1.1 million mt of US wheat being shipped. The US old crop year in wheat is quickly coming to an end, but China should ship out remaining sales.
- US weekly export sales of wheat were -3.4 million bu, corn was 19.7 million bu with soybeans at 17.8 million bu. For their respective crop years to date, the US has sold 688 million bu of wheat (up 7 million or 1% from last year), 1,758 million bu of corn (up 260 million or 17% from last year), 1,517 million bu of soybeans (down 324 million or 18% less than last year). If the US sells soybeans at the same pace as last year (record large Brazilian crop), the 2023/24 export pace will be 1,670 million bu, a future reduction of 30 million bu from WASDE.
- The US Ag attaché in Buenos Aries dropped the 2024 Argentine corn production forecast to 51.0 million mt, down 6 million from their January estimate of 57.0 million mt. The attaché report highlighted corn stunt disease as the reason for the crop cut and forecast that Argentine farmers will harvest only 48 million mt of corn in 2025 due to disease and La Niña. Private Argentine corn estimates are in retreat, but it will take actual yield data to gauge the final size of crop. WASDE has the Argentine corn crop at 55 million mt when just 3% of the Argentine corn crop harvested in the opening days of April. Back then, it was too early to make a disease adjustment to the crop. Spot Argentine May fob corn is holding firm at 70 cents over Chicago vs the US Gulf at $0.55 over.
- Chicago brokers estimate that the managed money has bought 1,200 contracts of wheat, and sold 4,300 contracts of corn, and 5,100 contracts of soybeans. In the products, the managed money has sold 3,900 contracts of soyoil and 1,900 contracts of soymeal.
- Limited rain is forecast across the Midwest into April 24, before showers/storms return with frequency. A trough digs southward into the SW US with a ridge in the eastern US which opens the flow of Gulf moisture flow. This ridge/trough pattern is favourable to rainfall across the E Plains/Midwest US in the week 2 timeframe. Cool temperatures prevail until then with highs in the 50’s/60’s and 70’s and lows in the 30’s/40’s and low 50’s. The relative coolness will slow germination and emergence. However, getting seed in the ground with rain following is a favourable start for 2024 row crop production.
- Corn/soy futures are testing prior lows set back in late February amid favourable Central US spring planting weather. The bears will need to see a supply risk to shift price trend. Nearby, Russian winter wheat areas will be short-changed by rain with stress increasing. Wheat should bottom before corn/soybeans. We favour limited downside into May.