• HEADLINES: Wheat recovers and forges a second key reversal; GFS weather forecast drier at midday for N Brazil with searing heat; China cancels 264,000 mt of US SRW wheat.

• China cancelled an additional 264,000 mt of US SRW wheat which elevated the 3-day total to 504,000 mt. Commercial talk has another 2-3 cargoes that could be cancelled taking total cancelations to 600-650,000 mt. This would leave 600-650,000 mt of US SRW wheat sales that will be exported. Chicago wheat rebounded strongly from fresh contract lows at the opening. May Chicago soyoil has tested its 50-day moving average at $46.90 while May corn has exceeded key resistance at $4.40. Soybean/soymeal prices are sagging on spreads.

• It has been a mixed Chicago morning with the grains gaining on soybeans/soymeal. The volume of trade has been active with Brazilian corn futures rising on the worsening dryness forecast for Northern and Central Brazil. There is a strong correlation that dry March weather produce dry April’s across Northern Brazil which is underpinning corn. Brazilian farmers cut back on winter corn inputs (fertilisers) and the crop will not be able to endure deepening dryness. Brazilian fob export premiums are slightly weaker which is helping to cap Chicago rallies. Chicago has a mixed midday tone and Brazilian winter corn weather and the coming US spring growing season will play important for the marketplace heading into the NASS March 28 Stocks and Seeding report.

• Chicago brokers estimate that funds have sold 3,500 contracts of soybeans and 2,100 contracts of soymeal. On the buy side, funds have purchased 5,200 contracts of corn, 1,900 contracts of soy oil and a net 2,100 contracts of Chicago wheat. There has been active spreading of long wheat/short soybeans.

• US farmers have engaged in modest cash corn sales on the rally. The cash movement improved as May corn futures rose above $4.40/bu. US soybean cash movement is constrained as US farmers appear willing to store corn heading into spring planting. There are rumours that S Illinois, Missouri and S Indiana farmers have planted a few acres of soybeans on rising soil temperatures. However, the risks of planting this early are high with even germination rates required for high yields. Amid the widening talk of summer US heat/dryness, farmers appear to be willing to push spring planting dates forward.

• US weekly grain inspections were 44.2 million bu of corn, 14.8 million bu of wheat, and 25.9 million bu of soybeans. Weekly US wheat/corn exports were above trade expectations, while soybeans were disappointing. For their respective crop years to date, the US has shipped out 858 million bu of corn (up 215 million or 33% more than last year), wheat exports of 491.4 million bu (down 92.6 million or 16%), and 1,286 million bu of soybeans (down 306 million or 19%). We maintain that US soybean exports could be reduced by 15-25 million bu with a like increases in the US soybean crush rate. Cash crush soybean margins are well above $1.00/bu and crushers are active processing due to record large US soymeal sales. The new Alta Iowa soy processing plant called Platinum will start operations in May.

• The midday GFS weather forecast is drier across Northern Brazil and more like the EU model solution. 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. Enough rain falls in Mato Grosso nearby, but little/no rain and warmth are advertised in Parana, Mato Grosso do Sul and Sao Paulo. There are hints that better rain for N Brazil in very late Mar/early Apr, but the strength of Brazil’s monsoon begins to wane in April and the rainfall outlook for winter Brazilian corn is concerning. The Argentine forecast is favourable except for the heavy rainfall for NE Argentina with totals of 4-7.00” which will produce localised flooding.

• CONAB will be out early Tuesday with an update on Brazilian corn and soybean production. We look for a CONAB soybean crop at 145-147 million mt which will keep the spread between itself and USDA at an important 8-10 million mt of supply. Note that world 2023/24 soybean end stocks are only 12 million mt above last year. A smaller Brazilian crop is key with WASDE raising Chinese soybean imports to a record 105 million mt. Brazilian soy exports in February are estimated at 14.5 million mt. Wheat has forged a key chart reversal following bearish news.

• HEADLINES: USDA avoids major balance sheet changes in March WASDE; Chinese soy imports raised; US winter warmest on record.

• USDA’s March WASDE, as expected, is a statistical yawner. US wheat end stocks raised on lower exports, following another 110,000 mt cancellation from China this morning, while S American crop estimates left largely untouched. Old crop Chinese soy imports raised 3 million to a record 105 million mt.

• The USDA’s Feb WASDE was released but largely ignored, with Chicago and global ag markets mixed at midday. Row crops are down slightly while Chicago wheat is higher in a reversal of Thursday’s trade. Wheat’s reaction to larger projected stocks and a second cancellation of previously purchased SRW by China suggests bearish input has been digested.

US End Stocks (million bu):

                    Feb        Mar

            2022/23    2023/24    2023/24

Corn            1,360        2,172        2,172

Soybeans        264        315        315

Wheat            570        658        673

• The bulls are disappointed in USDA’s lowering of Brazilian soybean production by just 1 million mt to 155 million, which keeps global soy output in 2023/24 at a record 397 million mt, up 19 million year on year. Our work maintains a final Brazilian soy crop size of 142-143 million mt based on ongoing yield disappointment in Mato Grosso. Argentina soy production is unchanged at 55 million mt.

• We also note old crop Chinese soy imports were lifted 3 million mt to 105 million based on shipping data from major exporting countries. China’s soy imports in crop year 2022/23 were increased 3.65 million mt to 104.5 million. It has been suspected all season that China had been underreporting monthly imports, which USDA has validated this morning. Modest growth in China’s demand for soy remains intact.

• Otherwise, USDA’s Feb WASDE included just a tinkering with global balance sheets. Argentine corn production was increased 1 million mt. Ukrainian corn was lowered 1 million mt. Global stocks were trimmed slightly. The US balance sheet was left alone, with stocks pegged at 2.17 billion bu. USDA’s seasonal average corn price forecast was lowered $0.05/bu to $4.75.

• The US soybean balance sheet, too, is unchanged from February. The season average price forecast is unchanged at $12.65. Global soy stocks were reduced 1.7 million mt to account for larger trade (China).

• US wheat end stocks were increased 15 million bu amid lowered projected SRW and HRW exports. Weekly/monthly US wheat shipment data has been weak, but even accounting for recent Chinese SRW cancellations, US all wheat export commitments (669 million bu) sit at a near-record 94% of USDA’s new forecast. We view the downward revision as premature.

• Global wheat stocks were lowered 600,000 mt as larger projected world trade offsets slightly higher production in Russia, Argentina and Australia combined.

Global End Stocks (million mt):

                    Feb        Mar

            2022/23    2023/24    2023/24

Corn            301.6        322.1        319.6

Soybeans        102.1        116.0        114.3

Wheat            271.1        259.4        258.8

• The midday GFS weather forecast is again drier in northern Brazil in the 6-15 day period, and 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. Enough rain falls in Mato Grosso nearby, but little/no rain and warmth are advertised in Parana, Mato Grosso do Sul and Sao Paulo. There are hints that better rain develops in north/northeast Brazil in very late Mar/early Apr, but the strength of Brazil’s monsoon in every year begins to wane beyond the middle of March. The lack of rainfall prior to this date is a concern. The Argentine forecast is favourable. Moisture reserves build further over the next 10 days.

• The March WASDE has been digested. Key moving forward is whether funds maintain sizeable/near record short positions ahead of critical Brazilian weather and the N Hemisphere growing season. Winter in the US was officially the warmest on record, which boosts the chance of heat during the summer months. More attention is being paid to negative moisture anomalies and the lack of precipitation offered to the Central/Northern Plains, IA and NW Corn Belt into March 25. Fair value is all about weather.

• HEADLINES: China cancelled two cargoes of US SRW wheat; Funds cover shorts on charts; GFS Brazilian weather forecast slightly drier.

• Chicago futures are higher with corn, soybean and wheat futures all engaged in the rally with corn rising above its 20-moving average for the first time since December 12. May corn pushed against the February lows at $4.40 while the 50-day moving average crosses today at $4.51. It will take a push above the 50-day to alter prevailing bearish corn price trends. Soyoil has also pushed above its 20-day moving average. The market is short covering ahead of the March USDA report tomorrow. Traders are aware that USDA historically has used the March report to make their largest adjustments of the crop year to S American crop sizes.

• The USDA announce the cancellation of 130,000 mt of US SRW wheat to China for the 2023/24 crop year. The cancellation had been rumoured but doubted. China shipped out a cargo of US SRW wheat last week with total export commitments now falling to 1.785 million mt with 1.2 million mt of the sale still open. Traders are now alert to the potential for additional cancellations or forward pushes of China wheat purchases to a new crop position. The cancellation of US SRW wheat is something of a wet blanket over today’s market. The May KC/Chicago spread has pushed back out to a 38-cent premium after trading at even money just 2 weeks ago. Chicago March wheat is placing carry back into the market of 8 cents vs May.

• Chicago brokers report that funds have bought 1,800 contracts of Chicago wheat, 7,100 contracts of corn, and 5,600 contracts of soybeans. In the products managed money has bought 3,400 contracts of soymeal and 3,900 contracts of soyoil. A close above $46.12 May soyoil (last week’s high) would be important chart wise. The 50-day moving average in May soyoil futures crosses at $47.06. The last time that May soyoil closed above its 50-day moving average was back on September 15 last year.

• For their respective crop years to date, the US has sold 677 million bu of wheat (up 38 million or 6%), 1,544 million bu of corn (up 338 million or 28%), and 1,449 million bu of soybeans (down 339 million or 19%). The soybean and corn sales pace are on track to reach USDA’s annual forecast depending on the size of 2024 S American crops. A Brazilian soybean crop of less than 145 million mt or corn crop less than 117 million mt would push additional export demand to the US in an old crop position. We do not expect that WASDE will make any big adjustments on US corn/soybean export estimates tomorrow. But if the final 2024 Brazilian soybean crop is 150 million mt or more, a further downward adjustment in the US soybean 2023/24 export forecast to 1,680-1,710 million bu is advised. WASDE in February measured US 2023/24 soybean exports at 1,720 million bu, and we have already cut our export forecast to 1,690 million bu based on pace.

• The midday run of the GFS weather model is slightly drier for Northern and Central Brazil with less rain of 0.25-1.00” over the next 10 days (vs the overnight run). The GFS model has been erratic on its run-to-run S American forecasts for most of the past week. Our bias is towards the drier and consistent EU model solution. Elsewhere, favourable finishing rain helps Argentine crops into mid-March.

• It has been a green morning in Chicago, but the Chinese wheat cancellations are holding values back in Chicago wheat on the fear that an additional 2-4 cargoes could also be cancelled. Most expect that China will go forward with remaining US SRW wheat purchases, but sourcing the US supply became difficult prior to new crop.

• Whether China sources cancelled US wheat from Australia or France in the coming weeks will be closely followed. Otherwise, whether the overnight rally continues depends on Friday’s USDA WASDE report. The bearish side of Chicago has become very crowded, and the risks of weather/short covering rallies is growing as spring planting approaches. Fundamentally, the strongest bull case can be made for vegoils on tightening world supplies. GASC wheat tender news is awaited.

• HEADLINES: Chicago wheat falls to test $5.275 low set in November on managed money selling; US weekly ethanol grind stays firm; GFS weather forecast wetter for N Brazil.

• World wheat markets are lower on the fall in Russian fob wheat offers below $200/mt with Chicago forging a new low of $5.33 May futures, the lowest price for a spot futures contract since November 2023 when values bottomed at $5.275. Corn and soybeans followed wheat’s early sag, with both markets finding support on end user pricing and fund short covering. Corn has been able to push back into the green at midday as crude oil prices are sharply higher with WTI April back testing resistance above $80.00.

• Wheat has been the Chicago bear story this morning with fund selling increasing on the break to new lows amid the US premium to Black Sea/European markets. Paris wheat has fallen to €188.50/mt in a retest of Monday’s low. Chicago wheat has been falling more sharply on Algo/AI selling. The May Chicago wheat/corn spread has narrowed to a $1.10/bu premium, which is in line with historical averages. However, if wheat premium were to drop below $0.8O vs corn, it would boost wheat feeding interest in the feedlot areas of the Plains. There is no doubt that wheat has been an anvil on the entire Chicago this morning as Russia and the EU competes for remaining world export demand heading into the new crop campaign. The funds are putting on sizeable new net short positions as evidenced by the rise in world wheat open interest.

• Chicago brokers report that funds have sold 9,700 contracts of Chicago wheat, 1,100 contracts of corn, and 3,100 contracts of soybeans. In the products, managed money has sold 2,900 contracts of soymeal and bought 1,900 contracts of soyoil. Chicago wheat open interest was up 13,500 contracts yesterday. The wheat selling is new short positions due to the break to fresh contact lows.

• The US produced 311 million gallons of ethanol last week, down 6 million gallons, but still a record for the week and up 5% from last year. WASDE/USDA is too low with their US ethanol grind estimate by 15-25 million bu based on the current pace. US ethanol stocks were up 3% on last year at 1,094 million gallons. And US gasoline consumption rose to 9.01 million barrels/day, up 5% on last year. The outlook for US ethanol consumption is seasonally brightening.

• Brazilian farmers have been more active sellers of soybeans on rallies early this week, but that selling has slowed on the break this morning. The Brazilian selling has allowed crushers and exporters to extend their forward coverage. Basis bids or premiums have not changed all that much. Estimates show that through Saturday, Brazilian farmers will have harvested 57-58% of their soybean crop. Winter corn seeding will be completed on a timely basis by March 15.

• The midday run of the GFS weather model is slightly wetter for Northern and Central Brazil with additional rainfall of 0.5-1.25” over the next 10 days compared to the overnight run. Bahia would be drier, but the GFS model has been erratic in its S American forecast for the past week. Our bias is towards the drier and consistent EU model solution. Elsewhere, favourable finishing rain impacts Argentina into mid-March.

• Chicago wheat values are testing the November low at $5.275. China cannot take cheap Russian wheat due to ambrosia seed and the need for a phytosanitary agreement. China is expected to keep shipping out US SRW wheat purchases. Whether China uses this break to add to their forward purchases is being debated by world exporters. If the wheat market pressure subsides, corn/soy futures can post a recovery. We note that traders worry that US soybean export sales will be poor Thursday with additional switches or net cancelations of unknown destination sales.  The only bullish fundamental story is world vegoil pricing on rising biodiesel demand amid strong margins due to $80.00 WTI crude.

• HEADLINES: China stays active seeking Ukraine corn/Canadian canola/Brazilian soybeans; Ukraine to enlist/draft farm workers; Managed money grain short into key USDA reports.

• US/Paris wheat futures higher on bottom picking and worry about future EU/Ukraine production; Brazilian farmers use the Chicago rally to sell recently harvested cash soybeans, but premiums keep rising. China buys Canadian canola for the first time in months and stay active booking Ukraine corn with another 2-3 cargoes sold. Chicago has firmer undertone based on fund short covering need.

• Chicago grain futures are higher at midday. May corn futures rallied and tested the 20-day moving average at $4.33. US wheat futures rebounded from prior contract lows while soyoil tested last week’s high. Hedge related selling in soybeans/soymeal pulled Chicago values off early session highs, but fund managers are feeling that their record large net short position is maybe too aggressive ahead of a new Northern Hemisphere growing season. Look for managed money to pare back their grain short into Friday’s USDA March report, and potentially into the end of the month if Friday’s data is not overly bearish. Fund managers are trying to measure their risk vs reward ahead of a new growing season.

• Chicago brokers estimate that managed money has bought 4,600 contracts of wheat, 8,100 contracts of corn, and 3,600 contracts of soybeans. In the products funds have bought 2,200 soyoil and sold a net 1,100 contracts of meal.

• Ukraine has likely sold its last cargo of wheat for the 2023/24 crop year and news that its military will start pulling conscripts from the farm has cash traders wondering about spring planting totals. To date, Ukraine has stayed away from selecting men from agriculture for the war on the need to produce grain and food. However, Ukraine military numbers are in sharp decline and the government will pull farmworkers and farm owners into the war. We have no way of knowing how this will impact Ukraine grain production, but the timing of the decision could not come at a worse time ahead of spring seeding.

• China is starting the week (the same way they ended last week) with the purchase of 2-3 cargoes of Ukraine corn and fresh interest in Brazilian soybeans. And China also booked 2-3 cargoes of Canadian canola for the first time in months as price reached levels that were deemed attractive. China’s new offtake of Canadian canola suggests a seasonal canola low is forming. China is importing record tonnages of world feed grains and elevating recent soybean purchases from Brazil and Argentina. We are not sure why China’s demand has taken a turn in the past week, but our count on Ukraine corn is starting to add up close to 1.5 million mt in the past 10 days.

• Brazilian soybean export premiums are up another 2-4 cents/bu even as the farmer has sold sizeable quantities of new crop soybeans this morning. The basis increase in surprising the Brazilian industry when a year ago, premiums were in the ditch on record large production. We note that Brazil’s CONAB will update their crop estimate on March 12, 4 days after the USDA March report.

• Rainfall in India for the past 30 days has run well above normal, and thunderstorms could have included wind and hail, but it is difficult to determine how much quality or quantity damage has been produced by the above normal rainfall. We would caution against making big downward adjustments to Indian wheat production.

• How short do fund managers want to be heading into a new growing season with key NASS reports? The March WASDE is on Friday with the all-important Stocks and Seeding Report due March 28. Excluding today there are 17 trading sessions before the NASS March 1 Stocks/Seeding Report with a long 3-day Easter Holiday weekend to follow. Spring planting season will start immediately following with Midwest farmers able to seed on the Revenue Insurance dates of April 10-15. Chicago price risks are to the upside with May corn futures not having pushed above its 20-day moving average since Dec 12. A close above $4.335 May corn or $11.73 May soybeans, or $46.11 May soyoil futures turns short term trading trends upwards.

• HEADLINES: Paris wheat futures drop to lowest level since 2020; Tugs Chicago corn lower; Brazil crop estimates lower.

• US wheat futures sag following Paris Futures/Russian FOB offers steady at $209/mt; Soyoil holds on talk of improving cash demand from biofuel industry;  Private forecasters adjusts Brazil soybean crop down to 143.9 million mt and corn to 114.9 million mt. Brokerage firm StoneX raises Brazilian soy crop estimate 151.5 million mt.

• Chicago grain futures are mixed at midday in a reversal of yesterday with soybeans higher while the grains sag on falling EU/Russian cash offers. Chicago wheat has fallen on fund-related selling as May futures dropped below last week’s low at $5.60 which triggered new selling from algo/AI trading systems.

• May Chicago wheat contract lows rest at $5.535, a reversal that was established on February 20. The March/May wheat spread has pushed out to a 3.50 March premium as cash supplies are sought to fulfil prior Chinese purchases.

• March Paris wheat futures fell to €184.50 this morning on a wave of selling that has prevailed throughout the week. Today’s low in spot Paris wheat is the lowest since August of 2020, the depth of the pandemic and before the arrival of record large Chinese corn imports.  It is liquidation which is much like Chicago March corn the week prior. Cash longs that are bailing on delivery potential.

• Chicago corn has been dragged lower by the wheat weakness in “me too” selling. May corn is up 11 cents on the week on active China demand for Ukraine corn. US cash corn selling has subsided and chart support at $4.18-4.21 should hold.

• Soybean futures have been supported by firming Brazilian basis in the May forward timeframe as the market starts to dial in a smaller Brazilian harvest. How small has yet to be determined with yield data from RGDS key to deciding whether the Brazilian soybean crop is north or south of 146 million mt.

• Chicago brokers estimate that managed money has sold 6,700 contracts of Chicago wheat, 5,900 contracts of corn, and 3,900 contracts of soyoil. In soybeans, managed money has bought 3,200 contracts and 1,900 contracts of soymeal.

• The latest private 2024 Brazilian soybean crop estimate was lowered to 143.9 million mt with the corn crop lowered to 114.9 million mt on harvested yield and producer survey data. Our soybean crop estimate is down 1.5 million mt from our February forecast and down 12.1 million mt from USDA. The March Brazil corn production forecast is down 4.8 million mt from last month, and down 9.1 million mt from USDA. March is normally the month that USDA makes their big adjustments to S American crop estimates and there is risk of a bigger than prior month cut.

• StoneX raised their 2024 Brazilian soybean crop estimate to 151.5 million mt vs 150.35 last month with the corn crop virtually the same as last month at 124.4 million mt. The winter Brazilian corn crop is still being planted and it is too early to adjust yield until the monsoonal flow shows an early retreat in April.

• Market volatility in a host of commodity markets is starting to pick up with the new Northern Hemisphere growing season ahead.

• The midday GFS weather forecast is like the prior run and shows modest changes in the outlay of rain across Brazil/Argentina. The coming rain will be enough to satisfy the early moisture needs of corn, but soil moisture levels are in retreat and the forecast should closely watched. No lasting extreme temperatures are forecast with highs ranging from the 80’s to the mid 90’s. The midday model has the Argentine rainfall being slightly further north across Santa Fe and N Cordoba. Southern Argentina will in need of better rainfall by the end of next week.

• EU/Russian wheat is the Chicago grain driver today as cash busts March Paris wheat futures length. Like Chicago corn last week, emotional bottoms are being formed as spot long futures positions are liquidated. USDA’s March WASDE report is next Friday. No news yet from the Commodity Classic from USDA’s Vilsack or EPA’s Regan. Paris wheat is now closed and the grain lows for the day are forming. Look for a modest Chicago bounce into the close on pre-weekend short covering and the rise in spot crude oil futures above $80/barrel. The bio crops of corn/soyoil should be supported on oil.

• HEADLINES: Chicago mixed at midday; More Ukraine corn to China; GFS weather forecast wetter for central Midwest. Wheat is a drag; corn is the coming story; soybeans caught with soyoil sagging on oil share profit taking.

• Chicago grain futures are mixed at midday with corn holding in the green, while wheat futures follow Paris futures lower as Russian 12.5% wheat sags to $209/mt. The Russians have been aggressive in shedding old crop wheat and trying to boost export demand. Shipping from the Black Sea is accelerating amid favourable weather and large interior supplies are pressuring values. A new crop Black Sea weather threat is needed to turn the market as the Russian Government is willing to let cash prices sag. However, the downside price risk for fob Russian wheat appears to be $205/mt fob which is several standard deviations below fair value based on Russian stocks/use analysis. Russia is single handedly constraining world wheat valuations, much as it has been doing for months.

• Corn futures are higher at midday with May holding support and looking to test last week’s high at $4.34, which is the next level of resistance. A push above $4.34 would produce a key reversal on the charts and start to produce some pause to the algo/AI trading systems. Monitor $4.34 May corn closely.

• December corn futures rallied above last week’s high and created a reversal. The initial money flow appears to be heading to the back end of the corn futures market. We would note that China continues to book Ukrainian corn with a few additional cargoes sold today. In total, Ukraine has some 12-15 cargoes of corn to China which can come in via their free trade zone. The profit margin on Ukraine corn imports to China is estimated at 20-23% to an importer. We note that Chinese corn prices keep rising which is strange if last year’s harvest was record large as reported by the government. TRQ’s are being released slowly, which could translate into US corn demand off the PNW.

• We are having trouble confirming rumours that US soybean sales that are being shifted to Argentina.. There may have been a few cargoes shifted, but we doubt any swapping is widespread. This rumour started yesterday and we would suggest that the news is following the market.

• US weekly ethanol production was 319 million gallons, up 7% from last year and continuing a stretch of far better than needed weekly grinds to achieve the USDA annual estimate. Favourable weather has aided US ethanol producers, but it is the profit margin via cheap corn that is driving production. US ethanol stocks rose to 1,093 million gallons, up 5% on last year. We argue that WASDE will raise the 2023/24 US ethanol grind by another 25-50 million bu.

• Chicago brokers report that managed money has sold 4,100 contracts of wheat and 1,000 contracts of soyoil, while buying 9,000 contracts of corn, 4,200 contracts of soybeans, and 2,900 contracts of soymeal into midday.

• The midday GFS weather forecast is slightly wetter across North Central Brazil with 10-day rainfall of 0.75-1.75”. The rain will be enough to satisfy the early moisture needs of corn, but soil moisture levels are in retreat and the forecast must be closely watched. The southern third of Argentina is also in need of moisture, but it is not critical based on last week’s rain.  No lasting extreme temperatures are forecast with highs ranging from the 80’s to the mid 90’s.

• It is a choppy day in Chicago with the exceeding of yesterday’s high in May corn causing a fund buying flurry of 5,000 contracts which pushed values against $4.30. First notice day against March futures is ahead and deliveries will be modest.

• HEADLINES: Early rally fades as China demand for US corn off the PNW cannot be confirmed; GFS weather forecast drier for NC Brazil.

• Chicago grains are higher at midday. Short covering and selective speculative buying rallied Chicago futures ahead of March first notice day on Thursday. We suspect that short covering could lift Chicago valuations into Wednesday with actual delivery intentions then determining if a correction is needed later in the week. A seasonal low has likely been scored with the break below $4.00 March corn and $11.25 in March soybeans on Monday, but new US export demand news and/or confirmation of smaller S American crops is needed to sustain a recovery. Chicago futures became too cheap amid the liquidation of cash related long March corn/soybean positions, but a fundamental trigger is lacking to scare the bears. We look for a higher Chicago grain close (values unlikely to finish near day’s high) which leaves the market vulnerable to a break.

• There have been rumours that China has purchased a modest amount of US corn off the PNW for April/May. We cannot confirm any US sales. As we suggested on Monday, China did release TRQ’s to the corn and livestock industry late last week which is causing purchases of Ukraine corn. US PNW corn could work due to rising vessel costs, but we doubt large US corn tonnage sales. PNW cash corn basis is firm to 5 cents higher at midday.

• Chicago brokers report that managed money has bought 6,200 contracts of wheat, 4,400 contracts of corn, and 3,900 contracts of soybeans. In the products, funds have sold 1,900 contracts of soymeal while buying 3,200 contracts of soyoil. Money managers were said to have bought 5,800 contracts of the July $12.60 soybean calls and 2,500 contacts of the July $12.40 calls overnight which started the bullish ball rolling. The call buying is likely new money coming into Chicago grain markets.

• Brazil’s corn ethanol industry is enjoying rising profits on sliding corn values. IMEA forecasts that ethanol production margin grew by 37% during February on the slide in the price of corn. The rising margin will boost the Brazilian corn grind which could reach a record this year amid tightening supplies of sugar. Domestic total Brazilian corn demand is estimated at 77-79 million mt with 14 million coming from ethanol. This means that any production losses from adverse weather will come right from export demand. USDA forecasts that Brazil will export 52 million mt of corn, down 4 million from last year using a crop harvest of 124 million mt. We see the crop at 119.3 million mt with CONAB forecasting the Brazilian corn crop at 113 million mt, a sizeable 11 million difference.

• The USDA sold 123,000 mt of US soybeans to an unknown destination in the 2023/24 crop year. Rumours have the buyer being Mexico. Rising ocean freight rates is tipping this demand back to the US for late summer.

• The midday GFS weather forecast is slightly drier across North Central Brazil with 10-day rainfall of 0.75-1.25” which is just 40% of normal. Northern Brazil is drying down which must be followed closely for winter corn production. To date, corn is too immature for outright worry, but in another few weeks that could all change. The Southern third of Argentina is also in need of moisture, but it is not critical based on last week’s rain.  No lasting extreme temperatures are forecast with highs ranging from the 80’s to the mid 90’s. It is North Central Brazil dryness that is worrisome.

• As previously reported, China has purchased 8-12 cargoes of Ukraine corn, but a US corn sale off the PNW cannot be confirmed. Oil share spreading is noted which is helping soyoil futures hold early day gains. Wheat pushed above Friday’s high, but Russia fob wheat values are flat. The US market needs to see a bottom in Russian wheat to sustain a lasting recovery. Volatile weather is forecast across the Central US. Blizzard warnings are posted for the ND/MN border with gusty winds to stress HRW wheat in the Plains. The record warm winter statistically correlates to Central US summer heat. Be prepared for volatility.

• HEADLINES: Chicago recovers as farmers roll basis sales forward; China demand for Ukraine corn and Brazilian soybeans; GFS weather forecast drier for north central Brazil.

• Chicago grain markets are mixed at midday. US wheat futures recovered from a lower opening, but corn/soybeans are holding in the red on fresh speculative selling and ongoing farm basis contract rolling/liquidation. First notice day against March futures is Thursday, and most elevators are demanding that US farmers have their cash March basis contracts cleaned up by Tuesday’s close. March corn futures slid to $3.945 with May corn futures pulling back to $4.0875. March soybeans scored a new low for the decline at $11.2475 while US wheat futures are finding support from cash demand to fulfil Chinese SRW sales and the heat/dryness that is spurring a “greening” of wheat across the Plains. Bringing the wheat out of dormancy is not a problem unless arctic cold returns in March/April. A mixed Chicago is expected. A close above $4.00 March corn would signify that a key low is likely in place. Brazilian premiums are rising on moderate Chinese demand this morning as crush margins likely triggered new demand. We hear that 5-6 cargoes of Brazilian soybeans were sold to China this morning. Additional demand is said to being worked on scale down basis. Also, Brazil is getting ready to expand their soyoil contribution to diesel by 2% on Friday which is firming Brazilian basis.

• Chicago brokers report that managed money has bought 2,400 contracts of wheat and 3,200 contracts of corn, while selling 2,400 contracts of soybeans. In the products, funds have sold 2,300 contracts of soymeal while being flat in soyoil with early purchases being sold back out on the break.

• There continue be to strong rumours that China has booked 7-10 cargoes of Ukraine corn for March/April. The demand is coming from the recent distribution of 2024 TRQ’s with Chinese importers looking at a profit margin of $3.25/bu including payment for the import tariff. China’s margin for corn imports is fancy and additional purchases are expected. There is a freight cost of $21-22/mt to go around the horn of Africa if the cargoes do not transfer through the Red Sea. This extra cost helps make US corn more competitive. However, for now it is expected that cheap Ukraine corn will help fulfil new TRQ demand.

• US futures brokers indicate that US farmers are rolling March length forward into May. The March/May corn spread pushed out to 15.5 cents May premium today amid the active rolling. We expect that as first notice day against March passes, US corn end users will have to start paying up again for future cash supplies. Look for basis bids to start firming again in March.

• US farmers are actively applying fertilisers and preparing ground for spring seeding due to record Midwest warmth and a lack of soil moisture. The question is how early will producers start planting corn and soybeans due to late winter warmth. US revenue insurance policies provide dates across the Central US when summer row crop planting can begin. For the key states like Iowa/Illinois, corn and southern state soybean seeding can start on April 10 with the more northerly areas of each state having to wait until April 15 to seed soybeans. Thus, farmers can get early fieldwork completed, but it is the RMA (Risk Management Agency) and key seeding dates that will hold back Midwest planting.

• The March liquidation break is coming to an end. The S American weather forecast features drier/warmer than normal weather across most of North Central Brazil that is drawing down soil moisture and making March rainfall highly important for Brazil’s winter corn crop. China is more active in seeking Brazilian soybeans with private buyers/importers securing Ukraine corn for April. Being bearish is a crowded trade, but a lasting rally demands adverse weather and a loss of supply to a major producer/exporter. USDA has a history of making important and sizeable S American crop changes (reductions or increases) in their March report. Our current bet is a more important reduction based on harvested yield data. Watch to see if corn can form a key reversal on the charts.

• This should be the week that a liquidation bottom is formed ahead of first notice day in March futures. A recovery effort should follow, though it will be choppy unless Northern and Central Brazilian weather poses a threat to their winter corn crop. China’s soy crush margins are in the green and feedgrain import margins are at a two-year high. The bears will press the downside, but the risk vs reward is shifting to the bulls with a new Northern Hemisphere growing season ahead.

• 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.