• Chicago futures are lower at midday as traders take off risk ahead of the weekend with rain slated to drop across the S Plains late next week. Kansas wheat has been leading the decline in recent days as the market extracts weather premium. The rain will be important for wheat values late next week, but the models appear to becoming confident in its arrival. The tone of the market feels heavy at midday as weather/political concern exist. The market is uncertain on the US’s reaction to Syria and what will happen in the rain forecast for the Plains and Midwest. Moreover, US/China trade issues are likely to deepen as progress in the past two weeks has been nearly nil. The research view has been sideways with extreme volatility continuing, with advice being don’t chase rallies or sell sharp breaks. Chicago floor brokers report that funds have sold; 6,000 contracts of corn, 4,600 contracts of soybeans, and 4,200 contracts of Chicago wheat. In soymeal, funds have sold 2,800 contracts of soymeal while being flat in soyoil. The funds continue to pile into a larger net long soybean/meal/corn position.

• There were no new sales announced through the USDA Daily Sales reporting system this morning. This was a surprise to some traders. Rumors continued to swirl that Argentina had purchased additional US soybeans, but US exporters have not offered such confirmation (other than the cargoes that sold late last week and Monday). One cannot pencil a profit on US soybeans into Argentina with the products to be exported. The lack of a crush profit will keep Argentine import totals of US soybeans subdued for now. This is not to say that a break in US soybeans would cause the calculation to go positive, but we doubt that Argentine crushers will take on the risk without a healthy import margin. Brazilian fob soybean basis has corrected sharply this week as US and China headlines on trade were replaced by other political issues like Russia and Syria. Brazilian fob soybean offers are at $1.30 over for July (compared to $1.95 over last Friday), while US soybean fob rose to $.92 over. The spread at $.38 over is far less than $1.00 plus from last week. EU crushers are not interested in shifting their sales to the US at such a fob vs fob spread. Note that Brazilian soybeans normally trade at a $.15-.20/bu higher value vs the US due to its higher soyoil content. Chicago corn prices have had trouble rallying this week to the surprise of the bulls as Midwest seeding is delayed. However, Brazilian fob corn has declined and is now cheaper than the US Gulf at $187.50/mt for July. US Gulf corn is priced at $194/mt, or $6.50 higher. The Brazilians are starting to aggressively offer corn and offering a cheaper alternative to US product.

• Traders are cutting their risk in a host of markets, excluding energy where this week’s close will be the best in years on Mideast political concern. This is a headline marketplace and we see no reason why that will change. This week, Brazil has become a more aggressive seller of winter corn, while soybeans were not able to poke above their winter spot high price. In wheat, its all about Plains rainfall amounts, watch this space.

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

Weekend summary 13 April 2018

• The morning has been mixed in Chicago with the summer row crops firmer while wheat futures sag on the prospect for rain across the Central Plains. The rally in corn/soybeans has been based fresh fund buying which is related to a week of strong US export sales amid the switching of non-Chinese buyer demand of Brazilian soybeans back to the US. Also, the prospect that President Trump won’t immediately target Syria with a missile strike has offered levity to the US and world financial markets. Funds have been putting risk back on in soybeans and corn, and adding a short back into wheat. We look for a mixed close with trade volume slowing into the close. Traders will be loath to take on additional risk heading into the weekend amid the ongoing political uncertainty of Syria/trade tariffs. Chicago floor brokers report that funds have bought 4,500 contracts of corn, 5,000 contracts of soybeans, while selling 5,500 contracts of wheat. In soybean products, funds have bought 2,200 contracts of soymeal and 1,200 contracts of soyoil.

• FAS reported that for the week ending April 5, the US sold 4.4 million bu of old crop wheat (and 2.5 million bu of new crop), 33.1 million bu of corn, and 55.5 million bu of soybeans. Weekly US soybean sales were above trade expectations and included 35.1 million of new crop sales. The purchases by China in a new crop position is comforting traders that China is not seeing a real trade tariff issue. We fear that such thinking is not capturing the lack of negotiation between the parties and the potential for US tariffs to come in late May/June. WASDE is forecasting a 5% decline in US 2017/18 soybean export estimates, so there is no statistical rational for WASDE to raise or lower their export estimate today. The same applies to soymeal.

• US President Trump continues to reassure US farmers that they will be taken care of if China retaliates against $50 billion of US tariffs that were promised in late March (working their way through the US 30 day Government comment period). The USDA is working hard to find an equitable platform to compensate US producers for trade related losses, should a US/China trade war erupt. The US has a Sec 301 finding against China and Tuesday’s warm talk by President Xi is not enough to halt US intellectual property protection demands. We are fearful that additional US/China trade (in the media) bantering will occur and that the odds grow with each week of non-negotiation that US tariffs will occur.
  

• It should be a risk off day on Friday as the market fears new trade rhetoric against China and a potential military strike against Syria. We estimate that funds are long around 198,000 contracts of soybeans, 130,000 contracts of corn, and 110,000 contracts of soymeal. The long side of soybeans/soymeal is loaded which makes the market vulnerable to adverse news. US soybean demand has slowed as Brazilian fob premiums have retreated to more normal levels.

• The USDA April Crop Report was bearish for soyoil/wheat, while being neutral corn/soybeans. The surprise was that WASDE lowered its Argentine soybean crop estimate by 7 million to 40 million mt, while they raised Brazil by 2 million to 115 million mt. The net decline was larger than expected which rallied Chicago soy futures. However, the industry has been talking an Argentine soy crop of 36-39 million mt for weeks, and we doubt that the soybean rally will last. We expect that Chicago will get back to focusing on weather and trade disputes. The USDA raised 2017/18 US corn end stocks by 55 million bu to 2,182 million bu. The increase in stocks was a result of a 50 million bu decrease in feed/residual use to 5,500 million bu, and a 10 million bu cut in the amount of corn used for glucose and dextrose, that was partially offset with 5 million increase in the amount of corn that is used for starch. Research would argue for another 50-75 million bu cut in US corn feed/residual use, with a like increase in US corn export estimates. This would leave 2017/18 US corn end stocks around 2,200 million bu with the average cash farm price placed at $3.35.

• 2017/18 world corn production was lowered by 6 million mt with a 2.5 million reduction to 92.0 million mt in Brazil and a 3.0 million to 33.0 million mt in Argentina. 2017/18 world corn end stocks were forecast at 198 million mt, down 1 million from March, and down 33 million mt from last year. No change was made to Chinese corn imports at 4 million mt or their 2018/19 stocks at 79.55 million mt. The world corn balance sheet was neutral and traders will be looking forward to the May WASDE which will offer their first estimate of the 2018/19 world corn estimates. US 2017/18 wheat end stocks were raised 30 million bu to 1,064 million bu via reduced feed and residual use to 70 million bu. This is an historically low US feed/residual use rate as more corn is utilised in US livestock rations. No other changes were made in the US wheat balance sheet, but we would argue that WASDE will cut its final US wheat export estimate by 10-20 million bu which will raise 2017/18 US wheat end stocks closer to 1,100 million bu by the final count. Such stocks are burdensome and reflects the tepid demand profile for US wheat with total use estimate under 2,000 million bu. World 2017/18 wheat stocks rose by 2 million to 271.2 million mt, a record high. The hefty world wheat stocks will mollify the cash rally as the market starts to worry about the sharp fall in the Russian Ruble and likely response by farmers to sell additional stored supply. Russian wheat exports were raised 1.0 million to a record large 38.5 million mt. Even amid last year’s record large 85 million mt Russian crop, their wheat carry in supplies will only be 2 million larger at 12.7 million mt. The world still has an abundance of old crop wheat to cap global prices.

• WASDE lowered their estimate of 2017/18 US soybean end stocks by 5 million bu to 550 million bu with a 10 million bu increase in the US crush estimate to 1,970 million bu and a cut in residual/seed use of 5 million bu. WASDE held its US soybean export estimate steady with March at 2,065 million bu. The sharp fall in the Argentine soybean crop will have more of an impact on 2018/19 US soybean exports (than the old crop) with the Brazilian soy crop reaching a record 115 million mt. The average farm gate price was left unchanged at $9.30. US 2018/19 soyoil stocks were raised to a 1,966 million lbs as more cornoil is used in biodiesel production. 2017/18 world soybean production was lowered to 90.8 million mt (down 3.6 million from March) as the Argentine soybean crop was cut a sharp 7 million to 40 million mt while the Brazilian soybean crop was raised 2 million to 115.0 million mt. World 2017/18 soybean production fell 6 million to 334.8 million mt. The sharp fall in WASDE Argentine soy crop estimate is rallying Chicago futures. However, such a crop has been rumoured for weeks and we doubt that the Chicago advance can be sustained. The US nor world balance sheet is surprising.

•  The USDA April report does not offer much new information for traders. The sharp drop in Argentine soybean production has been telegraphed by the Argentine Commodity Exchanges for weeks. Our bet is the Chicago goes back trading weather and politics. The sharp fall in the Russian Ruble and our doubt that the Chinese trade tensions have ended should produce a volatile sideways Chicago trade. It is early to argue that US corn, spring wheat or soybean seeding will be altered significantly with US farmers to plant 40% of their corn or soy crop in a week.

To download our report data recap as a PDF file please click on the link below:

USDA-Recap-10-April-18

To download our report contemplations as a PDF file please click on the link below:

Apr 18 USDA contemplation

• Chicago values are stronger at the start of the week with wheat leading the bullish charge amid dry weather conditions across the S Plains and the cold/snowy conditions across the Dakotas. Wheat has acted to pull up corn, with soybeans reacting to the hope that the US/China are working through their trade differences/tensions. President Trump before his weekly cabinet meeting indicated that he was hopeful on the progress scored in NAFTA and that Chinese President Xi will do the right thing. Moreover, he tried to assure US farmers that he stood with them, and would support their incomes. The news flow has been positive which along with the cold and snowy weather across the Midwest has offered a bullish tailwind for Chicago. A higher close is expected with the USDA April report to be released on Tuesday. Chicago brokers report that funds have bought 7,000 contracts of corn, 5,700 contracts of corn, and 4,800 contracts of wheat. In soy products, funds have bought 3,500 contracts of soymeal while being flat in soyoil.

• US weekly export inspections for the week ending April 5th were; 15.8 million bu of wheat, 76.2 million bu of corn, and 13.7 million bu of soybeans. The corn export total was above trade expectations while soybeans were below. The export data argues for a further 10-20 million bu cut in US wheat exports, a 25 million bu cut in US soybean exports, and 50 million bu bump in US corn exports.

• President Trump commented that if China wanted to hit the farmers (who are great patriots), we will support them. The financial support can come from either the CCC Corp funding or an obscure law known as Section 32. This law can take funds that are generated from customs duties, and use them for a wide range of things like disaster payments, or purchasing commodities for schools or other donation programs. Section 32 would let China pay for the US farmer financial support. Section 32 had been restricted from USDA using any funding for disasters or other emergencies. However, that all ended when Congress passed the US Omnibus Spending Bill for 2018, just a few weeks ago. Under reduced restrictions, The USDA Secretary must provide written notice on its expenditures to both the House and Senate at least two weeks in advance. This is the way that the US Government will support the farm community. However, deciding on the allocation is another matter that is still being discussed.

• We have learned that China did not include soymeal on its 25% tax list since meal cannot be imported into China under quarantine restriction. China added the restriction several years ago to protect its domestic soy crush industry. 

• Chicago wheat futures are rising on the Plains dryness and the lack of moisture in the forecast. The Russian fob market reached $210/mt, the highest price in three years on strong demand. Funds are covering shorts while corn and soybeans are following. We have no way of knowing how China will react to the new positive overtones from President Trump. Our bet is that China’s response may not be as “warm”. However, in this market of adding or subtracting trade risk, today is a day of addition. 

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

Weekend summary 6 April 2018

Our weekly fund position charts can be downloaded by clicking on the link below:

Fund positions disaggregated data

• Chicago markets are higher at midday, driven by a more favorable macro landscape (crude is up $.30, the DOW up 300), and ongoing weather concerns in both hemispheres. There is a better understanding by the trade that proposed tariffs from both the US and China will not be implemented for some time. The GFS overnight weather forecast trended cooler, and the midday so far maintains a lack of needed warmth across the N Plains and bulk of the Midwest. And some 95% of the Upper Midwest is blanketed by several inches of snow, which is unusual on this date. Soil temperatures in IA, MN and the Dakotas rest in the 20s & low 30s; a year ago soil temperatures there were in the 40s and 50s.

•  This week’s US Drought Monitor also showed a slight expansion in exceptional drought conditions across OK and CO, and still little to no rain is offered to the Western Plains into April 20. HRW yield concern has been well documented, but we reminds that producers in TX, KS, OK and CO intend to plant just over 9 million acres (11% of total) of corn there in 2018, as well as 5.6 million acres of soybeans

• Old and new crop US wheat export sales were disappointing at just 4 and 7 million bu, respectively. Sales of other ag production were in line with to above trade guesses, and world soy complex demand does appear to be shifting to the US and away from S America. Corn sales through the week ending last Thursday totalled 35 million bu, down from the prior week but still some 15 million above the pace needed to meet the USDA’s target. Total corn export commitments stand at 1,865 million bu, or a near record 84% of the USDA’s forecast. A 50-75 million bu hike in US corn exports is nearly certain. Bean sales through the week totalled 42 million bu, a record for this particular week (sales in late March typically range from 5-20 million). Total US bean commitments are now much better in line with the USDA’s forecast, and so perhaps no downward revision will occur in next Tuesday’s WASDE. Meal sales were a 9-week high 414,000 mt, and meal commitments also rest a near record high 81% of the USDA’s forecast, with half the crop year remaining.

• World wheat prices continue to move upwards, albeit slowly. An ongoing rail workers strike in France has pushed fob offers in France and Germany to new seasonal highs at $210-220/mt, still well below Gulf HRW offers but fundamental support is being raised to $4.80-4.90, basis July Kansas futures.

• The S America’s weather forecast remains much drier than normal across the southern half of Brazil’s safrinha corn belt through late April. It is not too concerning at present, but whether the wet season has ended there needs close watching. There are still a few weeks before the bulk of Brazil’s second corn crop begins pollinating, and a boost in soil moisture is needed in Mato Grosso do Sul and Parana, which typically produce some 45% of Brazil’s total safrinha crop.

• Attention has shifted from global trade issues to less than ideal weather in the US and Brazil, and more rain is needed in Argentina and Australia over the next 30 days ahead of wheat planting. A choppy marketplace will likely persist.

• Chicago corn and soybean futures have traded sharply lower in opening trade with fund liquidation being featured. However, end user scale down buying has been noted in wheat, soymeal and corn on the morning break. The volume In Chicago has been huge as everyone hopes that US/China negotiations can avoid a trade war. President Trump tweeted this morning that the US cannot lose with a Chinese trade deficit of $500 billion dollars. US/China negotiations on trade have already started. We would note that the proposed Chinese tariffs will not be put into place until the US implements/activates the $50 billion of proposed trade tariffs. For those tariffs to be implemented there is a process. The US Government 30 day public comment period will end on May 4, with USTR (US Trade Representative) holding a public hearing May 15 with the US Treasury deadline for China investment restrictions being May 21. Final comments are due to the USTR on May 22, with the Trump Administration likely to wait 1-3 weeks before actually announcing any activation of the tariffs. Thus, US tariffs against Chinese goods cannot become active until the closing days of May or June.

• The understanding and hope that Chinese tariffs will not become active until early summer has provided some calm to US ag futures market. Also, the hog market is rallying as traders understand that US pork processor and exporter, Smithfield Foods, won’t be impacted as it is owned by a Chinese company. China is nationalistic as a nation, and it is extremely unlikely that they would tax their own operations. We would also note that Kong Hong does not appear to be involved in the US or Chinese retaliatory tariffs. US beef exports are mostly to Hong Kong in recent months, with US beef trade to the mainland as minimal at around 10 million lbs. There is speculative selling in cattle futures this morning, but we see little tonnage impact from the Chinese tariffs.

•  Brazilian soybean cash basis has soared and is currently trading at $1.25- 1.30/bu over, which compares to the US Gulf at 76 cents over. The 70 cent premium for Brazilian soybeans to the US Gulf is pushing non-Chinese soybean demand back to the US. However, it is also possible that China could secure US soybeans off the PNW for quick shipment to China that would arrive in early to mid-May. The odds are low that these beans would be hit with tariffs. Now announced, the US has six months to actually enact its proposed tariffs. The US International Trade Commission has locked into place anti-dumping duties of Argentine and Malaysian biodiesel into the US. Total duties of up to 159% on Argentine and 341% on Indonesian biodiesel makes it almost certain that the imports of these biofuels will not occur.

• Funds are paring their net Chicago long positions to reduce risk as the US/China trade war builds. However, the actual implementation of US tariffs won’t happen until late May and June, which means that US and N Hemisphere weather will become more important with time. WASDE cannot and will not include any of this trade sabre rattling in their April report. WASDE cannot incorporate US/China trade rhetoric until there is statistical proof that it is actually impacting US exports. Our bet (and we are prepared to back this one quite strongly) is that the overnight Chicago lows are seasonal lows, and that prices whipsaw in a wide range as the market shifts back and forth from politics to weather.

• Kansas wheat has been the upside Chicago leader with double digit gains tied to historically low crop ratings and ongoing forecasts of dry S Plains weather. Corn and soybeans have followed with volume in retreat at midday. Funds have returned to the buy side of Chicago with trade worries lessened this morning as the Trump Administration is calling for an early settlement of NAFTA. Most sources have little or no knowledge of how NAFTA can be completed in just two weeks and why the rumoured location of the talks would be in Peru. There is still a lot of ground to cover on NAFTA and although hope is high that a deal can be cut, the political antics of involving the US President in negotiations could prove risky. We continue to be concerned about the US’s more protectionist trade policy and the retaliatory impact on US agriculture. China has yet to announce retaliatory measures for the proposed $50 billion of US trade tariffs (tied to China’s theft of US intellectual property). We would note that China has a history of making US retaliatory trade announcements on the weekend. The US is expected to release its Chinese product tariff list on the weekend.

• Chicago brokers report that funds have brought 4,000 contracts of corn, 6,000 contracts of soybeans, and 4,000 contracts of wheat. In Kansas wheat, funds have added to a record long position by 4,000 contracts. We note that Kansas wheat has blown above its 50 and 200 day moving average which triggered the strong fund buying. Also, funds have bought 3,400 contracts of soyoil and 2,200 contracts of meal. May soyoil has pushed above its 50-day moving average. The S American midday weather forecast offers soaking rains to portions of the Argentine ag areas that have been besieged by drought for months. Rains of .5- 2.50” are offered over the next ten days, which is likely the start to a return of a wetter pattern going forward. The rain comes too late to help summer row crops, but it would help remoisten soils ahead of winter wheat seeding. There is much discussion on delays in Midwest corn seeding due to cold/wet weather. However, it is too early to make any broad calls on either a reduction of US corn yield or planted area. Such a call for either cannot be made until early May. We would remind that US farmers have been able to plant as much as 40% of the US corn crop in a single week. One should closely watch Central US weather, but it is far too early to discuss a cut in 2018 US corn production on weather. Black Sea wheat traders are wondering what is up in Chicago as their prices seasonally slide. The US Plains drought is back in focus and the morning rally is more about fund demand as key technical resistance has been exceeded.

• The US weather forecast is little changed from the overnight run with cold fronts passing through the Central US with regularity producing moderate rains for the Delta and the Tennessee Valley, and below normal temperatures. The midday GFS forecast is slightly farther north with rain when compared to the EU model, and cooler in the 11-15 day period. There could be a few days of warmer temperatures during mid-April, but the overall trend one of below normal temps with a NW upper air flow. Any spring seeding effort will be delayed due to the chill and frequent rains east of the Mississippi River. It is too early for any undue concern for US corn and soybean seeding, but the trend of cold temperatures and dry west and wet east (Central US) is worrisome.

• It is a wheat day with futures sharply higher on chart buying. Trade concerns will cap Chicago rallies later in the week while Central US weather supports breaks. There is no meaningful rainfall offered to the Western Plains over the next two weeks.

• It has been a “Tale of Two Cities” in regards of Central US weather during the 1st quarter of 2018. Heavy rain, often more than 18”, has dropped across the Delta and Southern Midwest while extreme drought persists across the Plains. The disparity is striking and based on the extended range forecast, this trend is unlikely to change. It will be important to see if the dryness in the Plains shifts north and east into June as forecast.
  

• Soybean futures traded quietly at midweek and settled slightly lower. Trading interest has been limited ahead of the USDA March report and rallies have been capped by funds looking to book profits ahead of the NASS Acreage and Stocks data. While soybeans and meal are trading well off the early month highs, soybean crush spreads are holding just under the highs traded five weeks ago. The May spread on Wednesday was at $1.47/bu, and on a seasonal basis is holding at a record level for late March. The July spread is also holding at a similar level at $1.44, with August at $1.37/bu. We estimate March 1 soybean stocks at a record large 2,055 million bu; however, strong crush margins are expected to keep processing rates record large into 2019. Our view stays neutral ahead of the US growing season, with spot soybeans to find support against $10.00 while a weather problem is needed to support a lasting rally over $11.00.

•  Corn settled flat again, and there was little for the market to accomplish ahead of tomorrow’s flood of USDA data. There’s little doubt March 1 stocks will be record large, but more important will be whether farmers intend to plant at least 90 million acres in 2018. The USDA’s Outlook Forum guess (90 million this year) is rarely too far off, but there is a risk that intentions range between 88-89 million, which will provide strong support on breaks into mid/late summer. Also note US corn export sales Thursday should be a hefty 50-60 million bu. This week’s EIA data was mildly supportive in that ethanol production through March 23 was near unchanged on the week, and stocks fell 41 million gallons. They are now down 2% from this week in 2017. US crude production is record large, but crude exports continue to rise, and stocks remain some 20% less than a year ago. Overall, the incentive to produce/blend ethanol will stay intact throughout 2018. Volatility is expected on Thursday. It is too wet/cold in the Midwest, too dry in the Plains, and Gulf corn is competitively priced.

• May Chicago wheat has now retraced 85% of its Feb/Mar rally, and with the US Gulf market below other world fob prices, downside risk moving forward is limited. The next potential bear move requires confirmation of large Black Sea and EU crops, which won’t be known until July. Also, the US cash market is not showing evidence that current US wheat stock levels are burdensome. New crop cash basis is relatively strong. Funds are short an estimated 60,000 contracts in Chicago. The dry Plains weather pattern shows little sign of change in the next 30 days. Soil moisture in the far eastern section of the HRW belt will be improving, but a vast majority of HRW crop will be stressed under worsening drought conditions. Even SRW crop ratings need close watching amid a series of heavy rain events offered to the Midwest/Delta into mid-March. Egypt’s GASC is seeking optional origin (Black Sea) wheat for early May arrival. It is fully expected that Russian wheat will account for a bulk of the purchase, but the price paid is expected to be another seasonal high. NASS data won’t be overly insightful for wheat, but the spring wheat market does require a boost in acreage

• The month of March will end in a few days and the CRB Index is breaking out to the upside (likely to finish above a downtrend line that extends back to 2011). This is an important signal the CRB bear market has likely ended. Inflationary concern is growing as the US budget deficit is likely to annually grow at $1 trillion in the years ahead. This produces a more bullish macro background. The CRB rally has been led by energies, but the metal markets have started to follow. Key will be whether the ag markets get involved in the macro recovery this summer, and add to momentum.
  

• Soybean and meal prices eased through Tuesday’s trading, with reduced volume totals noted. Market news so far this week has been limited, though traders are anxious to see the USDA’s quarterly stocks and new crop acreage data. US and S American soybean meal prices have rallied since the start of the year, but so far spot and forward offers are not suggesting a significant shift in world demand. Note that US soybean meal is almost always priced higher than Brazil and Argentina, and that prices spreads on quoted offers this week are not significantly different from a year ago. So far Argentina continues to export meal at a good pace, with the latest vessel lineup showing March exports unchanged from a year ago at 2.5 million mt. Jan-Mar exports are estimated at 6.7 million mt, or slightly better than last year. Quieter trading is expected to continue into the USDA reports on Thursday. Record large March 1 stocks and new crop acreage is expected, and an acreage number below 91 million acres would likely be seen as bullish.

• Chicago corn futures traded mixed and in mediocre volume ahead of Thursday’s highly anticipated USDA data. The spec community is likely to square positions up ahead of the reports, but large new positions are unlikely. Ethanol blend margins are again at the levels caused by Hurricane Harvey last summer, which is noteworthy, and Wednesday’s EIA report is expected to feature steady production and a modest decline in ethanol stocks. Also key will be whether US crude stocks rebound following last week’s surprising correction. Estimates on Brazil’s safrinha crop have centered at 62-63 million mt, implying a total Brazilian corn crop of 87-88, vs. the USDA’s 94.5. Weather in C Brazil looks to be non-threatening into mid-April, but it is acreage that is capping crop forecasts. Recent dryness in Goias and Mato Grosso do Sul needs watching, but overall there is still no indication that Brazil’s wet season will end prematurely. Corn looks to be most supported in the weeks ahead amid ongoing US export demand, coming excessive rainfall in the Delta, and what looks to be another round of snow across the Dakotas, MN, IA and WI next week.

• US wheat futures fell another 3-5 cents amid a lack of fresh news, and as the trade debates Plains weather potential during the first half of April. The evening’s model guidance suggests that perhaps light precipitation will be more widespread moving forward, but drought improvement is unlikely without a more pronounced, and sustained, pattern shift. Long term moisture deficits remain. We caution against turning bearish below $4.60, basis May Kansas futures, and $4.50, May Chicago, as US cash prices are now much better in line with values elsewhere. The world cash market continues to inch higher, albeit very slowly, and Gulf HRW’s premium for June arrival rests at just $1-7/mt over comparable EU/Black Sea origin. It is our belief that the February rally was unsustainable but at current prices downside is limited. Argentina’s crippling drought does not look likely to end in the next 30 days, when wheat is typically planted, and a close eye will be kept on soil moisture in eastern Australia, where longer term dryness also lingers.