• US weekly export data has been released as follows:

• Brussels has issued weekly wheat export certificates totalling 637,997 mt, which brings the season total to 18.8 million mt. This is 2.6 million mt (12.3%) behind last year. Barley exports for the week reached 407,630 mt, which brings the season total to 3.6 million mt.

• Egypt’s GASC tendered again for wheat with 420,000 mt being secured at a price some $2/mt below their last purchase. The price paid over the last 3½ months has trended higher, and this is the first time that trend has changed providing some welcome relief for Egypt.

• Chicago markets are minimally changed as we write this with meaningful news, once again, largely absent. Outside markets are  similarly mixed, crude is a touch lower at $0.15/barrel lower and testing recent lows and the US$ is unchanged whilst the DOW Index is 15 points lower.

• NOAA’s long-term climate outlooks this morning are little changed from February. Normal to above normal temperatures and normal to above normal precipitation are forecast in April. The forecast for the Apr-Jun period is similar, with above normal precipitation favouring the N Plains, as well as the far Southern US (TX, LA, MS). Elsewhere normal spring climate patterns are expected. NOAA’s seasonal drought outlook includes improving soil moisture through June 1 across KS, E CO and MO, with drought to persist across the TX and OK panhandles. NOAA of course cites the lack of La Niña, and expects neutral ENSO through spring. A moderate El Niño is possible by mid to late summer.

• Corn has found support amid Wednesday’s better than expected ethanol data, and renewed interest in exports from traditional buyers following the recent break. This week’s demand reports in wheat and soybeans, however, have failed to spark any meaningful buying interest, and from the midday forecast along with NOAA’s climate updates this morning, it does appear that better moisture lies in the offing for the US Plains this spring. There’s nothing yet to alter our non-bullish viewpoint.

• Early strength in the soybean market faded ahead of the monthly crush data, and the soybean trade turned negative as the monthly NOPA crush data fell short of expectations. Soy product prices were sharply mixed with meal prices around unchanged, while soybean oil gave back overnight gains and closed down. NOPA reported February soybean meal exports at 738,825 short tons, down 17% from January and 8% larger than a year ago. NOPA meal exports have proven to be a rather poor predictive tool for total US meal exports, but have often been a helpful gauge as to whether export trends are up or down, but note that in January, NOPA indicated a slower meal export trend, while the Census Bureau reported total meal exports at a 24 month high. Our view is downside risk ahead of the end of month USDA reports is somewhat limited from current levels.

• Chicago corn futures remain stable amid tech-based support and as ethanol production data this week exceeded expectations rather substantially. Production margins have been increasing while corn futures have been falling, and plants responded quickly to the up-tick in revenue. Funds were net buyers of 2,500 contracts. Through week ending March 10th, US ethanol production totaled 307 million gallons, up 7 million on the previous week and up 14 million from the same week in 2016. Using EIA weekly data, we peg Feb corn used for ethanol at 425 million gallons, a record for the month, and estimates March demand at 467 million, a record for the month. Total Sep-Mar ethanol demand is then calculated at 3,185 million, up 4.5% from last year, which suggests the USDA’s forecast still may be a bit too low. However, this is only a marginal boost in total consumption, and S American weather remains conducive to additional yield hikes. Brazilian production changes await April weather, but increasingly Argentine yields appear a bit understated. The primary driver of price into early summer will be changes in export demand, and new export sales look to be capped at 20-30 million bu, vs. 50-60 million in autumn. Bounces likely lie ahead!

• US wheat futures rallied 5-8 cents on a weak US dollar (and negative reaction to the Fed’s raising of US interest rates) and as both Algeria and Egypt filled another tranche of spring import needs. This is possibly the last round of N African/Mid-East wheat purchases, but world cash market are well supported as the details of these tenders are worked out. Egypt’s GASC secured 420,000 mt of wheat from Russia, Ukraine and France (mostly from Russia) at an average fob price of $197/mt, $2/mt below its last tender in early March. Egypt ignored cheaper US wheat on its freight disadvantage, and with Algeria also seeking a large tonnage (details on Algeria are unavailable), EU cash prices ended slightly higher. Note also that crude ended $1.10/barrel higher, which supported the Ruble, thus raising interior Russian wheat prices. Outside the US, above normal temps and moderate rainfall in Europe and the Black Sea will support vegetative health into early April. There’s little compelling evidence to support a major change in price trends, with fair value still pegged at $4.20-4.50, basis spot Chicago futures, near term. Longer term, new crop Russian offers suggest US wheat can only compete for summer demand below $4.30.

• It has been another mixed morning in Chicago, with corn finding support on export demand and with soybeans still languishing amid rapid harvest progress in S America and the lack of any new export sales announcements. China has reportedly secured three cargoes of US corn off the PNW, with talk that they may be in the market for 500,000 mt. This is unconfirmed and sources cite poor quality of domestic feed supplies, but moving forward if more corn is needed by China, S American origin will be thrown into the mix. We doubt that China will embark on a major US buying spree, and a few cargoes are unlikely to affect US annual exports or the world trade matrix. Exporters also sold two cargoes of US corn to Mexico for 2017/18 arrival.

• Spot Chinese soybean crush margins are calculated at a negative 175 yuan/mt, the weakest since last summer. We can find very little correlation between spot crush margins and monthly/quarterly Chinese soybean imports, but ongoing weakness in crush margins there is being talked about more and more.

• Three cases of bird flu have been found in Alabama this week.  So far only one case of highly pathogenic bird flu has been found in the US (two weeks ago in TN), but this underpins a larger problem for domestic feed use, steep competition and limited demand growth.

• Fresh news this week has been mostly negative. US Gulf wheat is again highly competitive in the world market, ethanol margins are improving, and NASS’s planting intentions report is due in two weeks.

• Markets in Chicago opened mixed with little change although wheat has faltered and turned lower as the session progressed. Wheat, the driver of lower levels, eased on calls for more extended precipitation across the W Plains later in March and also on falling global cash prices. Matif and London wheat markets looks to be closing lower, as would be expected, and cash values are lower as Russian farmers are becoming ever more aggressive following Rouble weakness. The EU market has displayed weakness despite improved export demand and now focus is shifting to new crop production potential, which is looking solid across Europe and Black Sea regions.

• Informa Economics has updated its new crop US acreage estimates with corn at 90.8 million acres, compared with 90.5 in January and vs. the USDA Outlook Forum figure of 90.2. Soybeans are forecast at 88.7 million acres, fractionally higher than the January figure and compares with the USDA Forum’s 88 million. The all wheat area is forecast at 45.6 million acres vs. 45.8 in January and the Forum’s 46 million. Normal planting weather could see the total seeded acreage a touch higher, particularly given the boost in crop insurance prices.

• Managed funds need a bullish input if they are to continue buying commodities or raw materials, and may await NASS’s planting intentions report or any hint of adverse weather in the spring or summer before doing so. Meanwhile focus will switch to S American crop size and how much, and how soon, major importer demand shifts to the S Hemisphere between now and late summer.

• The USDA’s March WASDE, ongoing favourable S American weather and broken down chart patterns all continue to weigh on prices in Chicago. On the week, May corn is down 17 cents, Chicago wheat is down 11 and beans are down 33. May beans’ failure to find support at its 200-day moving average is cited, though we do not advise chasing breaks amid better than expected Chinese soybean imports (from all origins), and as NASS’s planting intentions report is just week away. There is talk that a cargo of Argentine corn has been sold into Vera Cruz, Mexico for July arrival. No price has been offered, nor is there any confirmation but the rumour is pretty widespread in the cash market. Changes in Mexican corn trade will be a hot issue through 2017, particularly as S American cash prices drop during/after harvest. Otherwise, relative to recent days, there’s real dearth of fresh news.

• Russian cash wheat prices this week are down for the only the second time since December. Spot offers rest at $190/mt, down $3/mt on the week. New crop Russian offers are pegged at roughly $177/mt, which is comparable to $4.30, basis July Kansas futures. Recall the seasonal trend in Russia’s cash wheat market tends to be weak in Mar/Apr.

• Fundamental input has turned bearish this week amid confirmation of rising crop sizes in S America, a slight boost in monthly Malaysian palm oil stocks/use, and the lack of any evidence of dryness in Center-West Brazil in the weeks ahead. Our outlook remains neutral until new crop US crop conditions are known, but this year’s S American harvest will weigh heavy on rallies.

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

Fund positions

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

Fund positions

• Friday saw the USDA’s new crop balance sheets fail to spark fund buying of any significance.

• Assuming trend yields it is probably fair to say that US end stocks will remain at lofty levels and price outlooks are materially unchanged from 2016/17.

• Russian interior wheat prices are lower for the second consecutive week in both Rouble and US$ terms and it would seem safe to assume the latest price rally saw some farmer selling. Consequently we feel safe in suggesting that Russia fob price offers will struggle to hold rallies (above $190.00/mt basis spot) and other origins will likely also struggle to rally in any significant way.

• The wheat chart pattern has also broken down with next support at $4.30-$4.40 basis May ’17 futures.

• The USDA’s Outlook Forum has come and gone without much market impact, and anyway the balance sheet numbers are not too surprising. We view the recent correction in futures as more a function of rising S American crop estimates and the recent modest decline in interior Black Sea cash values. Our longer term outlook still includes a lack of major bullish input without a weather N Hemisphere weather problem.

• The morning was weaker in Chicago as the USDA Outlook Forum’s acreage data triggered selling in corn and soybean futures. The USDA has estimated total major cropped area (corn, wheat, soybeans and cotton) at 235.5 million acres. This is down 2.2 million from 2016/17, but up 1 million from the USDA’s baseline estimates released in late 2016. Corn acreage is pegged at 90 million, unchanged from the baseline; soybean area is pegged at 88 million, up 2.5 million from the baseline and record large; wheat area is estimated at 46 million acres, down 2.5 million from the baseline and accounts for NASS’s winter wheat seedings data; and cotton acreage is expanded to rebound to 11.5 million, vs. 10.5 million in the baseline report. The soybean figure, especially, is viewed as bearish and assuming trend yield, the 2017/18 soybean crop could reach a record large 4,150-4,175 million bu.

• This compares to total consumption in the 2016/17 crop year of 4,080 million bu, and so end stocks could build another 80-100 million bu to 500-520 million in 2017/18 with normal world weather. The USDA has also projected the season average cash price in corn at $3.50, vs. 3.40 in 2016/17. Wheat’s average price is pegged at $4.30, vs. $3.85 currently, with the average soybean cash price forecast at $9.60, vs. $9.50 in 2016/17. Outlook Forum data so far has not been surprising, but does highlight that adverse weather is needed to adequately draw down US and world stocks.

• A host of government and private analysts continue to increase S American crop sizes. The Argentine Ag Ministry now estimates corn production at 40 million mt, vs. the USDA’s 36.5. Safras in Brazil projects total Brazilian corn production at a massive 95 million mt, vs. the USDA’s 88. Agroconsult in Brazil has raised the soybean crop there to 107.8 million mt, vs. 105.3 million mt in early February. It is still a bit premature to raise yields too far above trend, but no doubt weather has been conducive to bumper harvests, and the weather forecasts lack any major threat into the middle part of March, and harvest progress remains ahead of last year.

• The USDA’s data today is slightly bearish, but more important in the near term is favourable S American weather and rising production estimates. With the S American forecast maintaining near normal precipitation in Brazil through to around March 10th, the Brazilian soybean crop is nearly made. Only persistent flooding rain Argentina in late March/April can materially affect S American crop sizes.

• Little of interest has arisen to spark trade in Chicago markets today. Rallies and breaks have failed to follow through with the main trade being corn spreads vs. wheat or soybeans as traders hope for a reduced 2017 US corn acreage in the Outlook Forum later this week. Large Brazilian yield reports continue to keep a lid on rallies and add pressure to reduced levels.

• World importers are seeing cheaper prices from Argentina for corn shipment beyond the end of March. This is going to have other world feed users looking southward for supply. The recent illegal immigration guidelines handed down by the Trump Administration yesterday is maintaining talk within Mexico that they should be switching away from US corn to other suppliers. We note that US corn is the cheapest origin for Mexico, but if the country becomes more combative and nationalistic, one could imagine that some US corn demand will be switched. The US corn market has not paid much attention, but trade switch talk is growing.

• We await the outcome of a further wheat tender by Egypt’s GASC for late March/early April in which ten offers were received, the cheapest from Ukraine. Major global wheat exporters are keen to make sales in advance of the new harvest, freeing up storage space.

• It will be hard for the market to overlook larger S American corn and soybean crops and tepid Chinese demand following the USDA report. March 1st notice day will be interesting in terms of deliveries of soybean meal, soybeans, and KC wheat. All are currently well above their respective cash markets.