• Chicago grain futures are lower at midday with March corn falling below key support at $6.70 while fresh selling pulls March KC wheat closer to chart-based support at $8.40-8.50. Soybean futures tried to rally on the new speculative buying in soyoil, but then failed with the complex being pulled lower with the grains. US soybean and soy product demand is lacking as Brazilian premiums keep edging lower. And traders wonder if the USDA Outlook Forum is producing a shift in market mentality away from focusing on Argentine weather, to the new Northern Hemisphere growing season.

• Brazil has now harvested nearly 45 million mt of soybeans which is refilling the world soybean pipeline. As previously stated, we do not believe that the frost produced much yield loss and see the Argentine soybean crop in a range of 34-38 million mt. Such a crop does not elicit a rally much above key resistance at $15.50-15.75 with an emotional top possibly scored on Tuesday. Historically, it is difficult to see yield losses greater than 30% in crop areas that have good soils. Supply driven markets often peak when the weather looks the worst, and a frost scare fits into that category.

• Chicago brokers estimate that funds have sold 6,700 contracts of corn, 3,800 contracts of soybeans, and 2,200 contracts of wheat. In soy products, funds have sold 1,400 contracts of soymeal while being flat in soyoil. Funds are thought to be holding sizeable, long positions in corn, soybeans, and soymeal.

• The USDA Outlook meeting US spring seeding of the 4 major crops (corn, soybeans, wheat, and cotton) was 238.9 million acres vs 240.7 million acres in the year prior. We could argue that there is still room for growth in US soybean acres due to double cropping. Midwest SRW wheat seedings soared last autumn and producers now are eligible for a $10/acre payment and crop insurance if they double crop with soybeans. Our guess is that a considerable amount of SRW wheat acres will double crop which will raise US soybean acres by 700,000-1.1 million acres in the final count in June. We maintain that 2023 US soybean acres will reach 88.5-89.0 million under the new program.

• BSE has been recorded in Brazil which shut their exports to key countries like China. Brazil was forecast to export 3.0 million mt of beef and veal in 2023, which is now in jeopardy. Note that Brazil exports twice as much beef as the US and a portion of the lost demand could be pushed to the US. Such demand will further tighten declining beef production and lift US beef prices to record highs this spring. The Brazilian BSE beef ban is country by country, but Brazil will have to prove that it is BSE free for at least 6 months for exports to restart. Whether it is bird flu and now Brazilian BSE, feed usage rates are in decline amid disease issues.

• USDA Sec Vilsack at the USDA 2023 Outlook Forum said that Mexico will produce challenges for US corn exports and that there is little room for compromise. Mexico is trying to ban US GM corn imports beyond 2024. The market will continue to closely follow US/Mexico GM corn negotiations. Mexico will import more than 600 million bu of US corn in 2022/23 or some 30% of total US corn exports.

• The midday GFS weather forecast is wetter than the overnight with better rain coverage/higher amounts for Argentine crop areas after March 2. The GFS forecast pegs rainfall totals in a range of 0.5-1.50”. Dry weather follows in the 10–15-day period with another rain needed in mid-March. The Brazilian harvest is ongoing with below normal totals this week for northern and central crop areas.

• Chicago has a heavy feel as new money is not flowing into raw material markets. Chicago seems to be shifting its focus from Argentine weather to the potential for improved Northern Hemisphere seeding and lower world wheat prices. Our mindset stay bearish, wanting to sell rallies.

• Chicago ag markets are lower at midday with Brazil coming back online following the Carnival holiday while traders worry that world grain demand is showing new signs of slowing. Russian milling wheat was sold cheaply into Egypt in a tender that was financed by the World Bank. The pure cheapness of Black Sea and Aussie milling wheat is stealing corn import demand and causing worry if the US can recapture world corn demand to raise low crop year to date sales totals. World millers kept their storage filled as a means of a hedge against the Russian war with Ukraine. However, if the Ukraine export corridor is extended, a new Northern Hemisphere harvest will produce enough supply comfort that world millers will use their stores and pull back on new purchases prior to the coming harvest. This could slow world wheat/corn trade into May/June.

• A heavy feel dominates Chicago with wheat/corn the downside price leaders while soybeans/soymeal try to hold at historically high price level amid the expanding Brazilian/Paraguayan harvest. Chicago soy rallies look to be laboured as the focus on weather shifts from S America to North America.

• Chicago brokers report that funds were sellers of 3,100 contracts of corn and 2,200 contracts of wheat, while being on both sides of the soybean market. Trade counts have funds selling 1,200 contracts of soybeans, 1,800 contracts of soyoil and 600 contracts of soymeal.

• The lowest offer to GASC in a World Bank tender was $317.50/mt for Russian wheat which we work back to replacement at $290/mt on a FOB basis. This is down another $7-8/mt from where GASC purchased world wheat back on February 2 at $297-299/mt FOB. The sale confirms that Russian fob wheat has returned to a carry with old crop wheat priced below new crop offers. Amid the Russian war against Ukraine, this carry was not afforded to values until now. And Black Sea milling wheat is priced well below all other FOB corn offers, excluding Ukraine at $264/mt. Russian fob wheat at $290-292 is $10/mt below the US Gulf corn offer for April at $303/mt. Amid the cheapness of E Australian feed wheat landed into SE Asia and now Black Sea milling wheat being cheaper than US corn, North African importers will look to wheat as a feedstuff, not corn.

• Note that EU milling wheat is trading below EU corn which should boost its use as a feed within the community. EU wheat stocks are likely more abundant than forecast as high prices have cut demand. And now Russia looks to grab additional world wheat market share via price through early May. Importers and millers will be patient with new crop pricing amid the slowing world economic outlook and the abundance of wheat that is being offered from Russia, Ukraine, E Europe, and the Baltics.

• The midday GFS weather forecast is like the overnight solution with several bouts of showers possible into the weekend, a dry forecast for the half of next week with showers increasing after next Wednesday. The Argentine forecast offers below normal rainfall with 14-day amounts ranging from 0.5-1.50”. Yet, the models are struggling with rain amounts/location as La Niña weakens in the equatorial Pacific. Argentine high temperatures will range from the 80’s to the mid 90’s, 3-5 degrees above seasonal averages.

• Brazil will see near normal to above normal rainfall with the heaviest totals for RGDS/Santa Caterina and Parana. No extreme heat is forecast, and the harvest should continue to normally advance for the next 2 weeks.

• $6.80 Chicago March corn and $15.50 March soybeans are historically expensive when looking backwards at 10 years of Chicago price data. And these values are occurring at a time of rising world lending rates and slowing GDP rates.

• World grain demand has turned soft, and China sees no reason to chase the soybean market higher with Brazil harvesting a record crop that is struggling to find storage. Russian wheat has fallen to a new yearly low with old crop priced below new crop for the first time since the Russian war started. Black Sea fob milling wheat is priced below fob corn. Sell rallies as we see a top is forming in soybeans/soymeal.

• HEADLINES: Chicago rallies to $15.50 resistance in March soybeans as soyoil futures break resistance; US weekly exports disappointing for grains.

• Chicago ag markets are mixed at midday with the grains lower, while soybeans and soy products are able to hold in the green. Once again, March soybeans rallied to test key resistance at $15.50 and March corn to $6.83 before faltering. The wheat market was never able to post much of a morning recovery with Russian fob offers staying depressed at $297-299/mt. Chicago values are chopping at midday with soyoil futures posting new daily highs. It is soyoil that must rally if the soybean market can bust to new highs. End users or importers are unwilling to chase US cash soymeal much above $500-520/mt,  approaching a record high.

• Grains are following soybeans , but it is the unknown regarding the Argentine soybean crop size has underpinned the complex. A lower close would suggest that much of the Argentine supply losses have been digested by the trade with talk of a 33-35 million mt soybean crop circulating for the past week. We doubt that the Argentine 2023 soybean crop will be less than 33 million mt amid recent 4-week rains and NDVI indexes that are improving during the pod filling stage. We estimate the Argentine soy crop between 34-39 million mt depending on weather.

• Chicago brokers report that funds were buyers of 4,600 contracts of soybeans, 3,800 contracts of soymeal and 3,600 contracts of soyoil. Fund managers sold 900 contracts of corn and 3,600 contracts of Chicago wheat. It does not require much selling for the wheat market to decline. We also note that March soyoil futures are hitting against the 50-day moving average. A close above $0.6225 March soyoil (50 day moving average) will produce fresh fund short covering.

• US weekly export inspections were disappointing in corn/wheat, and as expected in soybeans at 58.0 million bu. For their respective crop years to date, the US has exported just 540 million bu of corn (down 312 million or 37%), 1,520 million bu of soybeans (up 52 million or 3%), and 538 million bu of wheat (down 15 million or 3%). The US corn and wheat export pace continues to disappoint, and WASDE is likely to make additional cuts in 2022/23 US corn export estimates. US wheat exports are already resting at a 40 year low.

• Brazil will return on Wednesday with their selling shoes on following the Chicago rally. Brazil is expected to harvest nearly 2.0 million mt of soybeans daily this week of which 1.0 million will move across the scales and be hedged in Chicago. The Brazilian hedging could produce a correction in Chicago soybean and soymeal values. Brazil is offering 48% hi-pro meal at $40-42/mt below the US Gulf. Neither US soybeans nor soymeal are competitive in the world export arena. US soyoil will not be exported due to the massive demand coming from renewable diesel pricing for coming plant start-ups. The US is leaving as a world vegoil exporter for years due to renewable diesel subsidies/demand.

• The midday GFS weather forecast is wetter than the overnight or the EU model with several bouts of showers. The first chance is later this week across Northern and Central Argentina with rain totals of 0.1-0.7” with a more important chance starting Wednesday March 1 and continuing into the weekend. This system is forecast to produce 0.5-2.00” of rain on good coverage of Cordoba, Buenos Aries, and Southern Santa Fe. Traders will be watching to gauge if the EU model follows through with the GFS rain forecast.

• Brazil will see near normal to above normal rainfall with the heaviest totals for RGDS/Santa Caterina and Parana. No extreme heat is forecast, and the harvest should continue normally over the next 2 weeks. The key for S American crop production is whether Argentine crops can catch a needed rain.

• The market is aware of the 2023 Argentine soybean crop loss of 13-16 million mt, but this is balanced against the record large Brazilian harvest of 152-155 million mt and a Paraguay crop of 9.6-10.5 million mt. Brazil also has a storage problem with the sheer size of their harvest to pressure fob basis offers even lower. USDA on Thursday will likely release US 2023/24 end stock totals that are far larger than the current year based on yield/acre gains. This will cast a bear shadow on price once the Argentine losses are digested. Don’t chase rallies in soybeans, soymeal, or corn.

• HEADLINES: US soy/grain non-competitive in world trade; GFS midday weather forecast calls for better Argentine rain in week 2; Holidays ahead.

• Chicago ag markets are mixed at midday with soy products lower while corn, soybeans, and wheat post modest recoveries on limited volume.  The early Chicago soy/corn rally failed as S America stays aggressive in offering soybeans/soy products (and even corn) to world end users/importers. US traders understand that from here forward the US export profile for soybeans, meal, soyoil and wheat will be sharply curtailed.

• The US grain market is becoming “domestic” in its focus with fund managers rolling market length forward before first notice day on Tuesday, February 28. March futures are liquidating, but there are still 161,000 contracts of open contracts in March soybeans, 277,000 contracts in March corn, and 67,000 contracts in March Chicago wheat. There is a risk of additional long liquidation. We look for a lower Chicago close due to the newfound competition from S America and the Black Sea. Amid the slowing US export pace, $15.00 spot soybean, $490 spot soymeal, and $6.75 spot corn futures are historically high prices. As S American weather/crop sizes are largely known, the Chicago price risk is to the downside heading into the North American growing season.

• Chicago brokers report that funds were early day buyers but have turned sellers at midday. The managed money has bought 1,100 contracts of wheat and 900 contracts of soybeans, and 1,400 contracts of corn. In the products, funds have bought 1,400 contracts of soymeal while selling 1,900 contracts of soyoil. We would argue that soyoil has formed its seasonal low while soymeal has forged its seasonal high.

• The USDA reported that 120,800 mt of US corn was sold to an unknown buyer. Cash connected exporters point to either Mexico or Japan as being the buyer.

• The Ukraine is offering March corn at $0.10 under Chicago or a price of $6.65 basis the Chicago March price of $6.75 or a price of $261.50/mt. Brazil is back to offering March/April corn at $1.10 over compared to the US Gulf at $0.90 over and Argentina at $0.87 over. There are additional costs involved with Ukraine corn, but most of Africa and the Mideast will secure Ukraine corn. If the corridor is extended, we expect that this offer will be pulled forward to April and May. Our point is that US corn on a landed basis is not the cheapest origin for many SE Asia or N African importers.

• Brazilian 48% hi-pro soymeal offers keep declining with March offered at $10 over vs the US Gulf at $60 over, and April/May offered at a +$3.00 premium. It is forecast that by late February, Brazil will be offering hi-pro meal at a discount to Chicago. Brazilian April/May soybeans are offered at $1.05 under. Brazil is harvesting nearly 2 million mt of soybeans daily with as much as 1 million mt being sold across the scales. Look for an increase in hedge pressure heading into the weekend.

• And Brazil is offering its soyoil at an 11.5 cent discount to Chicago with US Gulf soyoil priced at 4 cents over. The fob-to-fob spread is 15.5 cents. No world importer is going secure US soyoil as renewable diesel is gobbling up domestically produced supply. US soyoil exports will be holding at zero for the remainder of 2023 and for years to come if all else remains unchanged. Due to massive renewable diesel demand, the US has taken itself out of the world soyoil export arena.

• The midday GFS weather forecast is unchanged from the overnight run. Cool/dry weather prevails across Argentine/S Brazilian crop areas through February 23 before the chance of widely scattered showers returns in the week 2 forecast. The cool/sunny weather aids crops where rain has fallen this week with the week 2 forecast calling for near to slightly above normal temperatures. Our point is that with a few good first half of March rains, worry over summer growing weather will be much reduced. A frost/freeze is unlikely across Argentine crop areas this weekend with lows in the upper 30’s to the lower 40’s.

• The holidays loom in the US (President’s Day) and S America (Carnival) which is harming today’s trading volume. As the S American harvest expands, pressure on Chicago prices will increase. Our bias is to the downside. Rumours also have China fighting growing incidence of ASF in its pig herd which could lead to future reduced demand. Few traders are willing to chase March soybeans above $15.30 or March soymeal above $500.00 amid the expanding S American harvest. It will require bullish Argentine weather forecasts next week to sustain the rally. This is no place to chase a rally.

• HEADLINES: Market chop continues; NOAA US spring forecast implies drought shrinkage.

• Chicago ag markets are mixed but uneventful at midday. Row crops and KC wheat have found relative support, while Chicago wheat extends its correction on a weaker Russian Rouble and an otherwise lack of fresh input. We note that March Chicago wheat neared overbought territory Tuesday evening, and so a correction was warranted. Key is whether that contract can hold initial chart-based support at $7.58.

• US export sales were decent for corn, meal and soybeans but disappointing for wheat. Corn sales in the week ending Feb 9 totalled 40 million bu, vs. 46 million the previous week but against an average of 29 million needed to meet the USDA’s forecast. It is important that corn sales stay at/above 40 million throughout the next 3-4 months to prevent a further trimming of USDA’s forecast. Soybean sales were 19 million bu, vs. 17 million the previous week and right at the level needed to justify the USDA’s currently projected 1,990 million bu. Wheat sales totalled only 8 million bu, vs. 5 million the previous week. Meal sales were a three-week high 271,000 mt.

• For their respective crop years to date, the US has sold 1,095 million bu of corn, down 40% from last year, 1,767 million bu of soybeans, unchanged, and 607 million bu of wheat, down 5% year-on-year. Annual corn exports are most in danger of being revised downward, though on paper US corn is competitive with S American origin through May/June.

• Otherwise, this month’s global climate updates lean favourable for potentially massive gains in supply in calendar year 2023. NOAA’s updated monthly climate forecast leans wet across the PNW, Northern Plains and principal Midwest. A rather normal Midwest climate is probable throughout the spring months, and the coverage of drought is expected to shrink further between now and planting. A drier pattern will be desired in mid/late March across the Delta region, but water availability will not be an issue outside of the US HRW Belt. Recall normal rainfall is likely to persist across Central Brazil’s safrinha corn belt over the next 90 days. The end of La Niña will be a big deal for the world of agriculture next marketing year.

• Spot WTI crude oil is up $0.30/barrel at $78.90. Like corn, energy markets have been bound to strict ranges since late 2022. The Dow at midday is down 220 points following a higher-than-expected rise in producer prices of 0.7% month-on-month, vs. the trade’s guess 0.4%. Higher for longer remains the mantra of benchmark US interest rates. Spot Paris milling wheat is down €1.25/MT . We do note that Paris corn is at parity with wheat, which is unusual for mid-February.

• The midday GFS weather forecast is unchanged from morning. Rain will exit northern Argentina in the next 24 hours and give way to a lasting period of dry but mild conditions. The GFS forecast features little/no rainfall in Argentina between Feb 17 and March 3. Brazilian rainfall intensifies this weekend and next week, but meaningful harvest and safrinha corn seeding delays will be regional in nature. Abundant moisture will be available for early corn growth in late Feb/early March.

• Major declines in Chicago values are typically avoided in February, but unlike a year ago in late winter/spring, the collapse in Brazilian soy basis, marketing year lows in Russian interior wheat prices and the lack of glaring climate threats outside of Argentina will act as heavy weights on rallies.

• HEADLINES: Brazilian soybean fob basis falls on supply to $1.00 under Gulf; US inflation rate stays high at 6.4%; funds sell soybeans/soymeal.

• Chicago corn, soybean and wheat futures are mixed at midday. An early rally effort failed amid the pressure from declining Brazilian soybean interior and export basis levels and this week’s slowing Chinese interest. Chicago March wheat futures came close to reaching our long-held target at $8.00/bu while soybeans were unable to breach resistance at $15.45-15.55. Soy products are slightly lower in sympathy with the losses in beans.

• Chicago has a heavy tone as March corn was unable to penetrate resistance at $6.90-7.00. A close below $6.80 March corn would turn price trends down with the next level of key support at $6.70. We note that Brazil is back offering its first season corn back for export in the first half of March, which is seasonally unusual with the soybean export program in full swing. Argentina is offering corn for export below the US from June onward. If the Argentine corn crop continues to drop due to the drought, new crop US corn exports will enjoy some benefit. Argentina and Brazil will be aggressive offering the world corn from June through November.

• Chicago brokers estimate that funds have bought 2,300 contracts of wheat and 2,000 contracts of corn, while selling 3,900 contracts of soybeans. In the products, funds have sold 2,500 contracts of soyoil and 1,900 contracts of soymeal. The fund activity has been on either side this morning. CFTC data is needed to determine the limited fund length.

• Brazilian soybean basis continues to implode based on the advancing record large soybean harvest. We understand that Mato Grosso’s soybean harvest surpassed 50% today with the total Brazilian harvest reaching 23%. An estimated 35 million mt of soybeans have been gathered with winter corn seeding advancing quickly. The supply pressure is growing amid a lack of storage with the premium for Brazilian soybeans falling below Chicago.

• March Paranagua soybeans are being offered at 4-8 cents under March which compares to the US Gulf at $1.10 over. Brazilian soybeans are now $1.00-1.10 cheaper that the US Gulf. And China is not showing keen interest in large new purchases. We expect that as the Brazilian harvest reaches beyond 50% that basis cuts will become more aggressive. Traders will have to decide whether the aggressive Brazilian export program replaces additional Argentine crop losses. We suspect that Brazil’s record soy harvest now displaces additional Argentine crop losses. The last time that Brazil’s soy basis level was negative was May 2021.

• The US inflation rate (CPI) declined to 6.4% in January. The rate was well above the 2.0% US Central Bank’s target. The US inflation will continue to ebb lower. We maintain that US interest rates will stay higher for longer with an outside chance the FED raises rates to 5.50-6.00% before hitting the pause button in September. A US recession could develop in Q4 or early 2024.

• The midday GFS weather forecast is like the overnight run which is not offering additional rain for Argentina/S Brazil over the next 10 days. The dry Argentine weather pattern lingers into February 23 with heat expected after Feb 21. Until then, near to below normal temperatures prevail which will aid crops. Another couple of good rains are needed before mid-March. The Brazilian forecast calls for near to below normal rainfall into the weekend and near normal totals next week.

• The market is shifting its price focus from Argentine dryness to Brazilian abundance/basis declines. Brazilian fob soybeans are $1.00/bu cheaper than the US Gulf which will dissuade China (and others) from new US purchases. Moreover, China has a flotilla of soybeans heading its way from the US and Brazil, and their need for additional large purchases is limited. Corn, soybean, and wheat futures are testing key resistance, this is no place to chase a rally.

• HEADLINES: Fund demand chases soymeal to new contract highs, soybeans follow; Additional 48 hours of Argentine rain, they cool/dry; US corn exports disappoint.

• Chicago corn, soybean and wheat futures are higher at midday. The market has been able to cast aside the better Argentine rain totals that occurred overnight. And the US dollar has weakened, and the Russian’s are positioning for corridor negotiations that will start later this month.  The flow of capital is on the buy side of the ledger and the bull has been able to endure the Argentine rainfall “gut punch” to start the week.

• Soymeal has been the upside price leader with March futures trading into resistance at $505-520/ton. Soyoil has been sold on oil share spreading. Cash traders argue that the soymeal rally is not sustainable, but a top will not occur until the inflow of new money slows. Corn open interest rose 23,429 contracts with wheat up 2,651 contracts and soybeans up 12,289 contracts on Friday. After a battering in 2022, fund managers are back to buying equities, energy, and raw material markets. The big unknown is when does the investment slow or stop as seasonal price highs will be formed.

• Chicago brokers estimate that funds have bought 3,500 contracts of wheat, 5,600 contracts of corn, and 4,000 contracts of soybeans. In the products, funds have booked 4,500 contracts of soyoil while selling 2,300 contracts of soymeal. Managed money has been Chicago buyers from the opening bell.

• US export inspections for the week ending February 9 were 20.1 million bu of corn, 17.35 million bu of wheat, and 57.1 million bu of soybeans. The wheat export pace was as expected, while corn was less, and soybeans were more.

• For their respective crop years to date, the US has shipped out 514 million bu of corn (down 276 million or 35%), 524 million bu of wheat (down 9 million or 1%), and 1,452 million bu of soybeans (up 22 million or 1.5%). US corn exports lag in a position where the US was expected to be a dominant seller as Brazil switches over to exporting exclusively soybeans as their new crop harvest advances.

• Russia indicated that sanctions placed on its ag exports must be lifted for the Black Sea Grain Pact to be renewed. Russia says that economic sanctions that block payments, logistics and insurance are barriers. Russia made such claims back in October before the November renewal with the US/EU/UN arguing that there are no sanctions on Russian ag exports as they reach record levels.

• World exporters see Russia as posturing/positioning for the coming corridor negotiations. Russia needs the hard currency provided by grain exports to finance its economy. Russian crude oil exports will be cut 500,000 barrels in March further cutting the flow of hard currency into its economy.

• The midday GFS weather forecast is like the overnight run which is not offering much additional rain for Argentina/S Brazil over the next 10 days. The GFS model continues to perform poorly in forecasting nearby rains with showers projected for another 36-48 hours with accumulations of 0.4-1.50” before dry weather returns by midday Wednesday. The dry Argentine weather pattern lingers into February 23 with heat expected after Feb 21. Until then, near to below normal temperatures prevail which, following this recent rain, will aid crops. Another couple of good rains are needed.

• The Brazilian forecast calls for near to below normal rainfall this week with near to above normal next week. Some slowing of harvest is possible, but next week’s rain will keep soil moisture at an elevated level for winter corn.

• Soybeans are all about soymeal and the inflow of new investment by money managers. We hope that the CFTC will resolve delayed CoT data and reporting this week to allow for an understanding of fund length. March Chicago wheat came close to our upside price target at $8.00 while March corn is back testing resistance at $6.85-6.95. We hold a cautiously bearish view of March soybeans above $15.50 and March meal above $500/ton. Don’t chase this rally would be the best advice we can offer at this time.

• HEADLINES: Wheat soars on Russian geopolitical worry, Argentine GFS forecast arid into March; China buys US soybeans.

• Chicago corn, soybean and wheat futures are sharply higher at midday on fund short covering, dry Argentine weather forecasts and new Russian aggression in its war against Ukraine. Managed money has been active buyers of wheat, corn, soybeans and soyoil. Unlike yesterday, funds have been limited buyers of soymeal and are basically flat. The morning trade volume has been sizeable with more than 152,000 contracts of March corn, 82,000 contracts of March wheat, and 112,000 contracts of March soybeans trading hands. Monday is the last day of the index fund roll which should add to today’s volume at the close.

• We calculate that funds are back to holding a record or near record long position in meal, while adding to their length in soybeans/corn. Funds are holding a sizeable net short Chicago wheat position of more than 55,000 contracts which is vulnerable if Russia ups its aggression in its war against Ukraine. Wheat charts turn more bullish with close above $7.80 March Chicago with values able to push above the 50-day moving average earlier this week.

• Chicago brokers estimate that funds have bought 7,400 contracts of wheat, 5,600 contracts of corn, and 5,100 contracts of soybeans. In the products, funds have booked 3,200 contracts of soyoil while buying 900 contracts of soymeal. Managed money has been Chicago buyers from the opening bell.

• China is rumoured to be back in the US Gulf soybean market taking 3-4 cargoes in the past 48 hours. The return of Chinese demand was a surprise, but the buying is likely for their soybean reserve. China prefers to source reserve soybeans from the US or Argentina. With the Argentine soy crop getting smaller, it may have pushed the Chinese Government to be buyers from the US.

• The CFTC will be unable to update its weekly CoT report today as data is lacking from key market participants. The CFTC hopes to release the report when data is available/updated, and go backwards to release the report starting with January 31 and following with February 7. Trader’s hope is that the CoT updates will be available next week.

• Russia is positioning itself for coming UN negotiations over the continuance of the Black Sea Grain Export Corridor Agreement which expires on March 19.  Russia continues to argue that Ukraine exported grain is not flowing to needy countries, but western nations like the EU. Moreover, the Russian military is stepping up their rocket attacks on Ukraine infrastructure including its power grid. The uncertainty of a corridor deal extension and Russian military push has short wheat holders worried about growing geopolitical tensions.

• The midday GFS weather forecast is drier for Argentina/S Brazil. The model has pulled the rain potential northward into N Argentina and S Brazil into early next week with totals in the heart of the growing area ranging from 0.1-0.7”. Such rain is far less than what is needed to replace lost soil moisture and the drought will worsen. In fact, the 10–15-day period maintains an arid trend into the closing days of February, a growing concern that Argentine crop yield/production.

However, we note that the GFS forecast has under-forecast rain with the past 3 storm systems, and we fear that the model is making the same mistake again. We look for rain of 0.5-2.00” in the period from Sunday through Wednesday. Heat returns around Feb 20 and then lasts into the Feb 26.

• Chicago is adding back weather/war risk premium into price heading into the weekend. Brazilian hedge pressure late session will pull soybean values off their highs as the harvest accelerates and pushes further south. Yet, Russian aggression against Ukraine is on the increase which worries anyone short wheat. We hold to a view that spot Chicago wheat peaks between $7.90-8.10, March soybeans above $15.40 and March corn above $6.85. Chicago is still stuck in a wide ranging trade. Don’t buy rallies or sell breaks with Argentine crop sizes still in decline.

• HEADLINES: Mixed session with meal rising on new fund buying/dry S Argentine weather; March corn sags to $6.70 support.

• Chicago corn, soybean and wheat futures were unable to hold the early rally and values are lower at midday. Soymeal is holding its overnight gains on meal/oil spreading, regardless that US soymeal export sales are not showing much improvement from Argentine soy crop losses. S American fob soymeal for March/April is offered $20-35/mt below the US Gulf which limits US export competition. Yet, we doubt that March soymeal can push above recent resistance at $495-505/ton, a range that is the historical resistance on the weekly/monthly price charts. Cash soymeal in Decatur is offered at +3-4/ton over Chicago on the rail with their being no meal registrations for delivery on first notice day. Today’s meal rally is about chart-based momentum with little fresh fundamental news available. Southern Argentine weather is drier than desired, but crop condition ratings later today are expected to be steady from last week. We look for a mixed Chicago close with the bears needing a a few good rains to take the pressure off the crop. Most in the industry are using a 2023 Argentine soybean crop of 37-40 million mt and a Brazilian soybean crop of 153-154 million mt. Early Northern Brazilian soybean yields are solid to record large.

• Chicago brokers estimate that funds have sold 1,500 contracts of wheat, and 2,000 contracts of corn (9,000 contracts of buying early in the session) while being flat in soybeans. In the products, funds have bought 5,400 contracts of soymeal while selling 6,100 contracts of soyoil. Managed money is being protective of a near record net long position in soymeal.

• Rumours abound that the ICE Exchange is experiencing IT problems that may prevent it from providing its position data to the CFTC. So far, the CFTC has not announced whether Friday’s Commitment of Traders report will be released. The industry hopes for a CoT report but worries that it could be delayed for another week.

• US Weekly Export Sales data held few surprises. For the week ending February 2 the US sold 4.8 million bu of wheat, 45.7 million bu of corn, and 16.9 million bu of soybeans. For their respective crop years to date, the US has sold 599 million bu of wheat (down 38 million or 6%), 1,055 million bu of corn (down 745 million or 41%), and 1,753 million bu of soybeans (up 36 million or 2%). The US corn sales pace continues to lag well behind USDA annual corn export forecast calling for a cut of 75-125 million bu.

• US soymeal sales stand at 7.21 thousand tons vs 7.72 last year or a decline of 500,000 tons or 6.5%. There is no evidence that US soymeal sales are likely to pick up steam vs Argentine crop losses with Brazil and Argentine offering meal through June at price levels that are $15-40/mt below the US Gulf.

• The midday GFS weather forecast was drier at midday with limited rains for the southern half of Argentina over the next 10 days. The model has pulled the rains northward into N Argentina and S Brazil early next week. The only good news for Argy crops is that the heat will abate with seasonal 80’s to lower 90’s returning for high temperatures.

• Near normal rainfall exists for Northern and Central Brazil for the next 6-8 days with near to above normal rains returning for the week 2 forecast. The rain favours already seeded winter corn, but it will hinder the soy harvest.

• The market focus nearby is on Argentina and the placement of rain from Sunday through Wednesday of next week. The GFS model has a history of being too dry since mid-January, we will see if the drier forecast is correct.

• US corn export demand is below expectations and no demand bump is being offered as Brazil focuses its exports on new crop soybeans. Soymeal is being supported by drier Argentine weather forecasts, while Northern Brazilian soy yields argue for a crop boost in coming WASDE reports. We are bullish of Chicago soyoil while being neutral to bearish of corn, soybeans, and wheat.

• HEADLINES: USDA raises US stocks, lowers Argentine production; Feb WASDE lacks market-changing data.

• The USDA’s February WASDE leans mixed, but like most years the report lacked statistical fireworks and S American weather stays priority number one into the middle part of March. Range bound trade will continue into at least the release of USDA Outlook Forum data in late February. Rising US end stocks cap rallies; falling Argentine production estimates lend support.

• US corn stocks were lifted 25 million bu amid lower projected ethanol production, which is USDA simply aligning with the pace of output to date, namely the steep year-on-year drop in production autumn and early winter. Otherwise, the US corn balance sheet was left untouched, though we fear another modest downward revision to exports in March or April. Like ethanol grind, it will be difficult for exports to catch up given commitments as of Feb 2 were down 42% from the previous year.

• US soybean stocks were raised 15 million bu to 225 million. 2022/23 crush was lowered a like amount based on pace analysis. NOPA/Official crush has fallen below year-ago levels in each of the last two months despite enlarged margins. Capacity will be expanded but monthly data must show a decently sized year-on-year increase beginning in spring. Exports were left unchanged.

• US wheat stocks were raised 1 Mmillion bu. Higher projected seed disappearance was offset by reduced milling demand.

• Argentine corn production was lowered another 5 million mt amid weak vegetation health/crop ratings and following a string of reduced forecasts from the major grain exchanges there. Argentine corn production is now pegged at 47 million mt, vs. initial estimates in late 2022 of 55 million. Argentine exports were lowered 3 million mt, feed use 2 million mt, and major exporter corn stocks/use was trimmed to 8.1%, vs. 8.3% in Jan and 8.6% in Dec. Large Brazilian/US production is needed in 2023.

• Argentina’s soy crop was lowered 4.5 million mt to 41 million, the lowest since 2017/18. Crush was lowered 1 million to 38 million mt, unchanged from the previous year, and Argentina is forecast to be a net importer of soybeans worth 3.8 million mt. Argentina last year was a net exporter of 2.1 million mt. Brazilian soy production was left untouched at 153 million mt. Combined S American soy production in 2023 will be up 26 million mt. Exports will be up 17 million mt, with crush up 2.4 million mt from last year.

• The market anxiously awaits the complete arrival of Brazil’s soy crop, but a steadily weakening Brazilian cash market is expected to lead Chicago futures lower during the spring months.

• World wheat stocks were raised 900,000 mt amid larger projected production in Russia and Australia. USDA is unwilling to adopt Rosstat’s 100+ million mt Russian output figure but raised production there 1 million mt amid larger spring wheat harvested area. Australian wheat production was increased 1.4 million mt to a record 38 million mt. Russian exports were lifted 500,000 mt to 43.5 million mt. Aussie exports were also raised 500,000 mt to a record 28 million mt. Competition for late season importer wheat demand will stay intact, which will act to challenge rallies at $7.60, spot Chicago, and $9.00, spot KC.

• Global ag futures have largely shrugged off new USDA data. We believe that late Feb/early Mar weather conditions in Argentina will be the primary driver of daily/weekly row crop price determination, while rising Black Sea tension and the end of round 2 of the Black Sea export corridor in mid-March lingers in the background for wheat markets worldwide.

• El Niño is expected by May/Jun. A record large Brazilian crop is likely given current soil moisture abundance there and as climate guidance keeps a pattern of above-normal precipitation in place across Central Brazil into March 13.