9 April 2024

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  • HEADLINES: Chicago to stay choppy ahead of April WASDE release on Thursday; NASS to end county yield and livestock reporting in 2024; Midday GFS weather forecast too wet Gulf Coast States, too dry Western Plains.
  • More Choppiness! Chicago futures tried to push lower and break to the downside this morning and failed. Chicago values are weaker at midday, but off the early lows that were set right after the morning reopening. The volume of trade is limited at midday as the bulls and bears fight for directional dominance. We have been warning that neither rallies nor breaks will be able to carry through. And we doubt that Thursday’s USDA WADSE and CONAB reports will alter the wide Brazilian corn and soybean crop size discussion that persists. The bears argue that that the Brazilian soybean crop is north of 156 million mt due to expanded harvested acres, while a host of private sector analysts project a crop south of 149 million mt. Brazilian soy production stretches 2,300 miles from north to south and trying to be exact with seeded/harvested acres is impossible. Both the bulls and the bears will have to wait until Brazilian soybean exports seasonally run out to decipher whether Brazil’s soybean crop is 155 million mt plus or 144 million or less. We look for a mixed Chicago grain close with the market now trading in a range for the past 5 weeks. A bounce on Wednesday is expected ahead of Thursday’s WASDE report.
  • USDA announced that a 124,000 mt of US soybeans were sold for the 2023/24 crop year under the daily sales reporting system.  The unknown buyer is said to be Mexico, or the EU. Brazilian soybeans fob offers have risen to 24 cents over for July and 34 cents over for August which narrows their advantage vs the US Gulf at 60 over for July and 67 cents from August. The Brazilian soybean price discount to the US Gulf is just 34 cents vs last year at $2.00 Brazil under. The Brazilian cash soybean market is seasonally gaining and suggesting that the 2024 Brazilian soybean crop is under 150 million mt.
  • Brazilian interior soyoil basis is firm on strong domestic demand due to the elevated soyoil into diesel blend rate of 14%. Moreover, improving export demand for Brazilian soyoil due to its discount to palmoil is pulling cash soyoil basis bids upwards. China and India are buyers of S American soyoil on price spreads that will underpin Chicago soyoil futures below $0.46. The US cash soyoil basis is leaking, but S American soyoil is strong on demand.
  • HRW farmers are increasingly becoming worried by soil moisture dryness across the W Plains as rain appears to be limited into late April with warming temperatures. High temperatures will push into the 70’s/80’s with a few lower 90’s. Kansas crop ratings rose slightly this past week, but producers expect NASS ratings to decline without a weather pattern change. US HRW wheat ratings are below the 5-year average with NASS sending enumerators to the fields for yield measurements in several weeks. The bulk of KS/NE is dry into April 22 with showers to dot the Texas Panhandle in the week 2 forecast. The sharp decline in ENSO/Equatorial Pacific Ocean temperatures maintain a dry Plains trend.
  • Chicago brokers estimate that managed money has sold 1,000 contracts of wheat and 2,100 contracts of corn, while being flat in soybeans. Funds have sold 1,700 contracts of soyoil and bought 2,600 contracts of soymeal.
  • Additional heavy rains will drop across the Southern Delta and the Gulf States where corn seeding windows are closing. Farmers will have to switch acres to soybeans or enrol ground in the Prevent Plant program and take the summer off. The parade of wet weather across the Gulf States and the SE US shows no sign of ending. However, the good news is that rains are forecast for the N Plains and the SC Canadian Prairies where dryness has been a feature looking backwards to December. Iowa farmers are hoping that the rain extends southward to boost soil moisture.
  • Chicago grain prices are locked into a range awaiting the start of Midwest seeding. Seasonally, the risk vs reward is to the upside with Thursday’s WASDE report unlikely to produce any fireworks. NASS cancelled the July Cattle Stocks report along with county estimates for crops and livestock, which is disappointing.

8 April 2024

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  • HEADLINES: Chicago firm at midday; Independent forecasters raise Brazilian soy estimate and lower corn; US weather pattern stagnates.
  • Ag markets at midday are mostly firm, with only soyoil weaker on crude’s modest correction as the world vegoil market’s rally pauses. Palm oil overnight fell 42 ringgits. Spot European rapeseed is down, with cash rapeseed oil in northern Europe flat at €950/mt. Rallies in May Chicago soyoil since mid-March have lost vigour at the contract’s 100-day moving average, but downside below $0.47 is low. It remains that the US soyoil must keep supplies in the domestic marketplace, which mandates premiums to other oils. We also note spot Malaysian palm oil doesn’t tend to score its seasonal peak until May.
  • US export inspections in the week ending April 4 included 56 million bu of corn, vs. 58 million the previous week and vs. an average needed to hit USDA’s annual target of 34 million bu/week. Recall weekly USDA/FGIS data doesn’t capture the full extent of US corn demand amid enlarged truck/rail movement into Mexico. Physical corn export loadings are expected to rise further in the next 30-45 days. There is evidence to support a 25-50 million bu hike in annual shipments as US origin is still competitive with S American into early summer.
  • US soy inspections were 18 million bu, vs. 20 million the previous week and unchanged from early April a year ago. We note the prior week’s shipments were revised upward 5 million bu. Wheat inspections totalled 18 million vs. 21 million the prior week. China loaded 56,400 mt of US wheat, mostly from the Gulf.
  • For their respective crop years to date, the US has inspected for export 1,076 million bu of corn, up 35% year on year, 564 million bu of wheat, down 11%, and 1,381 million bu of soybeans, down 19%. USDA is likely to shuffle its total US soy disappearance in its April WASDE by boosting crush but trimming exports 25 million bu.
  • Private forecasters updated Brazilian soy production, which figure has been raised to 145.5 million mt, vs. 143.9 previously, but still well below USDA’s 155. Total Brazilian corn production is estimated at 114 million mt, vs. 115 previously, as forecasters are less optimistic that safrinha area will be increased. CONAB’s acreage adjustment Thursday will be watched closely, but barring a major hike the global feed market is left with a Brazilian corn crop some 20-22 million mt below last year.
  • Otherwise not much in the way of market changing news. Weather forecasts grab increasingly more attention as the calendar inches closer to May. Contacts suggest HRW conditions are fine today, but soil moisture loss will be rapid over the next two weeks as temperatures rise, and meaningful precipitation stays south and east of major producing areas. Yet, there is no threat to spring row crop planting west of the Mississippi River. Timely seeding dates lie ahead.
  • The midday GFS weather forecast is consistent in allowing better rain chances into the Dakotas beyond April 15, but confidence over the placement and intensity of this event is low. Unwanted soaking showers persist across the Delta and far E Midwest. A rapid warming of temperatures occurs across the Southern and Central Plains this week.
  • Choppiness continues. It is difficult to be bearish seasonally in spring, but a new clear supply threat is needed to accelerate speculative short covering. The duration of heat/dryness in the Plains needs watching.

5 April 2024

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  • HEADLINES: Chicago steady/higher at midday; Argentine corn production estimate trimmed; Crude at newer seasonal high.
  • Midday Chicago values are mostly firm but off session highs. The addition of premium in wheat was warranted but few want to make long-term speculations on the pace of Russian wheat exports in Apr-June. Ukrainian corn fob premiums have eased slightly, and May corn once again struggled at its 50 and 100-day moving average as a planting window opens in the Plains/W Midwest mid-April onward. We anticipate a strong close, but key today/early next week is whether May corn can close above $4.38, May Chicago wheat above $5.68 and May soy above $11.85. On the week, corn and soy are down $0.08; May Chicago wheat is up $0.13/bu.
  • We do note that spot Russian fob wheat offers have risen to $213/mt for nearby shipment, which compares to mid-March’s low of $198. It is tough to be bearish of wheat at current prices until/unless regular rain develops across the Black Sea region, which remains unlikely into April 20, while the loss of 1.1 million acres of US SRW mandates near ideal Midwest weather to keep end stocks stable. Temperatures in IL, IN and OH will be monitored this weekend and current forecasts project overnight lows of 29-31 degrees. Sub-28-degree readings trigger wheat stress.
  • The Buenos Aires Grain Exchange this morning trimmed its Argentine corn production forecast to 52 million mt, vs. 54 previously and vs. USDA’s projected 56. The crop’s rating this week fell to just 17% good/excellent, vs. 22% a week ago. Damage from insect-carrying bacteria is cited, while heavy rain/thunderstorms in March were a negative in east/northeast production areas. BAGE’s and CONAB’s combined S American corn production forecast of 165 million mt sits 15 million below USDA’s and 8 million below last year. Most private Argentine crop estimates moved towards 52-54 million mt, vs. mid-season estimates upward of 58-60. Exporter corn production in calendar year 2024 is likely to drop 23-25 million mt amid reduced seedings in Brazil, the US and Ukraine.
  • BAGE left its Argentine soy production estimate unchanged at 52.5 million mt, vs. USDA’s 50.
  • Spot soyoil is up $0.40/lb amid further strength in crude and gasoline. Additionally, global vegoil/fat prices have moved higher in the last week, and unlike a year ago, soyoil’s premium to competing markets is small.
  • At the time of writing spot Paris milling wheat is up €2.75/mt and spot EU rapeseed is up a sizable €9.50/mt. Needed dryness develops in Western Europe beyond early next week, with corn there typically planted in April. Spotty showers are hinted at in E Ukraine/C Russia, but rapid net soil moisture loss persists across core Russian winter wheat areas through April 20.
  • The midday GFS weather forecast is a bit further east with soaking rainfall in the Southern US. 10-day accumulation of 5-8” will favour east LA and MS, but seeding delays will be widespread across the Delta region. The GFS forecast remains in agreement in calling for heavy showers across the E Midwest. The C Plains and southern Canada stay arid. Warmer temperatures develop beginning early next week.
  • US, exporter, and world balance sheet changes, and price discovery, moving forward will be almost exclusively a function of weather patterns. El Niño is set to collapse in the next 45-60 days, which we would expect to bring about changeable/unpredictable weather patterns. It is still too early to chase large daily moves, but there is less tolerance for adversity amid reduced US cropped area. Wheat has the best story today if the Black Sea climate fails to change by mid-May.

4 April 2024

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  • Two very recent news flashes:
  • Russian authorities are holding up two Egyptian ships loaded with wheat for export, in the latest sign that a domestic dispute between a key grain trader and the agriculture regulator is hindering deliveries abroad. The ships are carrying cargoes from Grainflower DMCC, which people familiar with the matter say is an export partner of Russian trader TD Rif. Rif has been targeted by the industry watchdog recently. Egypt’s Supply Minister Ali El-Mosilhy told Bloomberg News the ships were denied permission to sail because they did not have the right documents and are now being held up in Russian ports. They were meant to sail by the end of March, according to a January tender, and Egypt is waiting for a response from Russian embassy officials on the issue, El-Mosilhy said. The people linking Grainflower to Rif asked not to be identified as the topic is sensitive. Last month, Rif’s owner said the firm’s exports were being blocked and that it’s facing pressure to sell its assets for a “negligible price.” Meanwhile, the agriculture regulator has said it’s stopping some exports by Rif due to “systematic inconsistencies” in grain safety and quality. Egypt is a major importer and a key customer for Russian exporters. Spokespeople for Russia’s agriculture ministry and regulator did not immediately respond to email and phone requests for comment, nor did representatives for Rif and Grainflower. El-Mosilhy said that Egypt will decide what to do with the cargoes once it receives a response from Russia on the ships, which are named Wadi Almolouk and Wadi Safaga.
  • Polish farmers have for months been blockading the country’s border crossings, particularly with Ukraine, against the import of cheaper food products they say is harming their livelihoods. Poland plans to earmark PLN 2 billion (€467 million) on grain subsidies to help its farmers compete with a glut of Ukrainian produce and battle low market prices, a deputy agriculture minister has said. Polish farmers have for months been blockading the country’s border crossings, particularly with Ukraine, against the import of cheaper food products they say is harming their livelihoods. Stefan Krajewski told reporters on Thursday that the agriculture ministry was working on draft regulations intended to implement the demands of protesting farmers. “The drafts are ready, they must go through their own procedural path, but we want to introduce them as soon as possible,” he said. Among the planned regulations, according to Krajewski, is one regarding subsidies for the purchase of around 5 million mt of grain. “We want to allocate approximately PLN 2 billion to purchasing surplus grain from the market… arrangements with the Ministry of Finance on this matter are currently underway,” Krajewski said. He added that the subsidies would be paid out by the end of May.
  • HEADLINES: Chicago mixed/uneventful; US export demand cools in week ending March 28; GFS weather forecast warm/hot in US mid-April.
  • Midday Chicago values are mixed, with corn and wheat steady/higher and beans lower as oil/oil share corrects on weakness in crude. Spot WTI crude at midday is down $0.60/barrel at $84.85. Energy markets are overbought and last week’s counter-seasonal modest build in stocks has paused crude’s rally at $85. Crude is unlikely to reach a seasonal top until May, but a more two-sided energy marketplace is forecast nearby. The Dow is up 183 points.
  • US export demand in the week ending March 28 eased from prior weeks. Corn sales totalled 37 million bu, vs. 48 million the prior week. Corn export sales tend to drift lower beyond late March/early April as S American surpluses become imminent, though we note weekly sales into late August must now average only 17 million bu. Soybean export sales were 7 million, vs. 10 million the prior week. Wheat sales totalled 0.6 million bu vs. 12 million the prior week. USDA in its April WASDE is expected to leave its annual corn and wheat projections unchanged while trimming soy exports 10-20 million bu.
  • Longer term, there remains evidence available that USDA’s 2023/24 corn export forecast is understated.
  • Official Census corn exports in February were 211 million, 39 million (23%) above weekly FGIS inspections during the month. Cumulative official Sep-Feb exports sit at 948 million bu, 40% above last year, vs. USDA’s projected 26% increase. Incredible Mexican demand, which is not fully accounted for in weekly FGIS data, is cited with respect to this year’s sizable difference between USDA and Census numbers. US exports have committed 727 million bu to Mexico, up 195 million (36%) on last year. Recall even amid record Mexican corn imports, Mexican corn stocks will be just 2.5 million mt, which covers only 19 days of consumption. Mexico has become an even more critical market for US ag.
  • Census soy exports in February totalled 193 million bu, vs. 197 million a year ago and right at expectations. Official wheat exports in Feb were 76 million bu, a marketing year high and up 24 million year on year.
  • The midday GFS weather forecast maintains needed showers in the driest areas of Mato Grosso do Sul, while the monsoon continues to perform normally in Mato Grosso into April 15. Safrinha yield ideas are improved from mid-March, but it is lingering drought in Parana, which accounts for 15% of total safrinha production, and 2024’s decline in planted area that caps total Brazilian production at 115-117 million mt, vs. 137 last year. The Black Sea forecast is keeps rainfall in southern Russia light/spotty in nature. Temperatures in Ukraine/Russia stay abnormally warm.
  • The midday GFS weather forecast is wetter across the Delta/Southeast but consistent elsewhere. 10-day rainfall in LA, AR and MS is now forecast in a range of 5-8”, which triggers regional flooding and shifts more acres from corn to soy. A lengthy period of dryness blankets the Plains and Midwest into mid-month, and temperatures rise considerably beginning this weekend. The GFS forecast is likely overdone, but today features high temperatures in the 70s & low 80s April 13-15. Heat favours fieldwork and planting, but the extreme nature of the N American climate continues.
  • The theme stays rangebound nearby. Seasonal trends are positive into early summer and prices today are aligned with old crop supply and demand. Be prepared for weather-based volatility post-planting.

3 April 2024

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  • HEADLINES: Chicago firm at midday; US ethanol grind stays strong; US dollar struggles at chart resistance.
  • Midday Chicago values are again mixed, with wheat up 10-12 cents, corn following and soybeans trading both sides of unchanged. A reversal of macro sentiment, a weaker US dollar specifically, has provided a pillar of support to the raw material space as the US$ index has struggled at major chart-based resistance. There is talk of China cancelling previous purchases of Ukrainian corn, but details are lacking. We note Dalian futures in China have been firm this week, and so it will be difficult to slow Chinese corn imports and also have feed market price deflation. Spot WTI crude is up $0.70/barrel at $85.90. The Dow is up 30 points.
  • It is difficult to find a specific catalyst for this morning’s strength in wheat, but it is difficult to be bearish seasonally and as the Russian fob market firms. Recall US SRW seedings in 2024 are down 1.1 million acres (15%) year on year, while spring seedings are near unchanged. Only the HRW balance sheet will feature stocks building in 2024, and there will be a need for regular rain in TX, OK and KS by late April. The HRW crop is rated highly today, but early April conditions correlate only loosely with final yields.
  • We would also note that the spot Indian milling wheat market is unmoved at $8.00/bu (equivalent) despite harvest having begun. The Indian wheat market tends to score its annual low in April, and the lack of any break in the next 30 days would be noteworthy. USDA’s attaché this week pegged 2024 Indian wheat production at 112.5 million mt, up 1.9 million on last year and record high. Yet, due to carryover stocks being decimated in the last two years, the Indian wheat balance stays historically tight in crop year 2024/25.
  • US ethanol production in the week ending March 29 totalled 315 million gallons, up 5.6 million on the prior week, 7% above last year and an all-time record for the last week of March. We estimate corn used for the production of ethanol in March at 461 million bu, up 6% year on year and the second largest for the month on record. USDA’s ethanol grind forecast is 25-50 million bu too low, and ethanol export demand has been particularly robust as the Brazilian market’s premium to US Gulf origin since early Feb has ranged from $0.10-0.20/gallon.
  • EU/Black and S American weather forecasts at midday are consistent with morning output. Heavy rainfall continues into mid-month across Mato Grosso, Goias and fringe safrinha producing areas further north. Rainfall expands into the driest areas of Mato Grosso do Sul and Parana, but not until April 11-12. A stagnant pattern of dryness persists in E Europe, Ukraine, and Russia into April 18. Russian dryness grabs much more attention if it persists into late April. Abnormally warm temperatures accelerate evaporation in the next two weeks.
  • The midday GFS weather forecast continues to trend drier across the US Plains, with rainfall now completely eliminated from TX, OK, KS and CO. Whether the EU model follows is key, as short-term moisture deficits begin to mount across the US HRW Belt. Otherwise, heavy precipitation into mid-April favours the W Midwest and Delta/Southeast, where soaking totals of 3-5” are forecast. A warmer temperature profile beginning next week sets the stage for Midwest fieldwork/planting opportunities in the second half of April.
  • Choppiness continues. Both the bulls and bears need meaningful perceived balance sheet changes for leverage, and we reiterate that it is Mother Nature that takes control May 1 onward. Our work suggests medium-term risks lean toward the upside amid funds’ sizable, short ag position and as weather extremes have been present for months. Stay cautious in chasing daily moves.

2 April 2024

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  • HEADLINES: Corn falls on Midwest planting weather forecast; Oil share spread out to 42%; India government wants first shot at wheat harvest.
  • Midday Chicago values are mixed with the grains lower while the soy complex bounces. Selling in corn futures developed on news that China may be slowing its corn import pace, but more importantly on the open planting window that is offered across the Midwest after April 12. Warmer Central US temperatures and sunny skies are viewed as bearish as US corn seed gets planted on a timely basis. And history shows that when corn is planted early, US farmers tend to seed more corn and less soybeans. Hence the modest strength in the soy complex. Wheat is just a follower with May Chicago wheat futures unable to rise above its 50-day moving average. As corn sagged, so did wheat.
  • It seems Chicago/Paris futures are not ready to sustain a trend. Avoid selling sharp down days (today) or chasing rallies like last Thursday. Soyoil has a bull story on rising tropical oil values and the coming increase in US renewable diesel capacity. Also, the California Air Quality Board will be voting on feedstock origin certification in BOD meetings scheduled on April 11 and April 25-26. The certification of feedstock origins should help limit the import of tropical oils that are passed along as used cooking oil. A close above $0.498 May soyoil is needed to confirm a more bullish trend on the daily charts.
  • Managed money has been on both sides of the Chicago grain markets this morning. Futures brokers estimate that fund managers have sold 5,400 contracts of corn and 3,200 contracts of wheat, and 3,700 contracts of soymeal. Fund managers have purchased 2,900 contracts of soybeans and 3,100 contracts of soyoil. We calculate that the oil share spread has pushed out to a new high at 42.4%.
  • Central US weather is gaining the attention of traders. An open mid-April window for corn/soybean seeding is pressuring summer row crop futures, while Paris wheat futures are finding support on the excessively wet conditions across Western Europe and the net drying of soils across the Black Sea. And the US Plains need rain. There is a chance of Plains rain from April 10-12. Thereafter, rain chances decline as a broad ridge/trough form across the US. World weather patterns lean supportive of wheat and slightly bearish of summer row crops. In particular, close attention needs to be paid to Black Sea weather (warming temperatures and limited rain into April 20) for wheat.
  • India is asking traders to avoid securing new crop wheat so that state reserves can be replenished. India’s state wheat stocks are at a 7-year low. The last time that the Indian government made such a request of traders was back in 2007 when world wheat values neared record highs. India is forecast to harvest a 2024 wheat crop of 112 million mt, right at estimated domestic consumption implying that 2024/25 Indian wheat carry in stocks will be no larger than 9-10 million mt. India is on the cusp of becoming a sizeable wheat importer in coming years as its population and standard of living improves.
  • The midday weather forecast is drier across the W Midwest and the Plains than was offered overnight and on Monday. The models have shifted the heavier rains further east. Note that the Northern Plains hold in an arid weather trend as does much of the Canadian Prairies. Any weather delayed seeding will be across the NE US and the Gulf States where 2-4.00” of rain are forecast to fall. Warmth spreads across the entire Central US in the week 2 forecast with moderate ridge of high pressure to build across the South-Central US. This ridge is progressive and does not pose a drought risk.
  • Neither the bulls nor bears are pleased with choppy Chicago price action following last week’s USDA March Stocks/Seeding Report. Sustained price trends are lacking with soyoil being the only commodity that has upside based on rising world tropical oil demand. A close above $0.498 May soyoil would confirm the next bull leg. April Chicago grain prices are often changeable like spring weather. May corn futures have support below $4.25 and May wheat below $5.40, and May soybeans below $11.70.

1 April 2024

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  • HEADLINES: Chicago starts new month/quarter with fund selling; Saudi purchases 795,000 mt of world wheat; China ships out US wheat.
  • Midday Chicago values are red in a correction of Thursday’s post NASS crop report rally. Central US weather forecasts are favourable, and the NASS crop progress report is expected to show improved winter wheat conditions relative to prior years later this afternoon. And the bears argue that NASS will find acres by the late June Final Seeding report with normal spring weather. The combined impact has been a correction of Thursday’s Chicago rally with corn/wheat futures sliding back to the middle of their recent trading ranges.
  • Soyoil futures are higher on active oil share spreading for seasonal considerations, the onboarding of the Phillips 66 renewable diesel plant in Rodeo California, and 2 California Air Quality BOD meetings with proposals on the table for feedstock supply origination certification.
  • We expect a lower Chicago close today, doubting that either breaks or rallies can be sustained. World farmers are becoming more bullish and holding back on cash sales in the Black Sea, S America, and the US. Adverse weather in the EU (too wet), Black Sea (too dry) with the Brazilian soybean harvest surpassing 80% this week prevents breaks from being sustained. Otherwise, an adequate supply of old crop cash grain/soy caps rallies and the leaves Chicago in a choppy overall trend nearby.
  • The new quarter started with fund selling. Chicago brokers estimate that funds have sold 6,900 contracts of corn, 2,200 contracts of wheat, and 4,700 contracts of soybeans. In the products managed money has sold 3,600 contracts of soymeal and bought 1,500 contracts of soyoil.
  • For the week ending March 28 the US exported 56.4 million bu of corn, 15.2 million bu of soybeans, and 18.3 million bu of wheat. Mexico and China were the big importers of US soybeans, while China shipped 200,000 mt of US wheat). We estimate that the US has just 600,000 mt of US wheat that is open to ship of a sales total of 2.087 million mt. China has shipped out 1.5 million mt of US wheat in total in the crop year to date.
  • For their respective crop years, the US has exported 1,018 million bu of corn (up 256 million or 33%), 1,359 million bu of soybeans (down 312 million or 19%), and 543 million bu of wheat (down 75 million or 12%). We look for WASDE to raise their 2023/24 soybean crush estimate upwards and adjust exports down by a like amount on April 11, allowing US soybean end stocks to hold at 315 million bu. WASDE should also raise its corn export forecast by 25-50 million bu based on record large Mexican import demand. Otherwise, any change in the April WASDE report will all be focused on S American crop sizes.
  • Saudi Arabia is said to have purchased 800,000 mt of wheat for delivery into July at CIF prices that range from $252-273/mt according to export sources. The Saudi wheat was sold as optional origin and today would be supplied by the Black Sea on price. The Saudi purchase news has supported Chicago wheat values.
  • Three storm systems take aim on the Central and Eastern Midwest over the next 10 days producing 0.75-4.00” of combined rainfall. The heaviest rain will be focused on IL, PA and TN. Spring seeding efforts will be initially delayed with the system for April 10-12 being further east than the overnight run. Snows are forecast for WI and portions of the upper Lake States mid-week. Warming temperatures follow with highs in the 50’s/60’s and lower 70’s.
  • Chicago breaks will be well supported by short covering ahead of the new Northern Hemisphere growing season since the March Stocks/Seeding Report did not hold a bearish surprise. US winter wheat condition ratings will be well above recent years this afternoon. However, spring crops in W Europe are soaked and farmers are becoming worried with corn planting to begin in earnest next week. Ongoing dryness and budding heat draw Black Sea soil moisture downwards into mid-April. This is a crop area that will need close attention into May.

28 March 2024

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  • HEADLINES: NASS seeding report rallies corn/wheat; Soybeans lag on expected jump in US seedings; Total US 2024 intended seeded acres falls 6.6 million.
  • The USDA March Stocks finals held few surprises compared to estimates. NASS forecast March 1 US corn stocks at 8,347 million bu, 7 million less than some forecast, but 85 million bu less than the average trade estimate. We calculate a Q2 corn feed/residual use rate of 1,559 million bu, 129 million bu more than last year. Total US Q2 use was 3,830 million bu, the second largest on record. The prior quarterly use rate was set back in December-February of 2021/22 at 3,880 million bu. US March 1 corn stocks at 8,347 million bu are 951 million bu greater than last year, but the strong usage trajectory should drop 2023/24 corn stocks below 2,000 million bu by the final count.
  • US March 1 soybean stocks were 1,845 million bu with the quarterly residual being a negative 24 million bu. This compares to -23 million bu for the same quarter last year. US March 1 soybean stocks are up 158 million bu from last year or 4.3 million mt. This stocks gain highlights the importance of the final size of the 2024 Brazilian and Argentine soy crops. USDA is unlikely to raise its old crop end stocks forecast at 315 million bu in April.
  • The NASS March Seeding report was bullish of corn and neutral for wheat and soybeans relative to expectations. US farmers responded to low price and profit forecasts and cut US corn seeding back to 90 million acres. Spread unwinding of long soybeans vs grains is pressuring the soybean market at midday, but the grains are sharply higher on fund short covering.
  • Total US farmed acres fell to 313.3 million acres, down 6.6 million acres from last year. Iowa farmers are forecast to plant 24.1 million acres, Illinois farmers 22.7 million (each equal with last year), Kansas 23.7 million acres (down 5%), Texas at 20.9 million acres (down 5.4%) with North Dakota planting 23.5 million acres (down 2.2%). Total US farmed acres rarely rise more than 500,000 acres from intentions and the final June forecast. We have confidence that US producers reported the cropped acres they intend to farm in 2024.
  • NASS forecast total US corn acres at 90.0 million acres, down 4.6 million from last year. Assuming a record 181 bushels/acre yield, the total US corn crop would be just over 15 billion bu. This would be down 180 million bu from the Outlook Forum estimate of February. US soybean seedings at 86.5 million bu were at trade expectations with a yield of 52 bushels/acre producing a 2024 US soy crop of 4,453 million bu. This is down 50 million bu from the Outlook Forum which drops 2024/25 US soy end stocks to 385 million bu. Such stocks do not argue for November to fall too far below $11.75 this spring.
  • March US Wheat stocks and seedings data leans mixed, fundamentally, but it is weather that matters most beginning in April. March 1 wheat stocks were 1.087 billion bu, 30 million above the market’s expectation and which implies Dec-Feb feed/residual disappearance at -48 million bu, vs. -11 Mil a year ago.
  • However, cumulative Jun-Feb feed/residual is calculated at 139 million bu, vs. 95 million. USDA will lower their annual wheat feed number by only 5-10 million bu in the April WASDE. End stocks will be lifted a similar amount.
  • All wheat seedings are pegged at 47.5 million acres, 500,000 above expectations and down 2.1 million year on year. Assuming normal abandonment and trend yield, new crop US wheat stocks reach 720-750 million bu. Yet, SRW seedings were trimmed 600,000. HRW seedings were increased a modest 300,000. HRS seedings are projected at 10.7 million acres, up only 200,000 year on year. It is the US durum balance sheet that loosens significantly as 2024 acres expanded by 350,000 (22%) from last year.
  • The long awaited March stocks and seedings report has come and gone, and bearish surprises were lacking. Producers are unwilling to expand total acres amid deflated prices and as CRP acres increase. Old and new crop corn end stocks are in retreat, and it remains that favourable N Hemisphere/trend yields are needed to be bearish of ag markets at current prices. Any new bearish trend has been pushed back to Jul/August. Acute focus on weather patterns develops in the next 90-120 days.

27 March 2024

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  • HEADLINES: Chicago grain trade turns slower and lower ahead of USDA reports.
  • Chicago grain markets were weaker overnight and were under early pressure at the morning open but have moved off the lows after an early burst of fund selling. Market news has been limited at midweek, and trading has largely developed around the upcoming USDA reports. Wheat has led the morning recovery and traded in the green for much of the morning, soybeans have clawed back some of the overnight losses, and corn has, at times, tried to work back to unchanged.
  • May corn has been under technical pressure this week after stalling against the 50-day moving average last week, which weighed on May Chicago wheat in the first half of the week. May soybeans found support on a test of the 50-day moving average this morning.
  • Chicago brokers estimate that funds have been light sellers of 2,000-3,000 contracts in the corn market, sellers of 1,000-2,000 contracts in soybeans, and have bought 2,000-3,000 contracts of wheat. In the soy product markets, funds have sold 2,000-3,000 in soybean oil and bought 1,000-2,000 contracts of soybean meal.
  • The EIA’s weekly Petroleum Status report showed that ethanol production last week rose 1% from the previous week and reached a 3-week high of 1,054 thousand barrels/day. This was the most in 3 weeks and marked the eighth consecutive week that ethanol production was above a year ago. Cumulative ethanol production from the start of the corn crop marketing year is up 4.4% from last year, and cumulative production for the 2024 calendar year is up 3%.
  • Other market news has been limited this morning, with the trade awaiting key USDA reports on Thursday. The average trade estimate calls for 2024/25 corn acres at 92 million acres (94.6 last year), 86.3 million soybean acres (83.6 last year), and 47.7 million wheat acres (46.9 last year). Combined corn, soybean, wheat, and cotton acres are projected to fall by 734,000 acres from 2023.
  • The midday GFS weather forecast update shows rains falling across the upper Delta and Eastern Corn Belt states over the next 10 days, with snow projected across the Western Plains and upper Midwest regions. Below normal temperatures continue across the northern Plains and Midwest this week, with a widespread warming trend to get underway at the end of next week.
  • Limited rains are projected for the driest parts of southern Brazil in the next five days, where they are most needed for the recently planted Safrinha corn crop. The forecast adds better rains in the 6-10 outlook but leaves several dry pockets in South Brazil and west Paraguay.
  • Summer row crop prices have corrected in technical trade and limited demand ahead of the USDA’s Prospective Planting and March Grain Stocks report. Funds still hold sizeable net short positions in all Chicago markets, with the trade prepared for bearish stocks numbers. In tight stocks years, the stocks figure drives the Chicago price response. In ample stocks years, it is the planting intentions figures. Nearly 1 million acres were added to CRP in the last year, and the key question to be answered on Thursday is the extent of the decline in total crop acres.

26 March 2024

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  • HEADLINES: Chicago sags as corn, wheat bump against chart resistance ahead of USDA reports.
  • World grain futures are mostly lower at midday as spot corn, and KC and European wheat bump against chart-based resistance, which is unlikely to be breached until NASS stocks and seedings data is published. Wheat markets have been the bearish leader on Tuesday as nearby Russian fob prices stabilise at $205-206/mt, up $8/mt from mid-March’s low but still somewhat aggressive when measured against comparable EU, US and Australian origin. We estimate existing Russian wheat stocks today at 34-35 million mt, and key is whether tension between RIF and Moscow pulls weekly Russian exports below 1 million mt. We note RIF was not awarded any of Russia’s remaining 2.4 million mt worth of Apr-Jun export quotas. Overall, the spark for large new positioning is absent today. The next 48 hours will be defined by the lack of a clear trend.
  • China’s latest auction of reserve soybean stocks featured purchases in the domestic market of just 82,000 tons, half the auction’s total, which follows a retreat in spot crush margins amid weakness in Dalian meal and oil values this week. China in late spring isn’t yet willing to chase rallies, with soy cargoes in S Brazil quoted $0.20-0.30 under spot Chicago, which compares to briefly positive premiums in early March.
  • Otherwise, there is just not much for the trade to sink its teeth into two days before USDA publishes benchmark US planted area estimates and fine tunes corn, wheat and soy disappearance via March 1 stocks data. Residual disappearance is always uncertain, and key on Thursday is the sum of US acreage intentions. Previous years of deflated prices have triggered corrections in total area. Combined corn, wheat, soy, and cotton acres at/above 240 million, like in 2022 and 2023, is unlikely.
  • The European/Black Sea climate pattern attracts more attention beyond early April. It is far too early to adjust yield from longer term trends, but over the next two weeks a rather stark split between heavy/excessive rainfall in W Europe and lingering warmth/dryness in Ukraine and Southern Russia remains projected. 10-day precipitation accumulation in France and the UK is projected in a range of 2-5”. 11–15-day guidance stays wet in France, and it has been too much water that has been the issue in W Europe since autumn. A correction in EU wheat production worth 5-7 million mt is anticipated. Meanwhile, little/no precipitation is advertised in key areas of Romania, Ukraine and Russia.
  • We would maintain that large Northern Hemisphere crops are needed to sustain bearish trends into late 2024, and weather in late winter/early spring has been far from normal in a host of areas.
  • Spot WTI crude has extended Monday’s recovery as EIA data Wednesday is expected to show a third consecutive week of lower stocks. Ethanol swap prices, RINS and California carbon credits have followed US/world crude prices higher since early March.
  • The midday GFS weather forecast is drier in Argentina and a bit drier in Mato Grosso do Sul in centre-west Brazil but is otherwise consistent with morning output. The coming lengthy period of warmth/dryness in Argentina boosts the speed of harvest into early April. The Brazilian monsoon continues normally in Mato Grosso and Goias, 60% of safrinha corn area, into April 10, but net soil moisture loss persists in Mato Grosso do Sul and Parana, which account for a third of safrinha production. It is not a bullish S American forecast, but assuming CONAB’s safrinha corn acreage numbers, continued dryness in MGDS/Parana keep total 2024 Brazilian production at/below 115 million mt, vs. 137 last year.
  • There is no reason for either the bulls or bears to gain meaningful leverage until stocks/seedings data has passed and more is known about N Hemisphere soil moisture on June 1.