• HEADLINES: WASDE disappoints and says low trust in NASS stocks data with no change in US corn/soybean end stocks; US wheat stocks raised on feed cut; US cash markets stay strong.

• The USDA April Crop Report held little market fanfare with WASDE holding US 2022/23 corn/soybean stocks steady with March, while raising US wheat end stocks by 30 million to 598 million bu. WASDE was willing to lower the US wheat feeding rate by 25 million bu and increase imports by 5 million, but it did not have the same confidence in NASS stocks data to raise the 2022/23 corn feed/residual use or the soybean residual per the March stocks report. WASDE has decided to wait until the last quarter of the crop year to make domestic demand adjustments based on crop size and feeding rates. It is possible that recent year adjustments in soybean residuals and corn feed/residual use have made them “gun-shy”. However, tightness of the cash market is noteworthy.

• WASDE left US corn 2022/23 end stocks at 1,342 million bu, the same as March with a stocks/use ratio of 9.7%. The March Stocks data argued that WASDE should raise its corn feed/residual use rate by 125-175 million bu, but it decided to wait.

• Recent China purchases of US corn argue for a bump in 2022/23 corn exports of 25-50 million bu. Here too, WASDE decided to wait for additional sales data. WASDE did lower their 2023 Argentine corn crop estimate by 3 million to 37 million mt and hold the Brazilian corn crop estimate unchanged at 125 million mt.  World 2022/23 corn end stocks fell by 1.1 million to 295.35 million mt, down 11.6 million from 2021/22.

• US 2022/23 soybean end stocks held at 210 million bu, unchanged from March with the Argentine soybean crop falling 5 million to 27 million mt, while the Brazilian soybean crop was raised 1.0 million to a record large 154.0 million mt. World soybean crush rates were lowered 5.0 million mt with world trade holding steady. WASDE cut the Argentine soybean crush rate by 2.25 million to 32.0 million mt while raising Brazil’s by 500,000 mt to a record large 53.25 million mt.

• US soybean end stocks held at a historically tight 210 million bu with WASDE making no change in either their crush or export forecasts. The surprise was that WASDE kept last month’s residual use at 19 million bu deciding to ignore the NASS March Stocks estimate that showed that the 2022 crop was overstated by 60-70 million bu. Huge premiums for Central US soybeans will maintain the fear that the 2022 US soybean crop was overstated. We would argue that WASDE should have adjusted its soybean residual upwards. Also, WASDE kept China’s soybean imports at 96 million mt when vessel counts, and pace analysis argues for a total that is 8-12 million mt larger. We strongly doubt that a soy break can be sustained.

• USDA wheat data leans slightly bearish as combined Russian and Ukrainian exports were hiked 2.5 million mt. Russian exports were lifted 1.5 to a new record 45 million mt which allowed for EU stocks to be raised a full 1 million mt despite larger projected domestic use. US wheat feed/residual use was lowered 25 million bu following bearish Dec-Feb disappearance. US imports were lifted 5 million bu, and US all-wheat end stocks are pegged at 598 xm, vs. 568 million in March. Total world wheat end stocks were lowered 2 million mt amid enlarged feed disappearance.

• The cut to US wheat feed demand was centered entirely on the HRS and white wheat balance sheets. 2022/23 domestic use for those classes was lowered a combined 51 million bu. HRS stocks were boosted 31 million bu; white wheat stocks were increased 21 million. HRW stocks were lowered 9 million to 262. SRW stocks were lowered 14 million to 88 million. HRW stocks will be the lowest since 2013/14 and another year of contraction is guaranteed if soaking rain fails to develop across the Southern Plains in the next few weeks. SRW stocks in 2022/23 will be the second lowest since 2007/08.

• The April WASDE is surprisingly dull. We maintain that total 2022/23 US corn use must be raised by 100-150 million bu, with USDA’s US soybean residual too low by 30-40 million bu. This is being reflected in cash markets, and we note that some major markets this week are bidding $7.00 for corn delivered this week. Underlying themes are unchanged, namely extreme old crop supply tightness and the need for ideal Central US weather. Breaks provide opportunities for buyers. The Great Plains Drought will worsen which underpins Dec corn below $5.50. It is too early in the crop year to be bearish. It is surprising that with US March 1 corn/soybean and wheat stocks 680 million bu less, that WASDE did not adjust US domestic demand upwards. We guess that there must be a trust issue with NASS Quarterly Stocks estimates.

• HEADLINES: Chicago values pressured on favourable Midwest weather forecast; Brazilian soybean premiums weigh; Egypt’s GASC secures 600,000 mt of Russian wheat.

• Favourable warm/dry weather for Central US summer row crop planting has produced pressure on Chicago values as traders expect that farmers will be sitting tall in their tractors planting corn on a timely basis next week.

• The open weather and the steep discount of Brazilian fob soybean offers to the US Gulf has continued the correction which started on Monday. The markets are complex, 1) Historically tight old crop stocks with a higher than normal percentage of those stocks on farm, 2) Cheap Brazilian basis offers as their export and storage system strains as the soybean harvest reaches past 80%, 3) A dire drought in the Plains and high odds that 2-3 million acres of Northern Plains and Upper Midwest acres will be enrolled in the Prevent Plant program.

• And it is also difficult to understand why only 61% of the US renewable diesel plants are operating. If plant operations were 90%+ like they are in crude oil, North American veg oil and animal fat supplies would be quickly exhausted. The point is that for today, the bulls and bears both have talking points and first notice day against May futures is still several weeks off. The Chicago choppiness could persist next week.

• Chicago brokers estimate that funds are flat in wheat, while selling 6,600 contracts of corn and 5,500 contracts of soybeans. In the soy products, funds have sold 4,800 contracts of soyoil and bought 1,200 contracts of soymeal. Commercials are doubtful that Argentine farmers will be active cash sellers following their Dollar Peso program at 300 Pesos vs the US$ rate.

• For the week ending March 30, the US sold 7.1 million bu of wheat, 49.1 million bu of corn, and 5.7 million bu of soybeans. For their respective crop years to date, the US has sold 667 million bu of US wheat (down 37 million or 5%), 1,465 million bu of corn (down 678 million or 32%), and 1,834 million bu of soybeans (down 226 million or 11%). The US soybean sales pace is expected to slow dramatically, while US soymeal sales stay strong due to the dire Argentine drought. US cash crush margins are well above Chicago, and we forecast future gains as Brazil’s crush capacity is near its maximum which shifts demand back to the US.

• Egypt’s GASC secured 600,000 mt of Russian wheat at tender for May delivery. Russian wheat was the cheapest at the tender with values holding above $270/mt basis FOB. The Russian Government hinted several weeks ago that it did not want to see Russian fob wheat prices falling below their benchmark at $270-257/mt. Today Viterra was the low-cost Russian wheat seller at $272.00. Egypt is now harvesting their own new crop, but due to a lack of private buyers in the Egyptian market, GASC will continue to be a large importer.

• The midday weather forecast is bone dry for the Plains over the next 9 days with showers forecast to break out across the drought-stricken Plains on April 16. The US and EU models have been fighting over the correctness placing showers across the Central Plains, but it is encouraging to see the GFS/US models pull it forward into the 10-day run.  The EU model remains arid for the Plains and is our model of choice, but the GFS forecast is not yet backing down in its shower forecast.

• Next week’s warmth allows the Central and Southern Midwest corn seeding to start on a timely basis. Widespread snowmelt in the N Plains and Upper Midwest will produce regional flooding. The 11–15-day forecast added to the rain chances across the C Plains with 1-2.50” totals.

• Improved Midwest and Plains weather forecasts are applying pressure to Chicago today. We doubts that December corn will slide below $5.50 or November soybeans too far below $13.00 with the growing season right ahead. World wheat values have stabilised which argues that May Chicago wheat has support below $6.50. This is no place to turn bearish.

• HEADLINES: Correction is running its course; Weekly export sales due Thursday; Chicago closed on Friday; KC/Chicago wheat spread.

• Chicago grain futures are mixed at midday with May corn/soybean futures reflecting independent strength on firming cash market bids. US cash markets stay strong and could strengthen further as US farmers head to the field for spring planting. End users were able to secure a few days of needs on Monday when Central Illinois cash corn bids reached near $7.00, but with natural gas prices low and the US driving season dead ahead, ethanol producers are looking to extend their forward coverage well into summer.

• The May/July corn spread pushed out to $0.27/bu with May/July soybeans trading out to a $0.36/bu premium. Both spreads are at fresh highs with cash soyoil basis starting to firm as biodiesel and renewable diesel producers start to seek additional feedstocks.

• The USDA announced the sale of 276,000 mt of US old crop soybeans and 125,000 mt of US corn sold to unknown destinations. The US soybean sale is likely to China as it swaps out Argentine for US soybeans due to the poor quality of the Argentine new crop soy crop. China’s soybean reserve buyer, Sinograin, prefers US/Argentine soybeans to Brazil due to their storability.

• Chicago brokers estimate that funds have sold 3,000 contracts of wheat, 2,600 contracts of corn, while being flat in soybeans. Fund product sales are estimated at 1,200 contracts of soymeal and 2,800 contracts of soyoil. May soymeal appears to have uncovered support against $450/ton.

• The spot KC/Chicago wheat spread has posted a record high premium of $1.82/bu yesterday. Remember that it was back in late 2019 that KC HRW traded $1.00 under Chicago due to the US surplus and lack of export demand for US HRW wheat. This was due to the Russian wheat onslaught that continues today. It is difficult to assess value in the KC/Chicago wheat spread based on the growing domestic nature of the US wheat market (US wheat exports in 2022/23 forecast at 4 decade low) with millers needing hard wheat for flour milling. Price is not producing any demand rationing. And any loss of the US HRS wheat crop will only make matters worse, but determining HRW abandonment rates and yield of the drought plagued Plain’s crop is a work in progress. Preliminarily it appears that harvested HRW wheat acres could be cut by 900,000-1.0 million acres with yield falling 5-6 bushels/acre from trend. 2023/24 HRW stocks will near 210-240 million bu, historically tight by any measure.

• Argentina’s soybean/dollar program will run from Saturday through May 24 according to sources with the Peso conversion rate yet to be announced. The official Peso vs US$ rate is 210 with rumours that the offer will be 270-290 Pesos or a bump of 27.5-30% from what is offered currently. The hope is that farmers will sell 5-7 million mt of soybeans to domestic processors.

• The midday weather forecast is bone dry for the Plains over the next 10 days with strong winds forecast this weekend before temperatures rise to the 80’s to lower 90’s next week which adds to HRW wheat stress. The coming warmth allows the Southern Midwest corn seeding to start on a timely basis. Widespread snowmelt in the N Plains and Upper Midwest will produce regional flooding. The 11-15 day forecast has pushed the rain chances north into the Upper Midwest and N Plains where drier weather is desired.

• HEADLINES: Chicago grain markets correct; Except for wheat due to coming Plains dryness. Two steps forward, one step back price action.

• Chicago ag markets are mixed at midday with wheat trying to hold onto overnight gains while corn/soybean futures sag in a correction of the recent rally. The volume of Chicago trade is well below recent days as a 3-day weekend looms and traders are adjusting their risk downwards. July corn has fallen into support below $6.30 with July soybeans also testing support below $14.80.

• Adding to the selling is the macroeconomic background with JP Morgan Chase CEO Jamie Dimon hinting that the world banking crisis is not over, and it will cause repercussions for years to come in an annual letter to shareholders.

• However, Dimon also stressed that that this is not the 2008 global financial crisis. The worry over shrinking lending has sparked selling across a host of asset markets. The war against inflation produces a choppy Chicago trade, even with US corn/soybean stocks historically tight with heady ethanol/soy crush margins. We look for a lower Chicago close today with short covering late in the day. Threatening weather for HRW wheat and expanding biofuel demand underpins Chicago wheat and old crop corn on weakness. It is the wrong time of year to sustain a downtrend in Chicago, but the macroeconomic outlook keeps traders from chasing rallies.

• The USDA did not announce any daily gain sales for the first time in over 2 weeks. China has finished its corn purchase program (for now), but questions abound on the quality of the 2023 Argentine corn/soybean crops that were acutely stressed by weeks of drought. Argentine crushers are hoping that Wednesday’s soy dollar announcement comes at a time when farmers will sell old crop supplies, not new crop. Crushers are not pleased with the new crop quality and desire the old crop to blend it off.

• Chicago brokers estimate that funds have bought 1,000 contracts of wheat, while selling 7,600 contracts of corn, 6,400 contracts of soybeans, 5,400 contracts of soyoil, and 4,300 contracts of soymeal. The fund selling was active in the opening minutes of the morning trade.

• US HRW crop estimates will continue to decline amid the forecast of hot/dry weather into mid-April. High temperatures in the 80’s to lower 90’s will further stress HRW wheat and boost abandonment. The combination of wind, drought and heat is exactly the wrong set up for Plains HRW wheat. Producer sources indicate that the N Texas/Oklahoma crop will start to head in 10-14 days. Rains are desperately needed or US all winter wheat yields could fall to levels like last year. And Plains feedlots booked wheat for feed a few weeks back, questions abound whether that feed wheat will be available without a dramatic change in the weather forecast. An ongoing drought will push July KC wheat up to their winter highs at $9.25-9.50. The lack of wheat for Plains feedlots suggests stronger feeding demand of US old crop corn.

• The US Plain’s drought increases the importance of keeping open the Ukraine Grain Export Corridor in mid-May. We have concerns over recent Russian actions in the exodus of multinational firms from Russian grain trading and what it implies for the corridor. Our concern is that Russia will not renew the pact.

• The latest weather forecast is bone dry for the Plains over the next 10 days with strong winds forecast this weekend before temperatures rise to the 80’s to lower 90’s next week which will add HRW wheat stress. The coming warmth allows the Central US corn seeding on a timely basis across Iowa/Illinois and Indiana. However, the active snowmelt in the N Plains and Upper Midwest will produce regional flooding. The 11–15-day forecast offers rain of 0.5­-1.50” into the W and C Plains.

• A correction was needed, but today’s decline is an overachiever. Ahead of a new Northern Hemisphere growing season, it is too early to be overly bearish. Cash basis is rising on the decline suggesting that end users would take on new ownership. The May/ July corn spread is back pushing out to a 23.5 cent premium, which is telling you to buy the break. May-July soybeans are trading at a 30 cent premium.

• HEADLINES: US farmer sells, cash corn pulls spreads and May corn off their highs; LDC exits Russian grain trade; USDA reports largest soyoil sale of the year.

• Chicago ag markets are mixed at midday with a modest correction from an early morning rally occurring in nearby May corn futures and the May/July corn spread on more active producer marketing. The rally in May corn and premium of cash corn basis ($0.33/over Central IL) pushed cash bids back near or above $7.00 which triggered a solid round of producer sales before the onset of spring planting. The farmer had the time and was waiting to reward a new chance to sell $7.00 cash corn in the Midwest. The morning cash selling sparked profit taking in the May/July corn spread which reached out $0.23/bu May premium. And the profit taking extended to May corn futures with the day’s trading range at $0.10 which also pulled soybean/wheat futures off their highs.

• Soymeal futures have been lower from the opening bell on oil share spreading with crude oil futures forecast to reach above $90/barrel by mid-year on tightening supplies as OPEC+ lowers daily production by 1.16 million barrels starting on May 1. The energy rally will underpin the bio-crops of corn and soyoil on corrections. It is not the time to chase a rally with the spring planting season in clear view. Yet, the new crop balance sheet cannot tolerate any supply disruption without sudden upside price adjustment.

• The USDA reported the sale of 20,000 mt of US soyoil sales to an unknown destination and 150,000 mt of US corn to Mexico. For now, it appears that the daily purchases of US corn by China have ended. Yet, the 20,000 mt soyoil sale is a bit of a mystery with US fob values well above S American offers by at least 11 cents/pound. There are reports of Argentine new crop soybeans being of poor condition with tiny green beans producing chlorophyll in crush operations. Some wonder if the US soyoil demand is due to worry over the quality new crop Argentine soybeans.

• The USDA reported that for the week ending March 30, the US shipped out 43.2 million bu of corn, 18.3 million bu of soybeans, and 6.2 million bu of wheat. For their respective crop years to date, the US has exported 762.5 million bu of corn (down 441 million or 37%), 1,670 million bu of soybeans (up 46 million or 3%), with wheat at 619 million bu (down 13 million or 2%). US soybean exports remain strong with China shipping 11 million bu or 61% of the US weekly total. Combined US corn, soybean and wheat stocks on March 1 were well below recent years with the US corn export program to China kicking into a higher gear from mid-April onward.

• LDC will halt its Russian grain export program as of July 1, joining other multinationals that will no longer be originating/elevating Russian grain. Four multinationals have left the Russian grain export business within a week. Russia has always wanted to be in control if its grain, and that is where this ends. The Russian ag ministry is going to great lengths to reassure buyers that it will remain a reliable world grain exporter.

• There are rumors that two 25,000 mt of Baltic/Polish wheat was sold into the Ardent Mills facility in Florida. The wheat is reported to be high protein 13.5% which will be milled for domestic consumption.

• Chicago brokers estimate that funds have bought 3,000 contracts of wheat, 3,500 contracts of soybeans, and 3,000 contracts of soyoil, while selling 3,400 contracts of soyoil and being flat in corn.

• The forecast is drier for the Plains over the next 2 weeks with limited rainfall for the drought-stricken areas. Snow totals were also diminished and pushed further north with the heaviest totals to impact E North Dakota and NW Minnesota. Much warmer temperatures arrive following the Easter weekend.

• It is not possible to get a sustained bearish price trend until trendline or above trend yields are confirmed in mid to late summer. Yet, with some timely spring seeding to be accomplished, this is a market that is taking 2 steps forward and 1 step back. Soyoil/KC wheat are upside leaders.

• HEADLINES: US March soybean/corn stocks bullish; Seedings as expected; Old crop to gain on new crop.

• The March 1 Stocks and Seeding Intentions Report was bullish for old crop corn, soybeans, and wheat. However, 2023 Seeding Intentions of US corn, soybeans and spring wheat came in close to expectations. Bull (old/new) spreads are expected to gain while the push will be on to own old crop soy/ corn is on as supplies decline into late summer. The US corn export program will be expanding due to recent Chinese demand while US soy crushers will be seeking cash soybeans to maximise profits on rising renewable diesel demand (soyoil) and soymeal export sales (sharp fall in Argentine soy crop).  It is now up to Mother Nature to determine if NASS corn/soy/spring wheat will be seeded.

• We calculate second quarter corn feed/residual use at 1,501 million bu, down 37 million from last year. WASDE is forecasting that US 2022/23 corn feed residual to be down 8% or 443 million bu from last year. Yet, the Q2 US corn feeding rate was down just 2%. WASDE needs to adjust their feed/residual use upwards by 100-150 million bu. The US is feeding more corn than forecast.

• US March 1 soybean stocks at 1,685 million bu are down 247 million bu from last year. The stocks were 70 million bu below trade estimates with the Q2 residual use calculated at -26 million bu. The residual argues that the 2022 US soybean crop was overstated. It will take the June report to corroborate, but the loss of 60-70 million bu of supply is bullish with old crop US soybean end stocks at just 210 million bu. WASDE will raise their residual use of 2022/23 soybeans to take old crop stocks even lower.

• US March 1 wheat end stocks were 946 million bu, down 83 million from last year which argues for a larger feeding rate. Although US wheat export data is near a 40 year low through mid-March, the wheat stocks total is supportive to price and argues that new crop weather for the W and N Plains will be important.

March 1 US Stocks (million bu)

2021        2022        2023

Corn            7,696        7,758        7,401

Soybeans         1,562        1,932        1,685

Wheat            1,311        1,029        946

• US 2023 total crop intentions were forecast at 318.1 million acres, up 6 million acres from last year, the largest seeding since 2019. North Dakota corn seeding was up 27% at 3.75 million acres. Illinois and Iowa corn seedings were up 200,000 acres each or 2%. The US corn seeding gains came from a host of Midwest States. 1 million from trade forecasts. This is the largest US corn seeding since 2021 at 93.3 million acres. The seedings will produce harvested acres of around 84 million acres.

• US soybean seedings were estimated at 87.5 million acres, the same as last year and the February Outlook Meeting forecast. US soybean seedings have held just above 87.0 million acres for the past 3 years.

• Total 2023 US wheat seeding rose to 49.9 million acres, up 4.2 million acres. US winter wheat seedings were up 13% at 37.5 million acres, up 2.5 million acres with another sizeable gain noted in durum seedings which was up 9% at 1.78 million acres. US other spring wheat seedings were down 2% from last year at 10.6 million acres. The total expansion of US all wheat acres was larger than expected.

US Planted Acre Intentions  (million acres)

2021        2022        2023

Corn            93.3        88.6        92.0

Soybeans         87.2        87.5        87.5

Wheat            46.7        45.7        49.9

• The USDA March 1 Stocks estimates are bullish, especially for soybeans, with new highs forecast this summer in Chicago futures. Cash soybean basis and premiums should lead the rally. Cash corn prices correctly indicated that US old crop corn stocks are much tighter than forecast with WASDE to raise its feed/residual use by at least 100-150 million bu in May. We do not see the 92 million acres of new crop corn as being bearish below $5.50 December futures. However, weather forecasts must indicate too wet or too cold weather to sustain a rally above $5.80. We maintain that rallies to $6.00-6.20 December on weather scares offer new sales opportunities. Soybeans will most likely gain on the grains.

• HEADLINES: Markets relax, prep for NASS data; EU balance sheet released in error this morning; US dollar testing mid-March low.

• Chicago ag markets are steady to lower midday as the complexity of markets, changing Russian policies, less than ideal weather in the US and abnormally strong interior basis levels, take a back seat to NASS stocks & seedings data due Friday. We reiterate that acreage estimates vary wildly, with some even forecasting a fairly sizable change to winter wheat seedings, and there is no doubt volatility will be massive in the last two hours of trading tomorrow. We do note that winter wheat seedings rarely change from January to March, which implies some 3.7 million acres have been stripped from row crop production. We also note that acreage enrolled in the CRP program at the end of February totalled 23.0 million, vs. 22.1 million last year and vs. 20.07 million in winter 2021. One crop will be left without needed expansion.

• Also lingering in the background is additional weakness in the US dollar index, which this morning is testing the lows of early March at 102.2. A close below 101.9 opens up additional downside risk, chart-wise, and a test of January’s lows are probable in the next 30 days.

• The exit of index funds from the US ag market have largely been a function of a rising dollar/rising interest rates, and whether this trend is reversed is important. Crude oil midday is up $0.80/barrel. The Dow is up 50 points and scored a new weekly high this morning. Fears of banking sector issues/liquidity have been eased.

• US export sales in the week ending March 23 were broadly in line with previous expectations. Corn sales totalled 41 million bu, vs. 122 million the previous week, amid a relative slowing of Chinese purchases. Note that sales of just 18 million bu/week are needed to validate USDA’s annual target, and as another 178,000 mt of old crop US corn were sold to China this morning, it is likely that weekly sales during the summer months must average only 10-12 million bu, a slow but reasonable pace even assuming record large Brazilian production.

• US soybean sales through the period totalled 13 million bu, vs. 6 million the previous week. China last week secured 5.6 million bu of US origin beans. Meal sales were an 18-week high 378,000 mt, vs. 121,000 the previous week. Wheat sales totalled 6 million bu, mostly HRW & SRW, vs. 5 million the prior week.

• For their respective crop years to date, US exporters have sold 1,416 million bu of corn, down 33% year-over-year but a rather normal 77% of the USDA’s annual forecast. Exporters have sold 1,828 million bu of soybeans, down 10% from last year, and 662 million bu of wheat, down 5%.

• Paris milling wheat futures have reversed early morning gains. The EU Commission’s initial supply/demand update was published in error. EU wheat stocks were actually raised 1 million mt to 18.6, not lowered 2.6 million. EU wheat exports were left unchanged at 32 million mt.

• For reference on Friday, the trade’s average guess on March 1 US corn stocks is 7.5 billion bu, vs. 7.8 billion last year, with soy stocks pegged at 1.7 billion, vs. 1.9 billion year, and wheat stocks at 930 million bu, vs. 1.03 billion last year. Corn acreage, on average, is estimated at 90.9 million, vs. 88.6 million in 2022, with soy at 88.2 million, vs. 87.5 million last year, and all-wheat acres at 48.9 million, vs. 45.7 million in 2022. The wide range of estimates implies the potential for intense price movement just after the data’s release. The expansion of Midwest winter wheat acreage, and associated plans to enlarge double cropped soy production, implies the potential for a bullish surprise in corn seeding intentions.

• The midday GFS weather forecast is similar to the overnight run in projecting heavy rain/snow across the N Plains, E Midwest and Delta into April 6-7. Warming occurs briefly in the Midwest early next week but below-normal temperatures resume thereafter. Freezing lows persist across the N Plains into mid-month.

• The burden placed on US weather this summer will be fine-tuned Friday morning via stocks and seedings intentions. Premium can’t be shed entirely until early July crop ratings are published. Volatility provides opportunity over the next 45-60 days.

• HEADLINES: Markets stay firm but drop from session highs; Ethanol data uneventful; US gasoline demand rising.

• Chicago ag markets are firm but off session highs at midday. May Chicago wheat tested multi-week highs early but failed to find follow though above $7.30, the contract was also unable to break through its 50-day moving average. The US dollar finding support above 102.5 is also noted. Money flow and chart patterns will be driving price discovery into the release of NASS stocks & seedings data. However, there is still no signal that markets are oversupplied. Paris milling wheat is up €4.00/mt. EU corn and wheat markets are again inverted. EU rapeseed has rallied another €9.00/mt and is now €61/mt (15%) above its low scored just last week. US exporters sold another 204,000 mt of corn to China this morning, bringing announced sales to China above 3.0 million mt since mid-March.

• The US’s energy balance sheet is beginning to tighten seasonally. Crude oil stocks less reserves on March 24 totalled 474 million barrels, down 7 million week on week. Motor gasoline stocks totalled 227 million barrels, down 3 million from the prior week, down 5% from last year and the lowest for late March since 2014.

• Most important is that gasoline use has seemingly recovered and has expanded in each of the last two weeks. Gasoline disappearance in the week ending March 24 was 9.15 million barrels/day, a 5-week high and up a sizeable 8% year on year. Note that gasoline use rises seasonally throughout the April-Sep period, and the (relative) cooling of retail prices since last summer should allow for additional growth moving forward.

• US ethanol production last week was an uneventful 295 million gallons, up just 2 million on the previous week and slightly below the pace needed to hit USDA’s target. But a rapid drawdown in stocks lies ahead, which in turn requires at least a modest boost in grind rates April onward. The spot ethanol swap market today is unchanged at $2.24. The forward market has rallied to $2.29, basis July, which keeps profitable margins intact. Note that July ethanol two weeks ago was trading at $2.10-2.12/gallon.

• A mixed closed is anticipated, with overhead resistance in corn/wheat established near today’s highs. Next resistance in May soy lies at $14.90.

• The midday GFS weather forecast is similar to the overnight run in projecting massive snow totals across the Northern Plains & Upper Midwest next week and additional heavy rainfall in the eastern Midwest this weekend and again next Tues-Thurs. It remains that temperatures will warm at least briefly across the Central Plains and Midwest into April 6, and on balance soil temperatures in the heart of the Corn Belt will be closer to normal by mid-month. Yet, our primary concern of snow/cold in the north and exceptional drought across the southern Plains don’t look to be eased in the next two weeks.

• The exits of Cargill and Viterra from Russia suggest the government there aims to more strictly control food markets, and overall Russia appears to have become a less reliable market for at least spring/early summer delivery. Near-term corn/soy direction hinges upon NASS data on Friday.

• HEADLINES: Grains struggle at chart resistance; Soybeans break through 200-day moving average; Snow added to Nebraska.

• Global grain futures are mixed at midday, as Chicago corn and wheat in the US and Europe collide with chart-based resistance, while the soy complex continues its recovery from last week’s lows. Soy futures are up 11-20 cents, with spot meal up $10 per ton. It is difficult to find the catalyst for new soy buying amid ongoing erosion in Brazilian basis levels, but processing margins remain elevated and Central IL basis this week sits at $0.35-40 over for nearby delivery. Cash beans in the heart of the Midwest are again valued at $15/bu. KC’s premium to Chicago wheat has widened to $1.70/bu as 10-day forecasts are entirely void of precipitation in TX, OK, KS and CO.

• FAS’s daily reporting system included another sell of old crop corn to China worth 136,000 mt. Announced sales to China since mid-March now total 2.89 million mt, and assuming Monday’s sale to unknown destinations was China the total surpasses 3.0 million mt. China’s newfound relationship with Brazil assures China buys Brazil corn beyond summer, but not until then.

• Spot Argentine fob basis this week sits at $0.90-1.00/bu. It is common for Argentina’s cash corn market to surge in Jan-Feb as remaining supplies are rationed, but key is whether basis there begins to relax in the next 1-2 weeks. Ongoing strength in Argentine basis in the first half of April will underscore just how tight that market will be between now and June. The message is that US corn is the world’s top reliable origin nearby.

• Additionally, the spot ethanol swap market has rallied to a new 12-week high at $2.24/gallon. A normal seasonal increase in gasoline use and ethanol grind lies ahead in spring and early summer. US ethanol stocks have likely peaked for calendar year 2023.

• The US dollar index is down 0.25% at midday, and a close below 102 opens the contract up to a more bearish landscape. Index fund selling has been directly correlated with currency/interest rates, and as has been the case over the last 9 months, macro markets’ impact on ag price discovery stays elevated.

• The midday GFS weather  forecast is wetter (snow) in NE and SD next week but is otherwise consistent with the morning run. The GFS forecast  is in general agreement with its EU counterpart in projecting heavy snowfall upward of 10”+ across the Central and Northern Plains and Upper Midwest next week. Abnormally heavy snow cover keeps temperatures cold across the Northern US. A favourable warmer pattern emerges in the Delta and Midwest next week, with highs in IA/IL reaching into the upper 70s/low 80s. But our chief concern remains that of winter’s extension across the Northern Corn Belt and the complete lack of soil moisture across the HRW Belt.

• The market has dialed in an expansion of corn area in 2023 worth 2-3 million acres, which if it occurs keeps US soy and wheat balance sheets tight. And even the global corn balance only loosens with record US yield.

• HEADLINES: Markets rally on Black Sea uncertainty, Fund short covering; Additional heavy snow possible in Northern Plains next 10 days.

• Global ag markets have shrugged off morning weakness and are trading higher by varying degrees. Wheat has paced the advance on a percentage basis as speculative short covering accelerates, amid rising Black Sea tension, and even Paris milling futures are participating. We hear from Black Sea contacts who suggest that forward selling/pricing in Russia has slowed considerably following talk last week that the government will act to buy supply for its reserve, establish a floor price or be more active in restricting exports. We have no way of knowing the pace of spring/summer Russian grain exports, but it does appear that, on balance, Russia has become a less reliable market. There is also widespread talk that corn quality in Ukraine is in rapid retreat, which is a concern for EU importers and also implies comparing Gulf basis to Black Sea basis on Ukraine’s remaining supply is less valid.

• Spot WTI crude is up $2.00/barrel at $71.30. The Dow at midday is up 170 points.

• New crop contracts are leading row crop markets as focus shifts to the 2023 US acreage matrix. Recall winter wheat seedings last autumn were up 3.7 million acres year on year, and that wheat area expansion spilled into the principal Midwest suggests some crop will be left without.

• Work on expected returns validated the Outlook Forum’s call for enlarged corn seeding, but beans may need area expansion more. Spring wheat is also need of larger seedings as HRS stocks/use this year sits at the lower end of history. Planting intentions on Friday will be a big deal.

• US exporters in the week ending March 23 shipped 26 million bu of corn, vs. 47 million the previous week, 33 million bu of soy, vs. 26 million the previous week and 14 million bu of wheat, unchanged from the prior week. Corn inspections were lower than expected. Soy and wheat were line.

• For their respective crop years to date, the US has inspected for export 1,376 million bu of corn, down 34% year on year, 656 million bu of wheat, down 5%, and 1,818 million bu of soybeans, up 8% from last year. There is no compelling evidence to suggest USDA revises its annual forecasts in its April report. The pace of physical corn exports must increase rather quickly, but recently sold bushels will be exported from mid-spring to early summer. A boost in corn shipments is anticipated in April.

• Additionally, Plains corn basis at $1.00+ and firming Midwestern bids suggest that feed operations are again being forced to pull supply from farther afield.

• The midday GFS weather forecast is slightly further north with soaking precipitation this weekend as totals of 1-3” have been moved into IN and OH, but otherwise the outlook is consistent. A warming temperature pattern lies ahead for the S Plains, Delta and S Midwest beginning early next week, but additional snow across the N Plains and Upper Midwest will keep temperatures there well below normal. Zero/sub-zero lows are forecast in the Dakotas and MN into Thursday. Very heavy snow (10″+) is possible in the Northern Plains Sat-Wed. Zero precipitation is offered to the Plains HRW Belt in the next 10 days.

• Markets have run out of sellers as critical US stocks and seedings data looms. Already our work suggests Plains wheat yields will be sub-trend and row crop seeding requires soaking rain in the next 30 days. This along with a developing arid pattern in Central Brazil keep breaks supported nearby.