• HEADLINES: Wheat rebounds on short covering and corn/wheat spreads unwind; China rumours noted for US corn/soy; Macro markets have ruled this week.

• Chicago ag markets are mixed with corn/wheat values firmer while the soy market sags. Macroeconomics has been the driver amid the US March Jobs Report that showed February nonfarm payrolls expanded by 311,000, while a California bank that is favoured by tech starts, Silicon Valley Bank (SVB), was closed by regulators. The bank made bad bets on interest rates while there was a run on their deposits by customers. The result is that the FDIC closed the bank and took control of its deposits. Bankruptcy or a merger is in the future of SVB.

• The US dollar declined sharply on the employment data/SVB news with fund managers looking at commodities with some favour again. The SVB closure and limited wage growth in the March employment report has some economists wondering if the US Central Bank will hit the pause button after raising their lending rate by 0.25-0.50% next week. The flow of funds has been out of commodities this week following testimony from US Fed Chairman Jay Powell that US rates needed to rise further for longer to get inflation down to their target of 2%. There is more stability today with all eyes being on the Tuesday’s CPI report and the market reaction following the Fed’s rate hike. Just a 0.25% rate rise would be seen as dovish and considered bullish to assets.

• Chicago brokers estimate that funds have bought 4,700 contracts of corn and 3,900 contracts of wheat, while selling 5,600 contracts of soybeans. In products, funds have sold 2,500 contracts of meal and 3,300 contracts of oil. We calculate funds entering a modest net fund soyoil short for the first time in years. There has also been some wheat/corn profit taking this morning. The big rise in Chicago open interest in recent days is being widely discussed, with varied opinions. We all need to see the CoT report a week from today to draw any real conclusions.

• Commercial traders reflect that China continues to ask for offers of old crop US soybeans/corn on a frequent basis. The unknown sale of 184,000 mt of US old crop soybeans that was announced yesterday is likely for China as it replaces the 1 million mt of Argentine soybeans that were washed of due to the dire  drought. China can only use US or Argentine soybeans to replace reserve soy sales which means that there will be an additional 800,000 mt of US old crop soybeans that will be purchased with shipment off the PNW. This fact along with the Argentine drought its why we raised our 2022/23 US soybean export estimate to 2,025 million bu, 10 million above WASDE. China is on pace to import 99-102 million mt of soybeans in 2022/23 with vessel loadings calling for record imports during both March/April from Brazil. The Chinese demand amplifies the Argentine soybean crop loss as US soybean stocks will be run down to pipeline levels with crushers fighting exporters for supply.

• We now think of the Chicago soy complex on a flat price, not a spread basis. The world needs additional soybean, soymeal and soyoil supplies. The downside appears to be limited below $14.80-15.00 May soybeans, $470-475 May soymeal and $0.55-0.56/pound in soyoil. Oil share has come in to 37%, but cash soyoil demand will pick up in coming weeks via renewable diesel and it makes little sense to be bearish. Our point is that the Argentine drought has turned the complex into a flat price, not a product spread trade.

• The midday GFS weather forecast is consistent with the overnight forecast with hot/dry weather across Argentine crop through Monday before widely scattered showers develop across La Pampa and Buenos Aries. Extreme heat will prevail with highs ranging from the 90’s to lower 100’s. Some better rains start to return in the last half of next week with totals of 0.25-1.00”. The time for the rain to do any good is running out.

• A weakening US dollar would return funds to the long side of commodities (risk assets in general) following the US Central Bank rate hike next week. The Argentine soy/corn drought decline is bullish longer term and should push soy futures to new highs. We see corn/wheat scoring/forming seasonal lows.

• HEADLINES: Funds unleash selling on the charts; Argentine crop fall bullish for months to come; World ocean freight rates rising on demand.

• Chicago ag markets are sharply lower with the grains pacing the decline. The soybean market is lower but trying to hold on the Rosario Exchange shockingly lower Argentine soy crop estimate of 27.0 million mt. The Buenos Aries Grain Exchange (BAGE) is expected to lower their corn/soybean crop estimates later today. A 27 million mt Argentine soybean and 35 million mt corn estimate has produced a crop season loss of both crops of 43-44 million mt of grain.

• The Chicago selling is fund liquidation based on the breaking of last week’s low and the sinking of US wheat values as funds pile into a larger short position. The charts are pointing down and will need time to heal before a recovery. End user pricing is noted as Chicago open interest keeps rising. The Chicago break has taken December corn futures down to support at $5.50 while July Chicago wheat has fallen to $6.80. Chicago spot wheat at $6.60 is at its lowest price looking backwards to July of 2021. The European wheat market started the decline on the movement of Ukraine wheat into the EU and their inability to sell wheat abroad due to aggressive Russian pricing. Paris wheat futures are likely to move to a carry so that EU farmers can hold their wheat stocks into summer. Wheat must bottom for the rest of Chicago to rally.

• Chicago brokers estimate that funds have sold 15,100 contracts of corn, 5,900 contracts of wheat, and 2,200 contracts of soybeans. In soy products, funds have sold 3,100 contracts of soymeal and 5,300 contracts of soyoil. Fund managers are cutting their corn/soymeal/soybean length while entering a modest net short position in soyoil.

• FAS reported that for the week ending March 2 the US sold 9.8 million bu of wheat and 55.6 million bu of corn with net cancelations of 900,000 bu of soybeans. The US also sold 319,000 short tons of soymeal and 7,300 short tons of soyoil.

• For their respective crop years to date, the US has sold 639 million bu of wheat (down 44.0 million or 6%), 1,206 million bu of corn (down 770 million or 39%), and 1,790 million bu of soybeans (down 134 million or 7%). US soy product sales are also below last year as the record Brazilian soybean crop weighs on demand.

• World freight rates have been soaring on improving demand for S American soybeans with the backlog of vessels worsening in Black Sea. There are over 14 million mt of vessels waiting to load Brazilian soybeans, a record high. Brazil is running full tilt to meet world oilseed demand. The rise in world freight rates argues for improving grain demand with China to import a record tonnage of soybeans in March/April. This could boost their total crop year import program to 99-100 million mt. Regionally, Russia continues to load out a record tonnage of wheat while China is stepping up its imports of soybeans. China’s economy is in full recovery following the end of Covid lockdowns.

• The midday GFS weather forecast is consistent with the overnight forecast in the persistence of hot/dry weather across Argentine crop areas for another 2 weeks. There maybe a few spits of rain, but most totals will be less than 0.15” and won’t help crops that have been suffering for months of acute drought. Argentine crop sizes will continue shrink.

• Growing in importance is the excessive rain that has fallen across MGDS and Parana in Brazil. Deral estimated today that just 37% of their winter corn is planted against 69% last year. MGDS is also struggling with excessive soil moisture and delayed corn seeding rates. The planting window is closing on Central Brazilian winter corn. And RGDS will holds in a dire drought.

• The Chicago break today does not make much sense! End users should be using the weakness to make forward purchases in corn/wheat and soyoil. December corn against $5.50 and May soyoil below $0.58/pound are too cheap. Argentine/Ukraine crop losses combined produce the need for record large US corn/soy crops this summer. We were bearish until Argentine abandonment rates started to soar thereby sparking these low crop totals. This is not a place for new sales. Closely follow Brazilian winter corn seeding in Parana/Mato Grosso Du Sol. Buy this break in corn, soyoil, and soybeans. Wheat should be very close to a seasonal/annual bottom. The new crop price risks are to the upside.

• HEADLINES: WASDE cuts to Argentine 2023 corn/soy crops combined 15 million mt: US corn exports cut 75 million bu, soybean exports raised 25 million bu; How low is low for Argentine crops?

• Chicago ag markets are mixed following March WASDE Report. WASDE cut its estimate of Argentine soybean production by a record 8 million to 33 million mt and lowered corn by 7 million to 40 million mt. In total, Argentine summer row crop production fell by 15 million mt, a record for both crops combined. The Argentine drought has been dire and further crop falls are anticipated as acres are abandoned. From here forward, every tonne of soybean crop that is lost will come directly from crush as exports cannot be cut much below 3.2 million mt and imports above 7.25 million mt will be nearly impossible logistically. If the Argentine 2023 soybean crop is 27-28 million mt as feared, this would slash their crush down closer to 30 million mt.

• Brazil’s soybean harvest was left at 153.00 million mt which means that world soybean end stocks were pulled down to 100 million mt, just 1 million above last year. The smaller Argentine crop will boost US 2022/23 soybean exports and drop stocks to pipeline levels amid record crush margins. Spot soybean futures will find support under $15.00 amid tightening cash supplies into summer.

• The USDA lowered US 2022/23 corn exports by 75 million bu to 1,850 million and raised soybean exports by 25 million to 2,015 million bu. The US 2022/23 soybean crush rate was cut by 10 million to 2,220 million bu with the result being 210 million bu of 2022/23 soybean end stocks. Such soybean end stocks are seen as near pipeline, the bare minimum needed in the US at the end of the crop year. We doubt that US corn exports will fall further due to the sharp drop in the Argentine corn crop due to drought. And 2023/24 corn exports will be nudged upwards with support noted around $5.60/Bu basis December corn.

US Crop Production (bu/acre & billion bu)

Corn             Soybeans

Yield     Production    Yield     Production

2021/22        176.7    15,074        51.7    4,465

2022/23 Feb USDA    173.3    13,730        49.5    4,276

2022/23 Mar USDA    173.3    13,730        49.5    4,276

S American Crop Production (million mt)

Corn             Soybeans

Argentina   Brazil    Argentina   Brazil

2021/22        49.5          116    43.9           129.5

2022/23 Feb USDA    47          125    41           153

2022/23 Mar USDA    40          125    33           153

US End Stocks (billion bu)

2021/22    2022/23    2022/23

Feb USDA    Mar USDA

Corn            1,377        1,267        1,342

Soybeans        274        225        210

Wheat            698        568        568

World End Stocks (million mt)

2021/22    2022/23    2022/23

Feb USDA    Mar USDA

Corn            305.69        295.28        296.46

Soybeans        99        102.03        100.01

Wheat            271.45        269.34        267.2

• The US wheat balance sheet was left completely untouched which makes sense given relatively strong exports, compared to USDA’s projected 775 million bu. World wheat data leans bearish but rising exporter stocks/use has been digested via the recent collapse in values. Aussie production was lifted another million tons to a record 39 million mt. Aussie exports were raised only 500,000 mt amid logistical restraints. Kazakhstan’s 2022 wheat crop was increased an unexpected 2.4 million mt (17%) to 16 million mt, and it was this that pushed 2022/23 exporter wheat stocks/use to 14.4% vs. 13.8% in Feb but vs. 15.3% a year. However, WASDE lowered carry in wheat stocks by 5 million mt lowering 2022/23 world wheat stocks to just 267 million mt, the lowest since the 2016/17 crop year.

• World wheat exportable supplies are adequate and will be used as feed due to the shortage from Argentina. This is no place to be bearish of wheat ahead of a new Northern Hemisphere growing season.

• The midday GFS weather forecast is consistent with the overnight forecast in the persistence of hot/dry weather across Argentine crop areas. There maybe a few spits of rain, but most totals will be less than 0.15” and won’t do much to help crops that have been suffering for the past 6 weeks of acute drought. Any showers that start next Tuesday/ Wednesday favour La Pampa and Southern Buenos Aires. High temperatures will range from the mid 80’s to the lower 100’s. Crop maturity is being pushed by the drought such that late March and April weather will decline in importance.

• RGDS in S Brazil will share in the hot/dry outlook with limited rain for the next 2 weeks. High temperatures will hold in the 90’s with limiting cooling for filling corn.

• The big question is how low is low for Argentine corn/soy production. Can the Argentine soybean crop fall to 25-27 million mt. It is the abandonment of acres that is the reason for the sharp fall in Argentine crops. A corn crop of 34-38 million mt is not unreasonable. The Argentine ag economy is in shambles amid 2 years of drought. Argentine farmers face financial ruin and will hold onto crops in the hope of rising prices. We now doubt that Chicago breaks can be sustained.

• HEADLINES: Row crops weaken; Wheat recovers; Macros lean heavy on fed chair comments.

• Chicago ag markets are mixed and rather listless at midday. Corn and soybeans are trading steady to lower in preparation for Wednesday’s WASDE release, in which US corn exports may be lowered 25 million bu and 2022/23 US soy crush is likely to be trimmed slightly. There is not yet evidence to boost total US row crop consumption, and while Argentine drought has become historic in nature and in the long run funnels corn and meal demand to other markets, including the US, this is unlikely to be printed tomorrow. We do note that nearby spreads continue to perform, with March corn’s premium to May widening to $0.10/bu. March soybean’s premium to May is up $0.04/bu to $0.16/Bu. FAS’s daily reporting system was void of new export sales this morning.

• Otherwise, it has been a largely macro day. Federal Reserve Chairman Powell this morning hinted that US benchmark interest rates in 2023 would likely exceed market expectations following ongoing strong economic performance and unrelenting strength in the labour market. The US dollar index is up a full 1.1% at a newer two-month high.

• Spot WTI crude is down $2.40/barrel at $78, which leaves $80 as decently strong overhead resistance. The Dow at midday is down 320 points.

• The Argentine weather forecast at midday remains outright hot despite summer’s fade into autumn there. The GFS forecast maintains max temperatures in parts of Santa Fe and Entre Rios in the upper 90s/low 100s, while precipitation will be confined to fringe producing areas of Argentina’s southern crop belt. Argentine yield losses will cross thresholds seen only a few times in recent decades. Corn has been less willing to add premium due to this year’s contraction in total global trade, but uncertainty will hang over global soymeal and oil flows for some time. Argentine soy crush in 2022/23 is likely to drop 5-7 million mt year-on-year. Soy product supply tightness is unavoidable.

• A broad pattern of active precipitation and cold temperatures is offered to the Central US into the latter part of March. Additional snowfall of 6-15” is possible across the Dakotas and in NE/IA into the weekend. A warmer/drier setup will be desired in April.

• The midday GFS weather forecast is consistent with the morning release in calling for unrelenting heat and dryness across key areas of Argentina throughout the next 10 days. Temperature moderation is forecast thereafter, but confidence is low given the recent warmer trend. Argentine showers nearby will instead favour La Pampa and southern Buenos Aires. Normal/above normal rainfall and mild temperatures will continue in Brazil. Soy harvesting/safrinha corn seeding will be slowed in Mato Grosso do Sul.

• Argentine drought this year will prevent a build in corn stocks and weigh heavily on the build in global soy stocks anticipated just 60 days ago. Argentine production loss and uncertainty over spring/early summer Black Sea grain flows place a heavier burden on production across the Northern Hemisphere, which likely avoids major threats but this must be confirmed before lasting bear trends emerge. Wheat remains oversold in the US and Europe.

• HEADLINES: Wheat sags and soymeal soars on Argentine weather; Divergent price trends awaiting the USDA report on Wednesday; CONAB out Thursday.

• Chicago grain values are mixed at midday with corn/wheat/soyoil values lower while soybean/soymeal futures are higher. May soymeal futures has pushed to a new contract high of $494.70/ton on the ongoing acute drought impacting the Argentine soybean crop. On the other hand, the Chicago wheat market has pushed to its lowest price since September 2021 on renewed fund selling of the coming end of the old crop export season. Also, traders are banking on the Ukraine Export Corridor deal will continue based on the weekend comments from Turkey that they are working hard on its extension.

• We would feel better about an extension of the corridor pact if there were favourable comments coming from Russia. We believe that a UN corridor deal has not yet been ratified. A mixed Chicago close is expected with spreads trying to re-jig on Tuesday. Wheat/corn ($0.55/bu spot futures) and soymeal/soyoil spreads (37.1% oil share spot futures) appear to be out of line fundamentally. Argentina is the world’s largest soymeal and soyoil exporter and a loss of crop/crush is more bullish to soyoil with US exportable soyoil supplies going to renewable diesel. We continue to see no reason for May soymeal futures to sustain a rally above $500/ton. It is soyoil that has future upside potential.

• The USDA reported the sale of 110,000 mt of US corn to Japan and 182,400 mt to an unknown destination. Questions abound if the unknown US corn sale is to China, and we just don’t know currently. Also, there are rumours this morning that China booked a cargo of US soybeans for late March shipment off the PNW.

• Chicago brokers indicate that funds have sold 4,400 contracts of wheat, 2,400 contracts of corn, and bought 9,200 contracts of soybeans. In soy products, the funds have bought 6,700 contracts of soymeal while selling 1,300 contracts of soymeal. The funds fully jumped to buy soybeans this morning.

• US export inspections for the week ending March 2 were 35.4 million bu of corn, 20.0 million bu of soybeans, and 9.8 million bu of wheat. For their respective crop years to date, the US has shipped 601 million bu of corn (down 374 million or 38%), 1,524 million bu of soybeans (up 44 million or 3%), and 572 million bu of wheat (down 12 million or 2%). The corn and soybean exports were larger than expected.

• Focus on Argentina has rightly been centred on historic drought which shows no sign of relenting. The 2023 Argentine soy crop was pegged at 34-36 million mt and corn at 41-43 million mt near the close of February. However, the ongoing hot/dry weather has taken a toll on production. Private Argentine soy crop estimates have fallen to 29-32 million mt with corn at 36-40 million mt. This crop loss has shifted the world soybean balance sheets back to extreme tightness with questions being asked on whether logistically Argentina can import 7.5-8 million mt of soybeans from others to boost its soy product exports.

• Soymeal rallies as it makes up +77% of the soy product production from crush. This is why meal always reacts first to any Argentine drought/crop loss. However, the world is facing increasingly tight supplies of vegoils, and with the US no longer exporting soyoil, and Malaysian palm/Argentine soyoil production down on adverse weather, a supply bull story is budding in vegoils.

• The midday GFS weather forecast is drier for Northern and Central Argentina and more in line with the overnight EU model. The core of Argentina’s ag belt stays warm/dry into March 16. Any rain will be focused on Buenos Aries and La Pampa in far Southern Argentina. And extreme heat persists for another 10 days with highs in the 90s/lower 100s. Near to above normal rainfall falls across Northern Brazil to the benefit of winter corn, but the moisture will slow the remaining soybean harvest. Dry weather helps speed the harvest in Parana.

• Spreads are out of line on capital flows today, but we look for oil/meal and wheat/corn spreads to perform for the remainder of the week. The USDA March Report will be out Wednesday with Brazil’s CONAB releasing their crop estimates on Thursday morning.

• HEADLINES: Corn, soy continue recovery; Crude testing $80 per barrel.

• Chicago grain values are again mixed but generally firm at midday as market focus stays on falling Argentine crop estimates and the performance of nearby corn/soy spreads. We have previously highlighted the uplift in crush margins, while Central IL is still bidding $0.28 over for corn for spring delivery. Spot beans in Decatur are quoted at $15.50, and still processing margins are profitable. A transition to adequate supplies is probable in 2023, but this requires confirmation of both favourable weather in Brazil in April and the lack of threats in the Northern Hemisphere between May and Sep. We also note that spot corn and Chicago wheat contracts remain oversold and a further reconciliation with this lies ahead.

• FAS’s daily reporting system was void of new demand, but amid recent rumours of US corn/sorghum sold to China and a rally in Ukrainian fob basis there does exist a window for improved US corn export demand. The market must see/feel this demand be funnelled to the US, but it is just difficult to be bearish of May Chicago corn below $6.50 given the potential for exports.

• Focus on Argentina has rightly been centred on historic drought, but corn and soy harvests there will also be pushed back into early summer following this season’s planting delays. Our bet is that the corn harvest in Argentina will not reach 30% complete (which covers domestic use) until the second half of June. Argentine corn is not offered competitively into the world market until July.

• Macro markets lean supportive. Spot WTI crude is up $0.80/barrel at $79.00 and is again trading firmly above its 20 and 50-day moving averages. A test of $80 lies ahead. The Dow at midday is trading 160 points higher. Paris milling wheat and corn futures are down €0.75-1.25/mt. European rapeseed futures have followed soybeans to solid gains. The Baltic Dry Ocean Freight Index, a widely followed proxy for global demand/trade, has scored a newer 7-week high and has rallied 116% in the last two weeks. China is digging out of its Covid hole and has triggered a boost in the movement of goods.

• Other news is lacking. The Northern Hemisphere growing season lies just ahead, with some reporting that corn planting has started in earnest in pockets of Louisiana. Markets in the next 30 days will be defined by Northern Hemisphere weather patterns, while late March’s USDA stocks and seedings report will be important in determining final old crop supply availability and the 2023 acreage matrix. Firm interior basis levels suggest corn and soy stocks will be tight. Water availability will not be an issue in the Midwest, but problems linger in US Plains, Western Europe, and India.

• The midday GFS weather forecast is much wetter in northern Argentina, with 10-day totals of 2-4” offered to northern Cordoba and Santiago de Estero. The core of Argentina’s ag belt stays warm/arid into March 13. Confidence in the details of precipitation intensity/location is low, but northern Argentina has been the target for intermittent rains this growing season. Relative dryness in Central Brazil allows for normal soybean harvest progress nearby. Soaking rain returns to Mato Grosso and Goias in the 6–10-day period.

• This week’s emotional break in corn and wheat is overdone, Gulf SRW is offered below French for new crop delivery, basis fob, while there is still little tolerance for US wheat/soy yields this summer. Rallies are selling opportunities, but there is more short-term upside than downside risk in grains at current prices.

• HEADLINES: Rumours of Chinese purchases of US sorghum/corn abound; Russia says no deal on black sea corridor without unfettered Russian ag trade.

• It has been a mixed morning in Chicago with corn/wheat sagging to new lows for the decline while soybeans/products hold in the green. The volume of trade has been active with funds aggressive on the sell side of the grains, while Chinese pricing in Brazil has placed a bid under Chicago soybeans. We look for mostly higher close as the Chicago tries to carve out a tradable bottom. Following a $0.66/bu drop in corn, $0.75 drop in soybeans and $1.00 drop in US wheat futures, traders wonder if price has reached levels that is stoking fresh demand.

• There are cash connected rumours that China initially showed interest in several US spot cargoes of Gulf soybeans while interest for US corn was noted at mid-morning. No commercial is willing to report if the corn interest is from the private and state buyers, but the Chicago break has pushed Chinese corn import margins back into the green. We suspect that any fresh Chinese interest for US corn is from privates that hold TRQ import licenses The March/May corn spread pushing out to a 3-cent premium suggests that cash demand has occurred, the question is for whom and in what tonnages.

• There are also rumours that China has purchased up to 5 cargoes (300,000 mt) of US sorghum with delivery in May/June from the US Gulf. The break has caused China to be more active in their purchase of US sorghum with rumoured totals being the largest in months.

• Chicago brokers report that funds have bought 2,100 contracts of wheat and 3,800 contracts of soybeans, while selling 4,100 contracts of corn. In the products, funds have bought 1,500 contracts of soymeal and 2,900 contracts of soyoil. The fund selling of corn futures was over 9,000 contracts at mid-morning.

• US weekly ethanol production was 1% above last that consumed 295 million bu of corn. The USDA is forecasting that for the remainder of the crop year, the US weekly ethanol grind must equal 295 million bu. There are rumours that the Biden Administration is preparing to allow E 15 to be statutorily sold year-round which could add 200-300 million bu to the annual US corn grind in 2023/24. US ethanol stocks fell to 1,039 million gallons, down 1% from 2022. We see the pace of the US 2022/23 corn grind as being in line of their 5,275 million bu annual estimate.

• Sources indicate that Argentine crops are suffering acutely as the hot/dry weather shows no sign of relenting. Extreme drought persists into at least mid-March. The USDA/WASDE will offer up sizeable cuts in Argentine soybean/ corn crop estimates in their March 8 report. WASDE pegged the Argentine soybean crop at 41 million mt and corn at 47 million mt on February 1 with private sources pegging the harvest at 31-32 million mt of soybeans and 39-41 million mt of corn. Such losses raise the importance of US/Brazilian corn production into July.

• The midday GFS weather forecast is like the overnight run with limited rainfall for Argentine crops into March 11. There is a chance of a few light showers of 0.1-0.8” in the next 48 hours, but then the forecast then goes hot/dry. High temperatures reach back into the 90’s/lower 100’s. Argentine crop stress is becoming acute on reproducing corn.

• Margin has come back to US ethanol producers while expectations for 2022/23 US soybean, corn, or wheat exports are low. Chinese interest for US sorghum/corn is a bullish surprise, though sales tonnage rumours vary. Another round of blistering heat is the death knell for some Argentine crops amid a dire drought. A tradable Chicago midwinter low is forming.  Russia has indicated that it will not continue the Black Sea Export Corridor Deal without free Russian exports of grain/fertilisers.

• HEADLINES: Chicago liquidation accelerates on March deliveries and chart breakdowns; China securing Brazilian soybeans; Turkey buys 790,000 mt of Black Sea wheat.

• Chicago corn, soybean and wheat futures are sharply lower. Chicago grain futures had dropped hard for the past 3 trading sessions with soymeal/soybeans initially holding on dry Argentine weather. Deliveries against March soybean futures and losses on long grain positions sparked selling of the prior stalwarts, soybeans/soymeal, as key chart levels were breached.

• Soybean futures fell below their 50-day moving average ($15.09 May) with corn taking out its December low, while Chicago wheat futures falling to its lowest price since September of 2021. Spot Paris wheat futures are trading at their lowest value in a year, and the trading mentality has been risk-off on budding losses. Only Chicago soyoil futures are holding due to oil share spreading amid the sharp drop of soymeal.

• The morning trade has been active with end user scale down pricing noted below $6.30 May corn and $14.60 May soybeans. The drop in corn futures has pushed ethanol grind margins back into the green, with cash soybean bids holding at premiums above Chicago across the W Midwest. Cash is still tight with soybean basis bids back to rising.

• We look for a sharply lower close as the selling in soybeans/soymeal accelerates into the close. Chicago has a heavy feel as funds offload stale long positions.

• Chicago brokers report that funds have sold 2,100 contracts of wheat, 13,000-14,000 contacts of corn, and 7,800 contracts of soybeans. In the soy products, funds have sold 7,200 contracts of soymeal while being flat in soyoil. The fund selling in soybeans/meal and corn was aggressive from the morning reopening.

• The wheat market was the first to drop, and it should be the first to bottom as nearby corn/soybean selling relents. KC July wheat is back to testing support against $8.00 with Black Sea fob wheat prices little changed this week. 12.5% Russian wheat is offered at $297/mt with bids at $295 while 11.5% Russian wheat is offered at $290/mt according to world exporters. Into last week’s wheat high, US/Paris wheat futures were rallying as fob offers declined. This week it is US/Paris wheat futures declining as Russian fob offers hold steady. US and European premiums relative to Russian offers are narrowing.

• Turkey purchased 790,000 mt of Russian/Ukraine wheat at $308-319/mt basis CIF for delivery to various Turkish ports. Turkey can no longer secure any additional wheat but can cancel purchases until the sales contracts are fully signed. The Turkish wheat purchase is one of the largest of the year. Russia was the primary seller of the tender, and based on a growing sales book, Russian exporters will show reluctance in dropping offers to fulfil new business.

• Ukraine has asked the UN to start the negotiations on extending the Black Sea Export Corridor deal. No comment on the start of negotiations has been returned from the UN, Russia, or Turkey. Last Thursday’s US/EU 1 Year Anniversary sanctions on Russia included key banks to finance Russian grain exports and coaster freight from the Azov Sea. Russian President Putin will argue that its grain is no longer offered unfettered access to the world market. This could make coming extension negotiations more difficult.

• The midday GFS weather forecast is like the overnight run with limited rainfall for Argentine crops into March 10. There is a chance of a few light showers of 0.1-0.8” in the next 48 hours, but then the forecast then goes hot/dry. High temperatures reach back into the 90’s/lower 100’s. Argentine crop stress is becoming acute on reproducing corn/soybeans.

• Chicago grains are liquidating. We see initial support below $6.30 May corn and $14.60 May soybeans. Oil share spreads will perform into the summer. However, before one gets too bearish, the Black Sea Grain Export Pact must be extended, and Northern Hemisphere spring weather must be deciphered before lower grain prices are justified. This no place to be making grain sales. Soybeans could liquidate through Thursday.  Short term trading lows will potentially be scored before the weekend.

• HEADLINES: Wheat/corn continue to liquidate on charts; Soybeans follow via high price; China selling back soybeans to Argentina; First notice day on Tuesday.

• Chicago grain futures are sharply lower to mixed at midday. Liquidation has been the 3-day theme in corn/wheat, while soybeans sag in sympathy. Oil share spread unwinding has dominated soy product trade with traders exiting short March soymeal futures ahead of first notice day. It will be interesting to monitor if soymeal deliveries develop with March futures trading above $500/ton and cash basis levels starting to leak lower.

• We favour long soyoil/short soymeal spreads heading into mid-summer. The only Chicago grain that has a bull demand story is soyoil as massive US renewable diesel plants start to come online in April/May. Feedstock accumulation by these producers should soon rally cash soyoil on basis during the last half of March. We look for a lower Chicago close today, but bottom picking could develop before the settle as traders argue that corn/wheat futures have become oversold on momentum indicators. Chicago could be primed for a post-delivery bounce. However, longer term price tops are in place for corn, wheat, and soybean futures. Choppiness could follow as the world grain market waits to see if the Black Sea Grain Export Corridor Deal is extended.

• Chicago brokers estimate that funds have sold 9,200 contracts of corn, 5,400 contracts of wheat, and 4,800 contracts of soybeans. In soy products, funds have sold 500 contracts of soymeal and 5,300 contracts of soyoil. Funds are adding to their large net short wheat holding, while cutting their corn long.

• US Weekly Export Inspections for the week for Feb 23 were 22.5 million bu of corn, 21.7 million bu of wheat, 25.40 million bu of soybeans. US corn exports continued to disappoint with exports showing no sign of a seasonal pick up.

• For their respective crop years to date, the US has shipped out 563 million bu of corn (down 350 million or 38%), 1,546 million bu of soybeans (up 52 million or 3.5%), and 560 million bu of wheat (down 9 million or 1%). The US wheat and soybean export shipment paces are above amounts that are needed to meet USDA/WASDE annual targets, but corn exports continue to lag.

• There are rumours that China is selling back over 1 million mt of Argentine soybeans to domestic crushers/exporters due to price/supplies. China purchased the soybeans for their soybean reserve months ago. Now due to the drought and price, China is said to be looking to sell those soybeans back into Argentina and purchase the soybeans elsewhere. China likes to secure US or Argentine soybeans for their reserve due to storability. Some world importers wonder if China is considering Brazilian soybeans due to their attractive price today. We have no confirmation of the S American soybean swap, just that cash traders are discussing a resale of Argentine soybeans back into Argentina.

• The midday GFS weather forecast is slightly drier than the overnight run with limited rainfall for Argentine crops into March 10. There is still a chance of a few light showers of 0.1-0.8” this Wednesday/Thursday, but then the forecast then goes hot/dry. The lack of rain and coming heat will produce additional drought stress on Argentine crops.

• The Brazilian harvest is ongoing with below normal totals this week for northern and central harvest areas with light rain for RGDS. As it has been the case all season, the Brazilian weather outlook is favourable, and Argentina is harmful. Big crops get bigger and small crops get smaller!

• Chicago grains are liquidating into first notice day against March futures. However, Paris or Black Sea wheat fob wheat values have not fallen as deeply as Chicago/KC – yet!. And Argentine crop sizes are still in decline amid hot/dry weather for another 2 weeks. However, this won’t make a difference until the speculative selling pressure relents. Chicago grain charts are oversold, this is no place to be making new sales with Russia complaining that the latest round of sanctions adversely impacts their ag exporters.

• HEADLINES: Soybeans extend losses in late week technical trade; Chicago corn extends correction on chart-based selling, weak export sales; Spot Chicago wheat falls to two-month low, reaches oversold territory in past two week.

• Soybean futures fell 5-15 cents to end the week with new crop November futures pacing the way lower. The inability of the market to rally on bullish Argentine crop news caused long time bulls to take profits. The Buenos Aries Grain Exchange knifed their Argentine soy crop estimate to 33.5 million mt, down 4.5 million. However, an overnight rally did not carry through. There have been several times that soybean futures dropped for 2 days, but the market has tended to rally on the third day. A lower close Monday will have traders discussing that a seasonal high was scored last Tuesday, the first trade following the weekend frost.

• The EIA’s Monthly Energy Review for November showed that US biodiesel production was down fractionally from October, but at 142 million gallons it was 101% of last year. Renewable diesel production jumped 18.5 million gallons (15%) from October and was 48 million gallons (51%) larger than last year. Other renewable production was 11.5 million gallons more than 2022, a record. The combined figures showed total US renewable production of 164 million gallons and total biofuel production of 306 million gallons. Renewable capacity utilisation was at a 10-month high of 77%. Chicago soyoil led soybeans lower on Friday, but it is soyoil that holds the most bullish fundamental outlook as US renewable fuel capacity doubles by yearend.

• We see soymeal as the overvalued product.

• Chicago corn futures fell another 9-10 cents on renewed fund liquidation amid falling Russian wheat price offers. May corn is below all key major moving averages following the release of the USDA’s Outlook Forum corn balance sheet with Russia’s wheat market dragging down global grain markets. Support at $6.65-6.70 March is now resistance. Global corn stocks will rise in 2023/24.

• However, the Brazil’s market did not follow Chicago lower this week. Spot corn in Brazil on Friday settled at a $0.65/bu premium to March Chicago. This is the largest premium since mid-January. Longer term chart support rests at $6.35-6.45 spot Chicago futures as importers contend with an absence of physical S American supplies until May. US corn export demand continues to struggle. This week’s US corn sales were only 32.4 million bu with the crop year sales pace to date down 745 million bu or 40%. With Argentina back offering fob corn below the US Gulf from mid-May onward, the window to expand US corn exports is closing. This will likely cause WASDE to lower their 2022/23 corn export estimate by 75-125 million bu in coming monthly reports. Corn lacks a demand driver with a drop to $6.35-6.45 March forecast for a bottom early in the delivery period.

• US wheat futures ended sharply lower with March testing the lows of mid-December. The market has tested both overbought and oversold levels since mid-February, and RSI index since summer has been the best indicator of future price moves.

• CFTC data won’t be fully available until mid-March, but we estimate managed funds’ short position in Chicago at a 5-year high 90,000 contracts.

• A Chicago recovery is probable, though such corrections are selling opportunities. A new supply threat is needed to sustain speculative buying and the US forecast is slowing trending wetter across the US Plains. Another round of soaking rain will impact North Africa in the next 7 days. The Russian Rouble scored a fresh 10-month low which keeps exporters there as aggressive sellers.

• Work maintains that fair value lies between $7.00-8.00 into mid/late 2022 unless Northern Hemisphere weather is perfect. Unlike corn, it is difficult to project larger exportable supplies in 2023/24 due to low carry-in stocks and this year’s contraction in Black Sea winter wheat planted area. Look for a trading low early next week as March Chicago tests $7.00 support.