Written Commentary
MORNING AG OUTLOOK
WHEAT
A strong start this morning for wheat on technical buying after this week’s pullback held 200-day moving average support. May Chicago has moved to a new high for the month and is up nearly $0.40 in February. Yesterday’s confirmation of 40,000 tonnes of Argentine wheat headed to Ardent Mills in Tampa was already rumored earlier this week and did not result in a bearish reaction. Other bullish news around this morning, French wheat conditions dropped 4% this week due to recent flooding and Russia attacked Ukraine’s Odessa port infrastructure again overnight. Saudi Arabia’s 655,000 tonnes tender is likely be sourced from Australia or the Black Sea. There were rumors yesterday of Chinese interest in US SRW wheat, but that is unlikely with expensive US prices. Yesterday’s latest drought Monitor showed acute dryness in Oklahoma and Texas and upcoming rains next week are expected to reach central and eastern Oklahoma, eastern Kansas and far northern Texas.
SOYBEANS
Traders got a reminder yesterday that headline risk is still very real as May Bean prices had a nearly $0.30 swing but impressively, were able to climb back and close in the upper 3rd of the day’s range. We can debate whether the midmorning headline that scheduling and coordination for the Trump/Xi meeting in early April was not going well was a leak by China to pressure US prices, but the reality is sharp unexpected headline swings are just part of trading these days. Bean oil strength was a major reason why beans were able to recover from the bearish news report as newswire stories suggested the EPA would allocate 50% of SRE’s to big oil, which was not unexpected but is bullish bean oil. US crush profit margins have made impressive gains lately, giving crushers further incentive to throttle up. Crush volume this week is on pace for an all-time record high week. Furthermore, the Argentine oilseed sector has announced another 24-hour strike, starting at midnight tonight, which will cause additional export disruptions. There were 138 March bean deliveries overnight, 102 meal and 340 bean oil. There are some warning signs that demand is faltering at higher prices but until the soy products show signs of topping, beans are unlikely to break significantly. May beans have rallied $0.90 this month and the bulls remain in control.
CORN
May corn was unable to extend the upside breakout yesterday, but prices have moved to a new high for the week this morning on the back of strength in wheat and crude oil and the edge stays with the bull camp. Steady buying on breaks recently has resulted in slow, grinding price gains for the last 6 weeks. May corn is up $0.10 this month, moving to its highest level since the bearish January 12th USDA supply and demand report. First notice day liquidation is now over and prices have made higher lows the last 4 sessions. There were 9 March deliveries overnight. Open interest dropped nearly 20,000 contracts again yesterday and is now down nearly 160,000 since early last week. Buenos Aries Grain Exchange says recent rains have benefited the crop and harvest is just beginning at 3.6% complete. The latest Drought Monitor released yesterday shows acute dryness in Illinois and parts of Indiana, along with Arkansas and Missouri where rain is expected to increase next week. With the calendar turning to March next week, the markets focus will be Brazil’s safrinha weather and US Midwest moisture. Weather risks are likely to increase market volatility in March and any hint of crop adversity could result in weather premium buying.
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