** Slightly higher is the CBOT at midday with corn/soy/wheat futures trading either side of unchanged. The AM volume of trade has been reduced from Monday’s strong activity as funds appear to be less willing sellers. Funds are still sitting on a sizeable net long position heading into the end of the quarter, but they are taking a pause. Monday’s CBOT Open Interest data did not suggest that funds had liquidated enough length to consider the market clean and ready to restart upwards.
Moreover, cash traders report that world farmers have slammed shut their bin doors heading into a new Northern Hemisphere growing season. The farmers are willing to bet that someone/somewhere are going to endure adverse weather. This could produce another supply driven rally during the coming growing season. But with the USDA March Stocks/Seeding report due out on March 29th, few want to take any new large net positions.
** FAS reported that the US sold 110,000 MTs of US corn to Peru in 2017/18 crop year. The FAS weekly export sales report will reflect another big US corn sales total for Thursday.
** CBOT brokers report that funds have sold 3,800 contracts of corn, while buying 2,900 contracts of soybeans and 3,200 contracts of wheat. In soy products, funds have sold 2,400 contracts of soyoil and bought 1,200 meal.
** There continues to be meetings/talks that the Trump Administration could cap RIN prices on biofuel production. Yet, if President Trump or the EPA enacted such a cap, it would run afoul of the 2007 US Energy Bill and likely be quickly challenged in court. The court ruled in 2016 that EPA did not have the discretion to peg US ethanol production mandates due to the blend wall. There is little doubt the court would find a cap on RINS in violation of the 2007 law. The point being that the road to capping or changing RINS is long and arduous without the affirmative vote from US Congress.
** The midday GFS weather forecast offers limited rain for the drought stricken W Plains in the next 10 days. However, the models offer rain chances from W Kansas and W Oklahoma through the Delta/S Midwest with heavy totals. Some rain totals across the Gulf States could reach 7-10.00” which would add to flooding woes. The corn crop is slowly being planted across southern third of the US and the forecast offers additional heavy rains into April.
** Midday South American Weather Update: The midday forecast is similar to the overnight runs with limited rains for C and S Argentine crops for the next 10 days. A few showers greater than .50” may fall across 10% of the crop area, but most of Argentina see .1-.6” on the weekend. This is far too lite to alter the deepening drought. Warm temps will also persist across Argentina with highs in the 80’s to the lower 90’s. Moderate to heavy rain will persist across N Brazil with 10 day totals of 6-9”. The rains will slow harvest, but produce favorable growing conditions for corn. The odds of a smaller Argentine corn and soybean crop is rising amid the deepening drought. Cash connected traders in Argentina now argue for a soy crop below 40 MMTs.
** Midday Market Comment: Everyone is catching their collective breath with just 7 trading days remaining before the key March Stocks/Seeding Report. The US FED is expected to raise their lending rate by .25% on Wednesday and worry persists with the Trump Administration will impose trade tariffs on China before the end of the month. Funds need to liquidate additional net long CBOT positions and world cash markets need to tighten before a rally can be sustained.
