** The morning has been mixed AM CBOT trade with the grains trading weaker, while the soy complex pushes higher on the discussion of a further decline in the ‘18 Argentine soybean crop. A sub 38 MMTs Argy soy crop would be near catastrophic for world meal consumers as their just would not be enough supply for all. The world would have to see China import more soybeans to process for SE Asia. The world is starting to better understand the impact on the Argentine drought and a sustained price decline appears to be unlikely until the Northern Hemisphere confirms another record or near record large harvest. However, fund managers are reducing their net long CBOT exposure heading into Thursday’s report which is producing some pressure this AM. Some additional long liquidation is possible before a rally into Thursday.
** CBOT brokers report that funds have sold 6,000 contracts of corn and 3,600 contracts of wheat, while buying 1,900 contracts of soyoil, 1,200 contracts of soymeal, and 2,500 contracts of soybeans. Funds have been early buyers of soybeans and soymeal, but have turned sellers at midday.
** US export inspections for the week ending March 22nd were; 45.4 Mil Bu of corn, 21.5 Mil Bu of soybeans, and 10.2 Mil Bu of wheat. The wheat inspection total was below the lowest end of trade expectations while corn was less than expected. For their respective crop years to date, the US has exported 902.1 Mil Bu of corn (down 351 Mil Bu or 28% from last year), 1,499 Mil Bu of soybeans (down 204 Mil Bu or 12%), and 714 Mil Bu of wheat (down 9% or 67 Mil Bu). The export pace argues that USDA is about right on corn/soybeans, but still 15-20 Mil Bu too high on wheat.
** FAS announced that 132,000 MTs of US soybeans were sold to an unknown destination and 120,000 MTs of soymeal to Spain. The Spain soymeal sale confirms that world demand is pushing back the US amid the Argentine shortfall
** Another 10 days of near complete dryness lies ahead across Argentina’s primary crop belt with just a few lite showers. The best chance of rain is now between April 5-7th, which is getting too late to offer much crop assistance. Cash connected Argentine crop watchers are now pegging their soy crop at 36-38 MMTs with corn under 28-30 MMTs.
** Midday Central US Weather Update: The midday GFS is dry across the HRW Belt over the next 10-14 days and our research maintains that a complete pattern shift there will be difficult to establish in the next 30 days. Moderate rain/snow impacts the Midwest midweek with heavy totals (upwards of 5-7”) across the Delta/S Midwest. Temps stay at/below normal across much of the Corn Belt with winter type temps to persist into April 10th. The Midwest farmer is going to be slow to plant any spring seed into mid-April. And Delta farmers are likely to start switching some of their intended corn ground to cotton/soy amid ongoing cold/wet weather. There is no indication of needed warm/dry weather for the Delta looking forward into mid-April.
** Midday Market Comment: It’s all about positioning for the NASS reports due out on Thursday AM as funds liquidate corn length. A further fall in Argentine soy/corn production will tighten the world balance sheets, while China trade tensions cap CBOT rallies. US farmers are not showing any willingness to alter planting intentions on Chinese trade threats. We see May corn futures as “too cheap” below $3.75 and look for a late week rally. And the Plains drought underpins US wheat. May soybeans should hold $10-10.20 support.