Markets at midday are mostly unchanged from the overnight session, though wheat’s break has deepened amid rainfall due in KS & NE in the next several days. Radar maps show moderate precip working across NE and the far NW corner of KS currently, and the midday GFS maintains regional boosts in soil moisture across the Plains over the next 5 days. No new export sales were announced this AM, and consolidation in grain futures has not been obstructed by new bullish news.
Open interest increased across the board on Thursday, indicating additional buying interest in soybeans, and also suspected farmer selling in wheat & corn. Interior basis levels since the end of February have weakened, with Decatur, IL, corn bids this week posted at $.05 under May futures, vs. $.05 over two weeks ago and vs. modest premium on this week a year ago. Corn’s story through the summer is still fairly compelling without above trend yields, but interior cash markets indicate no threat of shortages in the near term. The US farmer is keeping the pipeline full on the rally.
There’s an otherwise lack of fresh news available today.
Interior Chinese corn prices are rising as the government seems committed to ridding itself of burdensome supplies. The gov’t looks to offer subsidies to local corn refineries if local corn is secured. This could help China, but also boost incentive to import foreign grain amid rising domestic prices. Chinese feed imports since 2017 have been larger than expected.
Russian domestic wheat prices, however, are lower this week, partially due to a slight improvement in logistics and partially due to a weakening ruble. Replacement costs in Southern Russian – from where exports are sourced – rest at $161/MT, the lowest since early Feb. World cash wheat prices are not going down, but nor are they going up, and the US only better competes for export demand at $4.80, basis May KC.
The midday GFS is in better alignment with its EU and Canadian counterparts in South America, having trended drier in Argentina over the next 10 days. Regional precip will benefit the far eastern growing region on the weekend, but more important areas in Cordoba and Buenos Aires will be left shortchanged. The market has now digested Argentine crop loss, but those waiting for late-season improvement look to be disappointing. ARC does note that this month’s South American climate update shows near normal rainfall across Brazil’s safrinha corn belt in the Apr-Jun period, and precip there will be ongoing throughout the next two weeks.
Midday Central US GFS Weather Update: The midday US forecast is little changed from the morning run, if perhaps a bit wetter in Central KS early next week. Coming Plains rainfall does not appear to be an outright pattern change, but the wheat market will be on high alert to additional precip in the extended period amid the looming end of La Nina. 5-day totals across the northern half of KS are pegged at in a range of .50-1.50”, with similar totals expected across southern SD and the whole of NE. It also remains that above-normal precip will continue across the Delta, Southeast and mid-South into late March. The forecast leans a bit bearish wheat, but more attention will be paid to planting progress in the south in the weeks ahead.
Midday Market Comment: Consolidation was expected following recent excitement, particularly in corn & wheat. ARC advises to rest on the sidelines until planting intentions are known, and until clarity over N Hemisphere weather patterns emerge.
