Written Commentary
MORNING OUTLOOK
Grains are mixed. SK is down 6 cents and near 14.16. SMK is near 403.6. BOK is near 55.48. CK is unch and near 5.54. WK is down 4 cents and near 6.42. KWK is down 4 cents and near 6.04. US stocks are lower. US Dollar is higher. Crude is higher. Big Fed comment meeting day.
Chinese Ag futures (May) settled down 77 yuan in soybeans, up 8 in Corn, up 45 in Soymeal, down 186 in Soyoil, and down 218 in Palm Oil. Malaysian palm oil prices were down 13 ringgit at 3,882 (basis June) at midsession with a better export outlook supporting prices amid higher output forecasts.
In Argentina, today’s rain and the additional occasional periods of shower and thunderstorm activity in the next ten days will continue to reduce crop stress and stop the decline in crop conditions. In Brazil, last evening’s GFS model run was similar to the midday GFS model in showing rain intensity and coverage declining in Mato Grosso, Goias, and Tocantins after Friday which will help support greater fieldwork and help stop the decline in crop conditions.
A weather disturbance will promote significant precipitation from central and southern parts of the Hard Red Winter Wheat Region through the Delta, central and southern Corn Belt, and southeastern states tonight through Thursday.
March 1 soybean stocks are estimated near 1,500 mil bu vs 2,255 ly. This and USDA estimate of US 2021 soybean acres and South America crop numbers could be key to prices. Palmoil futures are higher. Soyoil futures continues to add to inverse due to higher global demand. Soyoil share of board crush is near 40 pct. There was talk of China buying 3 US soybean cargoes. Concern about their drop in crush due to ASF has weighed on soybean and soymeal futures. Some feel their April coverages is near 95 pct, 70 in May and 60 in June. This is about 6 mmt yet to buy. Brazil harvest should increase. Vessel lineup is near 16 mmt with 5.7 mmt loaded so far in March.
Nearby corn futures continue to gain on differed. Strong domestic basis and better than expected weekly US export is offering support. US end users; feeders, processors and exporters are all bidding.
For corn demand. USDA stocks estimate and 2021 soybean acres estimate and South America crop numbers could be key to prices. Weekly US ethanol production should be higher than last week. Stocks should be down from last week. Yesterday, China buying US corn brings their total to 20 mmt with 5.7 in the unknown. USDA estimate of China corn imports at 24 mmt looks low. Hog futures are 93 versus Covid low near 40. Cattle futures are 118 versus Feb high near 126 and Covid low near 81.
Wheat futures remain a follower given uncertainty of 2021 demand and north hemisphere weather.
Russia export policy and post Covid food demand also key to prices. Nearby Chicago wheat is near 6.42 versus Covid low near 4.94 and recent high near 6.93.
On Tuesday, Managed funds were net buyers of 1,000 contracts of SRW Wheat; bought 10,000 Corn; net bought 2,000 Soybeans; sold 1,000 lots of Soymeal, and; were net even in Soyoil. We estimate Managed Money net long 20,000 contracts of SRW Wheat; long 378,000 Corn; net long 155,000 Soybeans; net long 55,000 lots of Soymeal, and; long 107,000 Soyoil.
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