Written Commentary
MORNING OUTLOOK
Grains are lower. SK is down 6 cents and near 13.78. MK is near 429.3. BOK is near 45.80. CK is down 3 cents and near 5.47. WK is down 1 cent and near 6.46. KWK is unchanged and near 6.30. USDA Outlook Forum Friday. US stocks are lower. US Dollar is lower.
Chinese Ag futures (May) settled up 52 yuan in soybeans, up 55 in Corn, up 6 in Soymeal, up 230 in Soyoil, and up 254 in Palm Oil. Malaysian palm oil prices were down 142 ringgit at 3,490 (basis May) on demand fears, high export tax.
SK support is near the 20 day moving average at 13.66. Soybean spreads continue to widen on talk of slower US exports. Open interest is down from 1,059 thousand high. Daily volume is down from recent peak of 376,000 contracts. China futures reopened with gains in soybean and soyoil. Brazil harvest remains slowed. Technical signals turning lower. Fundamentals suggest long term higher trade. Approaching South America harvest offers resistance.
CK support is near the 20 day moving average at 5.40. Brazil second corn crop plantings are near 8 pct versus 32 average. Corn open interest remain near highs of 1,961 thousand. Volume has dropped sharply from recent peak near 816,000 contacts. Demand for US corn remains high and offers long term support to prices. USDA 2021/22 Forum corn numbers could be negative.
WK is in a 6.36-6.50 range. Chicago wheat open interest remain below recent highs. Daily trade volume is down from recent peak. Rumors that Russia may drop their export tax policy may have weighed on futures but appears unfounded. Strong debate on impact recent record cold temps may or may not have had on US 2021 winter wheat crop. Wheat fundamentals are mixed with adequate nearby World wheat supply limiting upside and uncertain 2021 World wheat supply limiting the downside.
Net drying will continue across a majority of Argentina through next Wednesday. Last evening’s GFS model run did not show much rain in Argentina Feb. 27 – Mar. 4; though, additional isolated to scattered shower and thunderstorm activity is likely. Conditions in much of Brazil will continue to be favorable; though, some areas will be wetter than preferred.
It has been three years since U.S. farmers experienced a normal spring planting season, as extreme flooding in 2019 and a pandemic in 2020 derailed the initial plans, resulting in dramatically thinner supply levels than originally projected. The extraordinary underproduction of corn and soybeans over the past two seasons has helped Chicago-traded futures reach multi-year highs, increasing projected profitability for the 2021 harvest. Corn, soybeans and competing crops are no longer “hot potatoes” in farmers’ eyes as they have been in recent, low-price seasons. Producers will report planting intentions to the U.S. Department of Agriculture at the beginning of March, and those numbers will be published at the end of next month and will be factored in to balance sheets until the next acreage survey results are revealed at the end of June. But USDA at the end of this week will be unveiling unofficial supply and demand outlooks for 2021-22, which will start on Sept. 1 for domestic corn and soybeans. These will include the only area projections of the year that are not based on farmer surveys.
On Wednesday, Managed funds were net sellers of 9,000 SRW Wheat; net even in Corn; net sold 2,000 Soybeans; bought 2,000 lots of Soymeal, and; net sold 3,000 Soyoil. We estimate Managed Money net long 10,000 contracts of SRW Wheat; long 340,000 Corn; net long 165,000 Soybeans; net long 65,000 lots of Soymeal, and; long 111,000 Soyoil.
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