Morning Commentary 3/10/21

CBOT Sags on Rain Forecast for Argentina for Last Half of Next Week; Algeria Buys Baltic/Polish Wheat; Snow/Heavy Rain to Target Plains/W Midwest

6:30 AM CBOT Prices: May soybeans are down 19.00 cents at $14.21, May corn is down 8.75 cents at $5.37 while May Chi wheat is up 8.50 cents at $6.48.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! It is “gut check” Wednesday with CBOT futures sharply lower on wetter Argentine weather forecasts for the last half of next week. The prospect of an Argentine showers along with USDA raising cumulative South American soybean production in Tuesday’s March WASDE was enough to spark overnight selling/long liquidation.

Key chart-based support rests at $5.30-5.35 in May corn and $13.90-14.10 in May soybeans, and $6.00-6.10 in May KC wheat. ARC doubts that this support will be broken with the CBOT to expand position limits on Monday. This will allow some of the larger funds to double down on their long grain/soy bets.

CBOT open interest in Tuesday’s trade rose 369 contracts in corn, while falling 1,617 contracts in soybeans and 4,073 contracts in wheat.

There were 15 contracts of KC wheat tendered for delivery with no corn, soybeans, soyoil, soymeal, oats, or Chi wheat tendered.

US equity markets are down slightly as traders eye bond yields and a House vote today on the $1.9 US Covid Stimulus package. If the House votes “yea” as expected, the bill would head for signature by President Biden with Americans receiving $1,400 checks in the closing days of March.

May Paris wheat futures is down €.25/MT at €229.00 while April Malaysian palmoil futures rose 76 ringgits to 4,104 RM/MT. Dalian May corn fell $.15/Bu to $10.77 while May soymeal eased $8.80/MT to $516.00/MT. Dalian soyoil closed lower for the first trading session in a week to $.655/pound.

The Argentine weather forecast is warm/arid for the next 6-7 days with a chance of rain in the March 17-20th period. Rainfall totals are boosted by the forecast models overnight with the GFS calling for .2-1.50” while the EU has rains of .5-2.50”. The EU is wetter, but our confidence rests with the GFS as its track record has been solid in recent weeks. The 11-15 day period is dry.

Northern Brazil holds in an above normal rainfall pattern for the next 10 days with even heavier rains offered in the 10-15 day period. Harvest operations will be labored while the new winter corn crop needs sunshine. High temps hold in the 80’s to the lower 90’s. Any winter corn seeded this late is likely to endure a yield drag as the dry season begins in early May.

Algeria is said to have booked 450-510,000 MTs of wheat at a CIF price of $323/MT, up $2.50/MT from their last tender in February. The wheat is said to be sourced from the Baltics and includes Poland. Algeria’s wheat tender results should prompt Egypt’s GASC to return to the world wheat market in coming days. The GASC tender will be interesting to monitor as it will help define the availability of Russian wheat amid their €50/MT tax.

China’s February food CPI was -.2% on the fall of domestic pork prices. China’s hog herd is estimated to be up 14% which should limit price rises.

Tightening US cash corn/soybean markets underpin CBOT breaks, but shrinking S American crop sizes are needed to sustain a rally. Its back-and-forth for now.

South American Weather Pattern DiscussionThe primary forecast models maintain a near to above normal rainfall for N Brazil while RGDS/Argentina hold in an arid trend. Lite to moderate rains are slated to drop across Argentina in the March 17-19th timeframe with the EU model offering important 1-2.00” totals.

The attached 10-day rain forecast from the GFS model. This model has been the most accurate in forecasting South American weather for the past 3 weeks. The GFS offers 10-day Argentine rain totals of .25-1.50” with coverage no better than 45%. The next 6-7 days are dry with the next chance of rain being early next week. The 11-15 day period offers a below normal rainfall trend with seasonal temperatures. Although some rain is indicated mid next week, totals will not be enough to substantially boost soil moisture. Concerns for Argy crops is high.

Near to above normal rain will persist across N Brazil which will slow the soy harvest and seeding of winter corn. High temps will be in the 80’s/90’s. The trend is wetter in the 10-15 day period with 2-6.50” of rain. The pattern of excessive rains for N Brazil shows no sign of ending into early April. Winter corn and the soybean harvest desire sunshine and less rain. No extreme heat is foreseen.

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