** Wheat fund selling has produced new contract lows in KC March futures. Paris wheat started the Chicago decline with March Paris wheat down $3.25 euros/MT at $195.00/MT. March Chi is back to its initial starting point at the beginning of the year at $5.01. This week’s wheat decline started on weakening Russian fob prices which has spread to the EU and US.
The wheat selling tugged corn/soybean futures off their opening highs. Most of the AM selling has been chart and fund related. Cash selling from US and South American producers has dried up on the CBOT decline.
The US stock market has rallied sharply amid China/US trade optimism. The US/China delegation will be arriving early next week for a new round of talks. Its expected that if enough progress can be reached, that US President Trump and Chinese President Xi will be holding a trade summit in the US in March. President Trump offered that he may invite Democratic leadership to join.
** US President Trump indicated that US/China are making progress on trade, but it will be up Trump to decide if final pact can be achieved in face-to-face presidential negotiations – likely sometime in March. The President hinted that this would be this would be the “biggest trade deal ever”. No exact numbers were offered, but we all need to remember that China pledged $1 Trillion dollars in US purchases into 2024 back in mid-January.
** CBOT brokers report that funds have sold 5,000 contracts of wheat, 2,200 contracts of corn, while being flat in soybeans.
** FAS reported that 205,744 MTs of US corn was sold to an unknown destination during the 2018/19 crop year.
** Above normal temps and below normal rainfall has some raising their winter wheat crop concern for SW Russia. The forecast is warm/dry for another 2 weeks
** Seasonal trends for corn/soybeans normally bottom in mid-February and turn upwards heading into May. Amid the need for additional US corn acres, ARC suspects that this trend will be at work again this year. South American crops (outside of winter corn production in Brazil) are largely known. US farmers needing to raise cash flow for spring inputs have largely completed those sales. New sellers will be needed to push values substantially lower from current levels. A new Northern Hemisphere growing season and enlarged US export demand to China are mentioned as the bull catalysts.
** South American Weather Discussion: The midday GFS is drier across Southern Brazil and Argentina when compared to the overnight forecast solutions into February 25th. The GFS backed down on the coverage and totals of Argentine rainfall during the 8-10 day period. The GFS’s outlook is generally favorable for Brazil with widespread soil moisture improvement. Weather watchers are eyeing developing dryness in S Argentina and can this dryness march northward into Central Argentina by early March?
** AgResource Market Analysis: Our advice has been to avoid selling CBOT breaks or chasing rallies in this political marketplace. The corn market continues to hold the most bullish fundamentals, soybeans the most bearish with wheat caught in between. The lack of volume on the push to new wheat lows tells ARC the break is a bear trap.
The 3-week weather forecasts for the Central US calls for considerable rain across the Delta and S Midwest. This wet trend shows no sign of abating, which could pose a March corn seeding concern.
The big US ag market unknown is the US/China trade deal and its impact on US demand looking forward? The potential of China pledging to reduce a good portion of the US/China trade deficit is enticing to every US ag market bull.
