Written Commentary
SOYBEANS
Soybean traded higher. Some feel tightening US old crop supply supports the domestic basis which is helping nearby futures.US and China will meet on Thursday in Alaska. Most look for China to agree to buy US goods under Phase 2 agreement in return US would drop or reduce the 35 pct tariff on China imported goods. China crush margins and crush rate are lower due to ASF. This could slow demand for US soybean exports. This has also dropped Brazil soybean export prices. Funds should be able to hold longs into US March 31 estimate of US 2021 acres and March 1 stocks especially if USDA numbers are below trade average guess. Drier Brazil weather should help soybean harvest there. Rains in Argentina could stabilize the crop there.
CORN
Corn continued to trade highs and closer to the upper end of the recent trading rang. Nearby futures continues to be supported by higher domestic basis as exporters, ethanol plant and animal feeders al bid for what is left of the 2020 US corn crop. Higher than expected weekly US corn exports are also supportive. Weekly US ethanol production is expected to be up slightly from last week as plants recover from the week of record cold temps. Stocks should be down slightly. Margins have improved and many look for increase demand once more Americans are vaccinated and return to traveling and get back to work in offices. US and China will meet on Thursday in Alaska. USDA announced China bought 1,156 mt US corn. Most look for China to agree to buy US goods under Phase 2 agreement in return US would drop or reduce the 35 pct tariff on China imported goods. New sales to China announced today is also supportive. Still talk that South America crops may not be as low as feared and improved Brazil planting and Argentina growing weather plus approaching US spring planting season offers resistance. Can funds hold on to longs if US spring planting weather is favorable? US March 31 estimate of US 2021 corn acres and March 1 stocks could be key to prices.
WHEAT
Wheat futures managed to close higher in Chicago and KC. Wheat was a follower to higher nearby corn prices. Good US HRW rains and slow US export pace is offering strong overhead resistance especially to KC. Talk that Russia may drop their export tax is also offering resistance although there is no official announcement. Cold weather in parts of EU and Russia should not be hurting the dormant crop there. Fact USDA raised crop ratings in KS, CO and OK also offers resistance although they remain below average. Wheat could see higher food demand once Americans get vaccinated and increase in domestic feed use. USDA is expected to estimate US 2021 all wheat acres near 45.0-46.0 million acres versus 44.3 last year. US SRW acres could be up as farmers look to harvest the wheat and double crop with soybeans. Key could be HRS acres. Soils are dry across US north plains and could stay dry through the rest of March and most of April. This could force farmers to switch intended wheat acres to other crops.
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