Ag markets, despite crude oil bounce, remain on defensive in corrective trade following early March
gains. AM headwinds include firm dollar, 3 day 27 cent decline in Dalian beans, comfortable US soy
crusher ownership and mostly open US weather for final week of winter.
Weather leans negative with dry week ahead for most of Midwest, return of warm temps next week
for C & S US, favorable S American weather and incoming rains for S Russia, Middle East and S
Africa.
Price action today supports view that ag charts topping out near term as cash markets absorb
stepped up CN/BN movement over last 10 days. KC wheat, up 6 cents in two sessions and up nearly
50 cents from early March lows, may have discounted US HRW dryness concerns—at least for now.
Vibes out of world’s largest wheat importer still negative as evidenced by low participation rate in
Egypt’s overnight wheat tender.
Soy oil share continue to advance–not so much on stellar soy oil fundamentals but more so on
eroding meal fundamentals including news yesterday of higher than expected Feb crush at a time of
dwindling US meal export interest and board crush margins that continue to encourage active crush
rate (especially with processors owning beans into early May). Look for lower crush margins in
coming weeks in attempt to slow US crush pace amid topping out of meal storage.
Export sales on deck tomorrow. USDA reported 100 tmt of US old crop beans to unknown. Suspect
US CN/BN sales tomorrow will be below last week’s totals of 1.2 mmt corn and 0.475 mmt beans.
FOMC press conference days inherently higher risk than most. Trade looking for stable policy today
although growing consensus that Fed ratchets rates higher in June –a stand alone supportive dollar
item that represents an additional undertow on ag markets in absence of adverse weather.
Suspect market upside response to inevitable less than ideal spring forecast will be more muted and
shorter termed than other years.
Foreign Markets:
Palm market unched at 2610 for 3 day gain of 6
• Paris milling up 1.25 urros at 158.50
• Dalian beans down 15.5 cents/bu, meal down $1.90/ton, soy oil up 1 and corn down 0.75
cents/bu
Special Report poultry, aquaculture, and livestock sectors will increase corn imports to 8.5 MMT in
2016/2017.
• (Bloomberg) –Palm oil exports from Indonesia probably fell for a second month in February
after demand from China weakened and as the world’s largest palm grower used more of the
commodity in biodiesel. Shipments fell 7.1 percent to 1.95 million metric tons from 2.1
million tons in January, according to the median of nine estimates from analysts, refiners and
plantation executives compiled by Bloomberg. That would be the lowest since February 2015,
according to data from the Indonesian Palm Oil Association, also known as Gapki. Palm oil,
which bucked a commodities rout last year, is set to reach the highest since 2012 as the
strongest El Nino in almost two decades ravages production and squeezes inventories,
according to Godrej International Ltd.’s Dorab Mistry. Better-than-expected world energy
demand for palm oil with the Indonesian biodiesel program “now functioning well†will boost
prices to more than 3,000 ringgit ($728) a ton, he said last week.
• (Bloomberg) –Olam International Ltd., one of the world’s largest food traders, is hunting for
more investments in Africa as it looks to benefit from the continent’s increasing appetite for
everything from instant noodles to lollipops. Long endowed with rich agricultural resources
including coffee and cocoa, Africa has a growing middle class that is now demanding more
packaged food, according to Chief Executive Officer Sunny Verghese. That’s presenting
increased opportunities for investment in branded foods as well as raw materials such as
rubber, cotton and lumber, outweighing threats from political unrest to terrorism, he said.
• No word as yet on PRC’s new corn pricing policy.
• Trade Friday looking for COF at 100.5% and Placements at 10.83%.
• Board crush Tuesday off 1.75 cents to 3 cents May through Jan 17 to 55-67 cents/bu.
• Egypt tender for wheat garners low participation amid uncertainty over quality rules. Only 6
trading companies participated.
• Prominent S American crop scout leaves 5 country 2015 CN/BN production forecasts unched
vs. last week at 175.3 mmt for soy (up 3.9 mmt vs. YA) and corn at 113.3 mmt (down 2.9
mmt vs. YA). Analyst also raised possibility that USDA is understating 2016 acreage of corn
and soy.
• (Bloomberg) – China March Soybean Inbound Shipments May Be 4.6m Tons – China’s inbound
soybean oil shipments may be 15,100 tons in March, the Ministry of Commerce said in a
statement on its website yday. Palm oil inbound shipments may be 223,000 tons.
• (Bloomberg) –Don’t be fooled by the recent rally for crop prices, as there’s still more pain
ahead for the U.S. farm economy. That’s the view of CHS Inc., the country’s largest
agricultural cooperative. U.S. farm net-income is falling at a steeper rate than cash receipts,
showing that fixed costs, such as land and equipment, are too high, said chief executive
officer Carl Casale. Farmland rents are demonstrating “stickiness†and aren’t dropping much,
if at all, he said Tuesday during the National Grain and Feed Association convention in San
Diego. The U.S. farm economy is “not at bottom,†he said. CHS is planning cut expenses this
year and will freeze costs during the next two years to help avoid trimming its workforce.
While it can’t make guarantees, the company is “hugely committed†to weathering the farm
economy downturn without massive layoffs, Casale said.