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Despite seeing double-sided trade today, grains managed to eke out a positive close, although well off the session highs as selling was found mid day after an impressive overnight rally. Tomorrow's trade could be volatile if we cannot sustain the positive momentum, as we only have a week to go until the major market-moving USDA report on the 28th.
Export sales this morning were as expected. China led net U.S. wheat export sales cancellations last week, though 286kt were sold for 24/25 (Philippines, S Korea, etc). Corn sales were very similar to the previous weeks, Japan & Mexico were top buyers. China had 266kt old-crop soybeans switched from unknown.
Chinese imports of U.S. soybeans totaled just 4.96 million metric tons in January and February, down from 11.6 mmt the previous year. Meanwhile, imports of Brazilian soybeans during the period totaled 6.96 mmt, an increase of 4.7 mmt from the previous year, as Brazil continued to ship old-crop soybeans as it began harvest of its new crop, resulting in sharply lower demand for U.S. supplies. Brazilian soybeans remain very price competitive as it rapidly increases its ability to produce in a cheap currency environment. Our peak soybean export season is Oct - Feb. Chinese imports of US soybeans in that period fell 10 mmt from last year's level, while imports of Brazilian soybeans rose by 12 mmt (441 mln bu) during the period. USDA’s attaché in China projects the country will import 103 MMT of soybeans in 2024-25, unchanged from its forecast for the current marketing-year, through 2 MMT less than the official forecast for 2023-24 in the March WASDE Report.
Additional short covering is likely into next Thursday's reports, as fund managers don't want to be caught too short going into data day. Private acreage estimates seem to be indicating USDA is possibly too high on soybean acres and too low on corn acres. Ranges vary by 2-3 mil acres for both crops, which produces a pretty significant change in both ending stocks, and stocks/use ratios (2.5-4%). Corn futures have closed lower in 7 out of the last 20 years by an average of 17 1/4, while closing higher in the other 13 years by an average of 14 3/4. Soybeans have been lower in 10 of the last 20 years by an average of 28 3/4, while closing higher in the other 10 years by an average of 30 cents. The one trend that does exist is that markets are likely to react strongly one way or the other to whatever numbers USDA puts out on Thursday.
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