Brazil Bean Harvest, Loading and Second-Corn Planting Sped Up with Dry Window; Argentine Crops Deteriorates With Dryness; Winter Wheat in Good Shape

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Oilseeds

  • Funds have trimmed the net long positions on soyoil, though they remained a 10-year high. On the contrary, funds are only modestly long soybean meal.
  • Delayed soybean supply and tight palm oil fundamentals continue to drive the tightness in the oilseeds complex. It is expected stocks will rebound in April/May, when we might see the relative strength of soyoil vs soymeal weaken.
  • Aided by crude recovery and tight fundamentals, palm oil rallied further, pushing soyoil and the CBOT oilshare to a 10-year high.
  • With strong global soymeal and soyoil demand, the board crush margin remained solid, despite falling back from previous high amidst recent soybean rally, providing strong incentives for soybean crush across US and South America.
  • On the flip side, Chinese crush has been hampered as margins dip to the lowest since the start of the year, led by weaker soymeal cash prices with new ASF cases and weaker RMB.
  • Brazil soybean lineups reached a record of 17.3 mmt as of last weekend, 40% higher YoY. Agencies expect that this would be the peak of lineups as loadings should pick with the weather pattern drying up in the upcoming fall months. We tracked 4.0 mmt beans loaded ex Brazil in the first half of March.
  • Despite a recent pick-up in the harvest pace, incremental farmer selling has dropped as cumulative harvest has been slow relative to the existing contract commitment. Up until March 12th, Brazilian farmers have pre-sold 63% of the 20/21 soybean production, compared to 61% a year ago and the 5-year average of 49%.
  • Despite a record crop size, Brazil harvested soybeans with excessively high moisture content and deteriorated quality in central/northern growing areas this year. We believe the impact is currently not fully reflected in the CBOT prices.

Brazil Soybean Loadings and Argentina Soybean Meal Loadings

Corn

  • The Buenos Aires Exchange recently cut the Argentine corn production by 1 mmt to 45 mmt. Forecast indicates heat and spotty rain will continue to dominate the central Pampas region, exacerbating the needs for moisture.
  • While precipitation has benefitted the late development of first-crop corn, continuous rain has delayed the planting of second-crop corn across central Brazil. Mato Grosso corn was 88% planted, compared with 97% on average.
  • A recent dry-up in the weather pattern has sped up the planting drastically, but a substantial share of the crop is likely planted out of the ideal window, leading to early freeze risks near harvest.

Wheat

  • Russian wheat exports slowed precipitously in March. The AgMin commented on the possible lifting of the export tax if the domestic market stabilizes. This is seen as temporarily bullish as it shuts down farmer selling.
  • Overall the improvement in the Black Sea has pressured the wheat prices lower. Conditions in southern Russia and Ukraine has improved in particular with above-normal rain since late December/January.
  • Despite a short 20/21 crop, prospects for the 21/22 winter crop remained favorable across most of Europe following a wet fall and winter.
  • US hard wheat exports rose to a multi-month high led by strong Asian demand.

Russia Wheat Loadings and US Wheat Loadings by Grade