This week’s action:
Corn May up 16 at $6.34
Beans May down 31 at $14.76
KC Wheat May up 33 at $8.36
Feeders April down 2.875 at $194.725
Fats April down 1.875 at $162.475
Hogs April down 7.425 at $79.825
Corn Dec23 up 2 at $5.61
Beans Nov23 down 44 at $13.12
KC Wheat July23 up 29 at $8.22
The government’s Commitment of Traders report has been lagging for several weeks now but they have gotten up to date up through last week and claim they will be 100% caught up this afternoon. Through March 7, funds had dumped 215,000 contracts in corn bringing their total length to just 21,000 contracts. This is the least long funds have been in the corn market since September 2020. This was the main driver for the 70-80 cent drop in May corn.
The big news this week is China has purchased a total of 2.111 MMT (around 85 million bushels) of corn. This combined with recent May futures weakness has resulted in springtime basis coming back to life. Some old crop bids are 15-20 cents better than a couple weeks ago.
The Brazilian state of Parana is struggling to plant its Safrina corn crop as moisture levels are at an all-time high for this time of year. This is equivalent to the wet spring of 2019 in the US in terms of timing.
Production cuts continue out of Argentina. The Bueno Aires Grains Exchange is pegging the Argentine soybean crop at 25.0 MMT. This compared to USDA’s current projection of 40.0 MMT and last year’s actual production of 49.5 MMT. (If correct this year’s crop is HALF of last years.)
The agreement between Russia and Ukraine to safely export grain expires tomorrow but is expected to renew at least another 60 days without conflict.
The forecast remains damp for most of Brazil next week but shows signs of clearing up to end the month of March.
We began the week with news depositors of Silicon Valley Bank would be made whole by the federal government. News and rumors of other financial institutions with illiquid long-term bonds have swirled and for the moment two main banks are in the crosshairs. First Republic Bank, based in San Francisco, has received $30 billion of deposits this week from larger banks to solidify front end liquidity as they have a similar profile to Silicon Valley Bank. Stock prices for regional banks have been lower 7 of the last 8 trading days.
Credit Suisse from Switzerland, and one of Europe’s largest banks, is also reportedly on thin ice. Their issues stem after an announcement from their largest shareholder, the Saudi National Bank, announced they have no intention of putting up additional capital. This caused the stock to fall 30% on Wednesday. For now, the Swiss National Bank is lending over $50 billion to calm things down. Many analysts predict this will not be enough to ward off a takeover by a competing bank.
Traders are debating whether the FED will follow through with their earlier ideas of raising rates yet this month. Some say it would cause panic if they do not continue raising rates as that may show the FED is seriously concerned about the banking industry. Others argue we need a pause to allow the banking industry to catch up to current market conditions.
The banking uncertainty has spilled over into other markets. Crude oil has fallen about 20% in just the last 10 days as the global economy is weary of more bad news. Traders are looking to see if the White House will step in with purchases to refill our Strategic Petroleum Reserves.
Something that probably means nothing:
The phrase “March Madness” was first coined in 1982 by Brent Musburger covering the NCAA Tournament. It the subject of a legal dispute with the Illinois High School Boys Basketball Championship, which had been using the phrase since 1939.
A 1996 court case led to a highly unusual decision granting both parties its own separate rights to the “dual use trademark”.
Enjoy your weekend!