Countdown To USDA & WASDE Weighing Fundamentals & Technicals. The Corn & Ethanol Report

We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., ADP Employment Change at 7:15 A.M., Fed Chair Powell Testimony, JOLT’s Job Openings, JOLT’s Job Quits, and Wholesale Inventories MoM at 9:00 A.M., EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Fed Daly Speech at 11:00 A.M., Fed Beige Book at 1:00 P.M., Dairy Products Sales at 2:00 P.M., Fed Kashkari Speech and RCM/TIPP Economic Optimism Index at 2:15 P.M.

green grass

Photo by Waldemar on Unsplash

As many headlights are ahead of traders contemplating fundamentals turns, shake & bake as we have funds heavily short and technical failures that could not produce a buyers close. Weather and yields will come into play in the March USDA & WASDE data. We failed to have May corn settle above 434 (the 20-day moving average) once again. The technicals are keeping the bulls at bay, with conflicting headlines they are keeping their cards close to the vest. A bullish market needs to be fed continuously bullish fundamental news. If the technicals and fundamentals ever agree that this market is completely oversold. The charts have been telling the complex otherwise. However, there are many of ships at the bottom of the sea and they had charts too. A lot to think about this week.

Brazilian fob soybean offers are steady this morning with soybean harvest accelerating across central and southern production areas. Paranaqua for June is offered at 5 cents under July futures. Brazilian crushers and exporters have been unable to secure more than a few weeks of soybean coverage with domestic cash soy oil gaining due to Brazil’s expanded blending rate in diesel. Brazilian 48% soymeal for May is offered at $11/MT below the US Gulf. We also must note Malaysian palm oil futures rose to a 7-month high due to expanding biodiesel demand for both Malaysia and Indonesia with product shortfalls and adverse weather. Another sign the bears & bulls are plotting their course.

Weather modules agree and are consistent in their South America weather forecast into mid-March. A winter like pattern holds with below-normal rainfall for Northern and Central Brazil while heavy rain focuses on NE Argentina. The GFA stays slightly wetter than the EU model, but both offer up a trend of below normal rainfall for the Northern 2/3’s of Brazil with near or above normal temperatures. Brazilian high temps will reach the 90’s with a Paraguay in the upper 90’s. The combination of heat and dryness will continue to drop soil moisture which could be important for the winter corn production should the monsoon retreat early in late March or early April as the soybean harvest pushes ahead. The Argentine forecast is nonthreatening. Mild and dry weather occurs this week with showers and thunderstorms returning on the weekend and persisting every 2-3 days next week. The forecast is consistent in projecting rains of 1-3” across Argentine grain areas which maintains favorable soil moisture.

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