USDA overshadows trouble and strife

Russia is also clamping down on some of its own private export companies After kicking out foreign-owned trading houses and seizing their assets, TD Rif – a major private exporter – has come to the attention of the Russian Ag Ministry. Citing ‘phytosanitary inconsistencies’, the watchdog is threatening to slash the company’s export quota and forcibly sell off their assets. It is thought this might be an attempt to nationalise the wheat export market. It has the potential to slow down exports which in turn could shore up prices. At this point, it is assumed that other private traders will step in to fill the void.

By the end of the week, the wheat market has turned its attention to the upcoming USDA report. The March stocks and acreage report can be a bit of a market mover. Expectations are for corn area to decrease by 3% from last year, wheat down by 4.5% and beans up by 3.5%. Recent history shows that trade guesses and the published data can be miles apart which can lead to some pretty big moves in the market.

The weather market is also showing signs of ramping up. The forecast for the Russian agricultural regions remains dry. While it remains cool, crop production should not be adversely impacted. However, as we move into April, temperatures will quickly start to increase, and any potential stress will build.  SovEcon recently increased their Russian production figures to 94mmt, but the weather remains a flag to watch.

Canada saw some good moisture along the Alberta southern borders in the past week. The rest of the Prairies missed out.  Snow and moisture levels remain patchy ahead of seeding.

From a technical standpoint, the net open interest positions ie the balance of sold and bought futures positions remains overwhelmingly bearish. This means that the fund managers and speculators are still betting on prices going down. This could be a bear trap if we see a sudden escalation in the war or a major production problem emerge.