GOOD MORNING,

The markets are lower across the board on first notice day.  Traders should be out of long March futures heading into delivery.   Equity markets are lower as well, which is providing Chicago with some macro pressures.  US meal futures are down hard following a 5% slide in the Chinese meal market, which was the largest decline in eight years and based on what analysts theorize was profit-taking combined with some limited March bean imports from Brazil. The announcement from China that they would slow the crush rate on Brazilian harvest delays cast a negative sentiment over the market Thursday.   Adding to the negative sentiment  this morning is the announcement from China that African Swine Fever outbreaks are now moving north to south.  

The market is finally coming to terms with the size of the crop in Brazil and Argentina.  More analysts have now pegged Brazilian bean production around 133.0 mmt, but some private estimates are even higher.  Brazil April/May export prices are lower than the US for both beans and corn.   

Wheat futures are lower as world supplies are not as tight as corn or beans.  The International Grains Council (IGC) on Thursday raised its forecast for global wheat production in the 20/21 season by 5 mmt to 773 mmt.  Australia's possible record crop was one of the main reasons for the higher production estimate, raising it to 33.3 mmt vs. a prev. forecast at 31.2 mmt, and more than double the prior season’s 15.2 mmt.  IGC raised its outlook on Kazakhstan's crop to 14.3 mmt, a three-year high, from 12.4 mmt.  Russia's wheat crop was projected at 85.3 mmt vs. 84.5 mmt.  

WEATHER

--A slightly wetter outlook for Argentina contributed to a bit of a sell-off yesterday.  Weather appears wetter in northern Argentina and southern Brazil after next Thursday, which is bearish. 

--US weather sees central and southern plains dryness continuing, which is concerning for winter wheat heading towards spring, with forecasts for southwestern US drought to not change anytime soon.  There are forecasts for rains to fall in parts of the HRW region next week, which would be important.  The GFS model has increased snow and rain in the northern plains, upper Midwest, and eastern prairies.  Unusually warmer temperatures will be present in the US Midwest for March 2-9. 

ANNOUNCEMENTS

Argentina's BA Exchange forecast for beans and corn unchanged at 46 mmt despite hot and dry weather. 

Brazil's second largest producing bean state is forecast to reach 20.34 mmt for 20/21, down slightly from 20.39 mmt, according to Deral.

Total bean stocks gained 930,000 mt from the pre-holiday level to hit 5.71 mmt week ago, according to data from China's National Grains and Oil Information Centre.

China's finance ministry announced they would be extending tariff exemptions on 65 imported US goods to Sep. 16, 2021.

China's Ag Ministry is looking to boost 2021 corn planted acres by 667,000 hectares in the northeastern growing areas and along the Hai, Huai, and Yellow River Basins.  The ministry also said it would treat 3.3 mln hectares worth of polluted land for future agricultural production.

DELIVERIES

Meal:  7

KC wheat:  89    Wells Fargo cust. puts out 83, scattered stopping

CALLS

Calls are as follows:

beans:  18-21 lower

meal:  5.50-5.80 lower

soyoil: 70-80 lower

corn:  6-8 lower

wheat:  10-12 lower

canola:  8.00-9.00 lower

What to look for today?  Prices closed at the lower end of ranges, and therefore should spark more selling at the open.   As such, it will be important to see if May corn can hold onto very important support at $5.40, May beans at $13.68, and May meal at $413.00, which is also trendline support. 

OUTSIDE MARKETS

Feature profit-taking for the energy/US currency trade, with crude trading to $62.01/barrel and the US dollar firming to 90.77.

TECH TALK

• May beans post an outside day closing lower Thursday, which typically indicates more weakness is ahead.  The PM session took prices back towards the key support at $13.95, where sell-stops were triggered leading to the bottom of the trading range which appears to be from $13.65-$13.70.  Today is a good test for this current bull market, as $13.65/$13.68 meets a visual strong support line.  Moving through it would set in motion a larger sideways trade, but also put the uptrend in more peril.  
• May meal prices break $420.00 trading below recent lows of $417.00.  The pattern is more bearish now featuring a descending triangle which is bearish in nature.  Key support is $413.00 and would open the door for a much larger sell-off if violated, and in that case if needing to price could exercise patience.  
• May soyoil trades to 5095c new contract highs, but this is a truly strong market, and therefore 150 pt pullbacks should be purchased.  Lower trendline support is at 4850c, but breaking that targets 48c quite easily.  If short soyoil, would cover on these dips.  Look for a pullback to 46c to offer the best support, as it held for a week to provide a base of support for the current market though we may not quite get there.  
• May corn prices trend lower towards key support at $5.35/$5.40.  We have now traded there on a heavy fund presence and lack of current upside momentum, but would look to see if prices will stay under $5.40 and key resistance once again returns to $5.55  to $5.58.  Look for a possible $5.35 - $5.55 trading range to possibly form.  
• May wheat continues to find support on pullbacks, but $6.60 now appears to be the difference between a market that would be able to work higher, or one that on a trade lower would find a larger sell-off towards $6.40 again.  Could continue to straddle/strangle this market from $6.30 - $6.95.

MAY CORN

Trading range is from $5.25 to $5.72, the contract highs.  However, prices are having trouble mounting a rally over key resistance which is from $5.55 to $5.58.  Trendline support at $5.35 to $5.40, and any trade below this level will increase the chance that prices begin to work lower.  If long and prices close under $5.40, should probably reassess and liquidate a portion of it.  Commercial pricings could and should still be located at $5.25.  The ADX is relatively weak at 29, with prices slightly trending towards overbought.  Prices may continue to pivot around $5.50 if $5.40 continues to hold.  With so much pressure on the markets, will be very telling if May corn can hold this important low.  

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America