Russian officials have finally agreed to extend the Black Sea export corridor, although the extension was less than hoped for. Russia has agreed to continue with the current agreement for another 60 days, half of the original agreement. While exports will continue, Russia wants ongoing talks to address some of their trade concerns, including the sanctions the world market placed on them at the start of the Ukraine war. Russia claims these sanctions are preventing exports of needed products, including fertilizer. It seems doubtful at this time there will be concessions on Russian sanctions. How much product Ukraine can export over the extended period will have an influence on how willing world partners are to work with Russia on another extension.

We are now at a stage of the year where we see a shift in market focus to spring planting. As more attention is placed on spring planting, less is given to marketing old crop inventory. Historically this tends to support interior basis values as deliveries of farm stored inventory declines. This year will likely be no different, but how much basis improvement we see may be less than in recent years.

One reason for this is that processing margins have been under pressure in recent weeks, which is impacting what a buyer can pay. Another is that many buyers have been aggressive on their origination in recent months and feel they have adequate coverage. Reports from the country also indicate farmer sales are already at 80 percent of last year’s crops and pushing bids may not elevate movement. There are still likely going to be windows of opportunity to extend sales over the spring planting season.

The most notable will be a shift in market attitude from monitoring nothing but old crop demand to placing more interest on new crop production. The most watched will be indications of wheat we may see for U.S. acres this year. In the Ag Outlook Forum, U.S. acres were projected at 91 million on corn, 87.5 million on soybeans, and 49.5 million for wheat. Total U.S. plantings are forecast to increase 6 million this year and be the highest total acreage since 2016. While this is a possibility, several factors will determine actual plantings, especially weather. Trade will now wait for the March 31st planting intentions report for more accurate numbers.

The United States continues to see the La Nina deteriorate and outlooks indicate this will transition to an El Nino, which tends to be favorable for production. Given the need for high production on all three crops, any potential for yield loss will receive a reaction in the market. We also tend to see a change in farmer attitude at this time of the year, with more interest on spring planting than old crop marketing. It is not uncommon to see buyers extend bids for immediate coverage at this time, creating windows of marketing opportunity.

The global soy complex is starting to see more harvest pressure from the Brazilian crop. While harvest has been slow to build this year, the spread between the U.S. and Brazil is increasing. Brazil continues to offer soybeans for over $1 per bushel under the U.S., and Brazilian meal is at a $45.00 per ton discount. Even meal out of Argentina is being offered at $25 per ton less than the U.S. and that is with a short crop. The real factor from the slower start to the South American harvest season will be longer competition in the marketing year. This will further shorten the window for the US to make sales.

One of the big stories in the corn complex recently has centered around Argentine exports. Argentina is projecting corn exports of 8.7 million metric tons between March and June, which would be a 40 percent reduction from the same period in 2022. The initial reaction to this prediction is that Argentina will produce a smaller corn crop, and while partially true, may not be the main reason. Argentine farmers have split their corn production into two seasons, which is similar to what is done in Brazil. Argentine farmers seem comfortable with their corn production outlook though, as offers are being posted at a discount to the rest of the global market.

A USDA forecast that is getting more attention is the average cash price projection. Corn is expected to average $5.60 for the 2023/24 marketing year, a decline of 16 percent from this year. Soybeans are expected to average $12.90, down 10 percent on the year. The average cash wheat projection for next year is $8.50, down 6 percent on the year. The concern with these is that interest rates are forecast to keep creeping higher, pressuring bottom line revenue for producers.

RISK DISCLAIMER: The risk of loss in trading commodity futures and options is substantial. Before trading, you should carefully consider your financial position to determine if futures trading is appropriate. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital. Past performance is not necessarily indicative of future results. The information contained in this report is believed to be reliable but is not guaranteed to accuracy or completeness by AgriVisor, LLC. This report is provided for informational purposes only and is not furnished for the purpose of, nor intended to be relied upon for specific trading in commodities herein named. This is not independent research and is provided as a service. As such, this is considered a solicitation.