Corn finished virtually unchanged for the week. The trade remains focused on the possibility of a wet spring causing planting problems. Rainfall of up to 1 inch is expected over much of the U.S corn belt, which combined with melting snow, may cause flooding.

Large quantities of poor quality corn is coming out of on-farm storage onto the cash market, drawing significant price discounts. However basis levels for good quality grain are remaining firm. Large US corn supply should keep corn spreads near full carry throughout the season.

In a rare move, the USDA has conducted a resurvey of US corn production. The results will be released on March 10th. While most expect production figures to decline, it is possible that better than expected yield results on late harvested corn may see unchanged to even higher production.


SOYBEANS
Soybeans finished unchanged from last week’s values. With the IMF intervening to solve the Greek debt problem, funds flowed out of the U.S. dollar and back into commodities, helping to support soybean values. However the falling U.S. dollar eroded local basis levels. Despite Greece avoiding loan defaults, currency volatility is expected to continue in the coming weeks as Ireland, Spain and Portugal face similar debt issues.

Trade is looking towards the key March 31st acreage and stocks report. Any confirmation of larger than expected new crop plantings would continue to create an even more bearish long term US soy outlook. However currently funds are hold long positions on Soybeans (24,000 contracts), meal (19,000 contracts) and oil (21,000 contracts).

North American biodiesel margins remain at breakeven levels, which will constrain oil prices in the short term. However outside America biodiesel use is expected to rise significantly in the coming year, which may result in increased domestic consumption in South America taking the heat out of the export market.  


WHEAT
Wheat finished marginally higher from last week assisted by a weaker U.S. dollar and some strength in the corn market.

Record snow cover in the U.S. will potentially delay spring wheat planting which usually begins in early April. Heavy rains are also expected over U.S. HRW growing areas early next week which may cause some flood damage.

During the week the UK, Spain and India increased their wheat production estimates. EU wheat values are on the verge of triggering government intervention. If values continue to languish, a flood of wheat is expected to come out of storage, freeing up space for the upcoming harvest.

The March contract saw 634 contracts delivered in Chicago, 125 in Minneapolis and 15 in Kansas City.

Contract prices for March 3rd, 2010 at the close are as follows:
SWW at $167.61 per tonne ($4.62/bu.), SRW at $161.65 per tonne ($4.40/bu.), HRW at $181.35 per tonne ($4.94/bu.), and HRS at $176.14 per tonne ($4.79/bu.).


Chart of the Week