Today's weekly export sales report was a mixed bag. Wheat showed 446 thousand metric tons were sold last week for shipment prior to June 1. That was off 8% from the week prior and below the 4-week average of 560. With ending stocks over 8 million bushels at a level that is double what we once considered tight stocks, only supply-side fundamentals [not demand side] can rally wheat. Supply-side fundamentals will be addressed on Friday's USDA monthly report, and in the March 30 spring wheat planting intentions report as well as through weekly weather updates concerning the now emerging U.S. Southwest winter wheat crop.

To date the El Nino weather pattern has the jet stream pulling storms along the southern U.S., Texas, Oklahoma, and southern Delta. If that continues, it will improve quality levels over the hard red winter wheat states, but the soft red winter wheat grown in the Midwest and delivered on the CBOT exchange contracts, grown largely in Illinois, Indiana and Ohio, could remain very dry.

Dormancy normally breaks in April, but temperatures hit the 60-degree mark this week, and the outlook calls for 70-degree temps in the region next week! With that, and if it is dry, emergence could begin early.

Trend-following funds are currently short a near-record 90,000 contracts; if weather becomes bullish, a short-covering rally could occur quickly. For example, in 2010 funds bought back 50,000 of 88,000 short contracts when weather issues arose in Russia, and wheat rallied $1.80! Be aware, be ready.

Corn exports were 445 million bushels versus 807 as our 4-week average. China was absent, while Mexico came in for the 14th consecutive week, but only for 74 thousand metric tons, opting to buy more for 2012-13 delivery after September 1.

All the talk of China simmers, and it's long-term bullish, near-term neutral. Their expansion of hog, chicken and corn-based ethanol has corn usage at a record pace, but they're feasting off reserves from last year's better harvest. It looks like problematic weather conditions are arising that could cut production measurably this year. The trade sees China entering when their current prices eclipse ours and reserves are tightest; that would time it to June and later with deliveries slated more for the 2012-13 marketing year that begins September 1.

Bean exports were a whopping 1.015 million metric tons for our current crop marketing year. This was over the 4-week average of 686 thousand metric tons and it was 86% over the week prior. Two of the last three weeks have been over 1 million. It's a red flag telling us they have accepted that the South American crop will be shriveled by drought and that they need to turn more aggressively to the U.S. This has traders buying beans and selling corn today as a spread.

All eyes now turn to Friday's USDA monthly crop before at 7:30 a.m. Central time.

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