** CBOT futures are mixed at midday with the grains higher while soy futures are slightly weaker. The volume of trade has been very active with more than 150,000 contracts of July corn and over 65,000 contracts of July Chi wheat changing hands. Soy futures volume has been more constrained, but we are noting solid grain/soy buying on weather and HRW wheat crop concern.
The US wheat crop concern is interesting amid funds sitting on a record large short position. Too much rain is expected to fall across the S Midwest and Delta which will fuel disease pressure in SRW wheat, while scouts running through the HRW wheat crop are finding rust and blank heads that could be from prior cold weather events or the widespread incidence of streak mosaic disease that carried forward from late last fall.
Corn futures are higher in a delayed reaction to wet weather forecasts amid reduced fund selling. July corn looks to test $3.75 resistance while December takes aim on $3.93-3.95 resistance.
ARC is starting to turn more bullish of wheat as US and world wheat crop problems start to develop with new crop KC cash wheat offers just above the loan level. US wheat farmers are in no hurry to make sales with LPD potential in the offing (once the cash wheat is harvested).
** US wheat farmers do not appear to be in any hurry to apply fungicides on their disease rattled crop. The producer sees new crop cash wheat prices at their lowest level in a decade (loan level in some cases), and with finances already strained, producers are not going to spend more money on the crop with revenue insurance to make up the difference if the yield is reduced. The mentality of US wheat producer is depressed and he is hoping that another world producer to suffer from adverse weather to bump up his profitability.
** There are better rain chances advertised for French farmers late in the 10 day forecast while dry/warm weather envelops Ukraine and Western Russia. The dryness will allow Russian and Ukraine farmers to advance spring seeding, but rain will be needed in mid May to aid germination. The long wave weather pattern across the European and Russian grain areas is amplified, which argues that producers/traders should be paying close attention to future forecasts.
** Canadian farmers are fighting weather with a new covering of snow. The snow/wet soils will prevent seeding for another 10-14 days if temperatures turned more seasonal and precipitation ended. Unfortunately, cool to cold temps will persist and at least 2 more storm systems will keep planting on hold into May 8th. It’s mid May that farmers normally like to have wheat/canola seed in the ground for trend yields. The market will become more sensitive to Canadian weather in coming weeks. Right now it’s too cool/wet with the long range models suggesting that this weather trend persists into mid May.
** The GFS midday US weather forecast is wetter than the overnight solution. Rain over the next 10 days will be heavy across the Delta and Central Midwest with totals of 5-8.00” of rainfall across the southern half of MO and much of IL. Such heavy rain would produce flooding/ponding and crusting of soils. The coming cool/wet weather would slow and cut corn crop emergence. And there is another storm offered for the 11-15 day period.
Also, there is a risk of a frost/freeze across the W Plains. The real risk of temps reaching down into the lower 30’s in the TX Panhandle is Sunday AM. The HRW crop is at risk to any sub 32 degree reading with more 45% of the crop to be heading in KS as of Sunday.
** AgResource Midday Market Comment: KC wheat is working on an upside reversal with disease/cold temps in the offing. Funds have bought more than 12,000 contracts of corn on the risk of Midwest flooding and cool temps. US and world farmers are not selling with China still wanting offers for US soybean offers off the PNW. This is no place to turn bearish with funds holding a record large combined net short grain position. In fact, wheat looks to be turning up?
** 10 Day Rainfall Estimate GFS Midday Model:
** Coldest Temps Sunday AM GFS Midday Model: