** CBOT summer row crops have traded mixed while the wheat market pushes higher on fresh fund short covering. The funds are less active this AM in covering their corn short position (than Tuesday). Friday’s Commitment of Traders report is likely to reflect a record large fund short wheat position that is vulnerable ahead of the May WASDE report. Farmers and traders well realize that funds are sitting on a large short grain position and are not making sales. End users have limited to fair forward coverage in the cash markets, and wonder if they should be taking on better coverage amid uncertain weather? A higher close today turns the short term CBOT trend upwards.
** CBOT brokers estimate that funds have bought 3,000 contracts of wheat, 2,000 contracts of corn, while selling 1,200 contracts of soybeans. In soy products, funds have bought 3,500 contracts of soyoil while being flat in meal.
** The weekly EIA ethanol report indicated US production of 290 Mil gallons of ethanol for the week compared to 292 Mil gallons last week. US ethanol stocks grew by 12 Mil gallons to 979 Mil gallons. The report was seen as neutral. Seasonal plant maintenance should be close to finishing in several weeks.
** The cucumber/tomato dispute between Russia & Turkey is being discussed. It’s hoped that a political solution will be found in the next few weeks. Turkey (the world’s largest wheat miller) has been a significant buyer of Russian wheat due to competitive prices and proximity. Turkish wheat production is expected to be down 10% in 2017 due to extreme weather, which is likely to boost demand for world wheat. As a new crop is being made, Russia wants to make sure that it remains the largest wheat supplier to Turkish mills. Likewise, Turkey wants to make sure that Russia keeps taking its tomato and pickle production. Resolution is anticipated.
** Brazilian calendar soybean exports (January-April) are estimated to be up 5.1 MMTs from last year’s record! The big export pace is largely due to China, as they continue to ramp up their soy purchase/shipping pace. Also, even with their record large export pace, ship loading delays have been minimal, testament to Brazil’s huge investment in port logistics. Today, a Chinese crusher can secure a panamax and start loading by the end of the week. This is a big structural change that places Brazil on par with the US Gulf logistics.
** Cold temperatures continue to bedevil Canadian farmers in their plans to harvest crop that was left in the field from last fall and commence spring tillage operations. The chill now looks to last into mid May which is pushing seeding to the last half of May. Spring wheat/canola futures are more closely watching weather updates for direction with canola up against 4 year highs.
** Rumors abound that President Trump is considering an order to pull the US out of NAFTA. If this order were signed, it would take 6 months of negotiation to come into effect, and even if the US did leave NAFTA, it the border tax would revert back to 3% under WTO – which should not have much of an impact on US trade. This appears to be the start of a negotiation tactic for Trump.
** The GFS midday US weather forecast is wetter than the overnight solution and about the same with cold temps across the Plains this weekend. Heavy rains are slated to drop across the southern half of MO and into S IL with totals of 4-8.00”. Such rains are extreme which will produce widespread flooding. Rains across the remainder of the Midwest would range from 1-2.50”. Planting would continue across the N Plains amid dryness, but temps will be too cool for seed germination. There remains a risk of a frost/freeze across the W Plains. Temps are projected to reach down to the lower 30’s in the TX Panhandle on Sunday AM. The HRW crop is at risk to any sub 32 degree reading with an estimated 45% of the crop to be heading in KS as of Sunday. The temp outlook into May 10th remains below normal.
** AgResouce Market Comment: The cooler/drier Midday forecast along with Trump NAFTA pullout has sparked some selling. ARC doubts that funds have covered enough shorts and this pattern remains one of coolness and wet weather into mid May. We cannot advise any new sales without better clarity on the forecast going forward.
** 10 Day GFS Rainfall Estimate:
** Sunday Morning Low Temps forecast by the GFS:
