** It has been a mixed morning at the CBOT on continued strong volume trade. The corn market has declined as some cite the chance for drier weather and planting progress across the N Plains and the NW Midwest later this week and weekend. The bulls continue to tout the millions of acres of drown out and need for replant of corn across the SE and SC Midwest. There are sizeable S Midwest acres that are underwater and due to cool/cloudy conditions, corn seedlings are under acute stress. The additional .5-3.00” of rain that is slated for the wettest areas is very unwanted and will lead to additional replant/abandonment.
December corn may decline to $3.80, but it’s difficult to get too much more bearish than that with so many weather chapters yet to be written on this year’s crop. The spring has not been kind for the US corn, soybean or wheat farmer. And we doubt that a lasting bearish price trend is in the offing until more is known about US corn/wheat yields and the number of acres that farmers will be accepting/taking in the prevent plant option. Producers appear much more willing to take the summer off and prevent plant than another other time in our recent memory. ARC advises against selling the AM CBOT break with a shot of additional fund short covering expected on the close.
** CBOT brokers report that funds have been net buyers of 4,300 contracts of soybeans, 4,300 contracts of soyoil, and 2,700 contracts of wheat. Funds have sold 7,200 contracts of corn and 3,200 contracts of soymeal. Funds remain on both sides of the CBOT marketplace.
** There are strong rumors that a biodiesel decesion could be rendered on Friday or Monday that was lodged by the US biodiesel industry an US anti dumping case against Argentina/Indonesia. The decision is expected to be followed by a duty/tariff that will economically limit the flow of Argy or Indonesian B100 into the US. Remember that Argentina and Indonesia have been the primary exporters of biodiesel into the US to receive the $1.00/gallon tax credit. That credit expired in January, but now the US industry wants more a limit on imports before a potential return of the $1/gallon credit in the form a producer’s credit. The pending US decision will have an important impact on US biodiesel policy if the mandate is left unchanged. US soyoil stocks would decline sharply as the new demand would exceed stockpiles with the current mandate. A decision was expected to be offered by the US Gov’t by May 8th.
** South American farmers are not selling stored soybeans or the pending new winter crop corn as talk of adverse weather for the US farmer breed expectations for higher prices. China has continued to secure South America soybeans on a measured pace due to negative crush margins. July soybeans nearly reached initial resistance above $9.80 basis July.
** The midday GFS is little changed from the overnight run, except that it is colder in the 11-15 day period with potentially more frosty temps for the Plains. A potent cold front will produce widespread showers/storms with rainfall of .5-3.00” for the flooded areas of; S MO into NE IL from Wednesday into Friday. The heavy rains will also reach potions of IN where spring planting has slowed/ended due to all of the recent rain. Planting progress is possible across the N Plains and the NW Midwest were mostly dry weather will prevail with variable temperature into mid next week. No lasting period of above normal warmth is expected with a boundary line of cold vs warm to set up across the Western Midwest. It’s the cold temps that will harm seed germination/emergence.
** ARC Midday Market Comment; This is no place to turn bearish just because a drier weather profile for the NW Midwest and N Plains. The next round of flooding rains starts for MO, IL and IN late Wednesday and continues into Friday with .5-3.00” expected. The Wheat Tour will be finding freeze/frost damage as it reaches beyond Dodge. We look for fresh fund buying late day.
** Midday GFS 10 Day Rainfall Forecast: