** Following weaker crude oil and a drier W Midwest/Plains weather forecast, CBOT corn, soy and wheat futures are weaker in moderate volume at midday. Soybeans/soyoil have held up better than the grains as traders position for the Commerce Dept decision on whether Argentina/Indonesia are dumping biodiesel into the US? An affirmative finding could lead to a quick placement of a duty/tariff that some expect will be as large as 25%. A decision on the duty could come as early as Friday or sometime early next week.
The Central US weather pattern is becoming a west vs east. Heavy rains have really exacerbated flooding across the E Midwest while improved planting conditions have occurred across the W Midwest. ARC looks for US corn seeding thru Sunday to reach 42-45%, which will be below last year and the 5 year average. The 2017 US corn crop will not be considered an early planted crop when all of the reseeding must take place in the E Midwest.
Producers tell ARC that it’s just a mess in the E Midwest amid all of the rain and the cool temps. Flooded fields are not draining which will likely lead to a significant amount of replant of corn and early planted soybeans. It will take 7-10 days of warm/dry weather across the southern half of IL, IN and MO. The flooding/cold temps will prevent a sizeable CBOT grain/soy decline.
** CBOT brokers report that funds have been net seller of 5,300 contracts of corn and 3,800 contracts of wheat, while buying 3,400 contracts of soybeans. Funds have bought 2,500 contracts of soyoil and have sold 1,500 contracts of meal. Active oil/meal spreading is noted with ADM stopping May deliverable receipts that has some cash connected traders talking greater crush downtime.
** US weekly export sales for the week ending April 27th were; 30.5 Mil Bu of wheat (9.5 Mil Bu of old crop and 20.7 Mil Bu of new crop), 30.4 Mil Bu of wheat and 11.7 Mil Bu of soybeans. The wheat and soybean sales were above trade expectations.
** For their respective crop years to date; the US has sold 1,028 Mil Bu of wheat (up 287 Mil Bu or 39% compared to last year), 2,040 Mil Bu of corn (up 550 Mil Bu or 37%), with soybean sales at a record large 2,082 Mil Bu (up 386 Mil Bu or 23% from last year). WASDE is likely to raise US 2016/17 US soybean exports by 25 Mil Bu at some point. US soybeans are competitive to China vs Brazil from LH July onward. However, clients need to remember that Brazilian soybeans normall carry a $.15/Bu premium for higher soyoil content.
** The Wheat Quality Tour is counting all heads as viable and not making any judgement as to losses from cold/snowy weather. Its all just a judgement call at this point and another week is needed before the winter stress can be partially known. ARC argues that NASS/WQT will produce a starting point in terms where the crop was before the artic onslaught.
** Midday GFS Weather Update: The 3-4 day forecast is cooler with the coldest morning being Monday when frosty temps could reach down into N Kentucky. Lows in the lower 30’s with a few upper 20’s are expected. Additional rainfall of .5-2.00” is forecast for the Ohio and Tennessee Valley’s into midday Friday.
The W Midwest and Plains is dry with warming temperatures. 70’s, 80’s and even a few 90’s will be seen. The warmth only briefly reaches east of the Miss River midweek. A new storm system forms in the Plains next Wednesday and pushes east across the W Midwest. The system returns rain chances to IL/IN into next Thursday with totals are estimated in range of .2-1.00”. A 3rd storm system is noted in the 11-15 day period. This remains a active pattern.
** ARC Midday Market Comment; Neither Informa nor the Crop Quality Tour will define Plain’s cold/snow damage. Wheat should form a secondary low by Monday. Wednesday’s WASDE report will reflect a decline in 2018/19 world & US wheat end stocks. Funds are selling corn/soy this AM, with US farmers holding fast to crop amid difficult spring growing weather. Corn replant will be widespread. ARC’s message; Don’t sell breaks or buy rallies – watch for biodiesel news!
