** It has been a morning of weakening CBOT prices with corn, soybeans and wheat all sliding in moderate volume. The USDA May report looms on Wednesday, but the big driver of price has been the improved weather pattern and advancement of seeding across the N Plains and the NW Midwest. Flooded areas of the E and S Midwest are still 5-8 days from getting back in the field to plant or replant spring crops. But, for today, it’s about the improved weather for the west that is pressuring prices.
ARC looks for weaker close with some short covering effort going home. A turnaround Tuesday is expected with rain in the Midwest forecast for the 10-15 day period. Traders will want to cover a portion of their short position ahead of the USDA May Crop report.
** Unlike recent months, CONAB will be out on Thursday AM with their April crop report and they will not release their updated crop estimates before the USDA. ARC expects a modest rise in their soy crop estimate to 111-112 MMTs and no change in their corn forecast. The Brazilian corn crop is just starting to pollinate, and with the dry season starting a few weeks early, CONAB will be careful not to raise their corn estimate ahead of this critical period.
** US weekly export inspections for the week ending May 4th were; 28.4 Mil Bu of corn, 22.6 Mil Bu of wheat, and 12.8 Mil Bu of soybeans. The wheat total was above and corn was below trade expectations. Soybean exports were right at trade expectations.
** For their respective crop year to date, the US has exported 1,542 Mil Bu of corn (up 55% on last year vs WASDE forecast of 17%), 1,830 Mil Bu of soybeans (up 16% from last year and well above the 5% WASDE forecast), and 919 Mil Bu of wheat (up 32% from a year ago and right at the level forecast by WASDE). ARC research argue that WASDE could raise their 2016/17 soybean export estimate in either the May or June WASDE report.
** Yellow corn abounds in the E and S Midwest where excessive rain fell last week and temps have held at (cool) early April levels. The cool temps helps corn hold on a little longer, but estimates of replanting are growing. Temps reached down into the upper 20’s to lower 30’s in SRW wheat areas where an estimated 20-25% of the crop was in the early stages of reproduction. Like the W Plains, it will take time to assess the damage. Most producers hope for cosmetic burn back of foliage.
** Funds have sold 8,700 contracts of corn, 4,200 contracts of wheat, and 6,900 contracts of soybeans. Funds have also sold 2,900 contracts of soymeal and bought 1,400 contracts of soyoil.
** Midday GFS Weather Update: The midday forecast is cool too cold for the next 10-14 days with any warmth to be isolated to the N Plains and the W Midwest. Any warming for the E Midwest will be brief. High temps will range from the 50’s to the lower 70’s on average, some 5-15 degrees below normal.
The midday model is consistent on rain potential with 1-3.00” focused on the Plains and W Midwest mid week with most totals in the E Midwest ranging from .5-1.25” through the weekend. More limited rains are slated to drop through the N Plains. The 11-15 day forecast remains wet across the Plains/Midwest with .5-2.50” forecast to fall. Its wet weather that has to be watched.
** ARC Midday Market Comment; The CBOT feels heavy at midday with a lack of news being offered for the bulls. NASS will release their weekly crop report after the close to define US planting progress and crop conditions following last week’s adverse weather. HRW wheat in the Plains does not require any more rain to make a crop. Following the mid week rain, Plains wheat would like dryness through harvest. Rain no longer makes grain in the C Plains or Midwest!
Soybeans are down on bearish pre report positioning. Don’t sell CBOT breaks as we are still caught in a range.
