** Someday…… we in Chicago and the E Midwest will come to work without our winter coats! Showery/cold temps is limiting evaporation losses and continuing to yellow S and E Midwest corn. CBOT summer row crop futures rallied on the wet weather and potential for additional heavy rains in the 9-15 day period.
On the other hand, producers are quickly seeding crops in the W Midwest and the market is having trouble knowing what to focus on? Should a trader focus on the W Midwest planting speed or crops that are waterlogged in the E Midwest/ Delta? This is the struggle of the marketplace pre and post the USDA May crop report. Right now no one can bet on better than trendline US corn, soy and spring wheat yields. This means that keeping a bear trend going following the May WASDE report may prove difficult with funds already short and farmers here and in South America not ready to sell their cash supply.
AgResource’s market price theme has been one of “choppiness” since the March 31st Stocks/Seeding report. There is no change in this view as US 2016/17 corn stocks are about steady with the old crop year, while US wheat stocks edge down while soybean stocks near a record. However, offsetting the soy rise is the record large Chinese/world soybean demand and biodiesel growth for US soyoil.
** The bears claim that US and world stocks will remain large which is true, but we all need to remind ourselves that grain prices in early May are at their cheapest levels in 5 years, and that any adverse weather that sparks a thought of reduced US supply will spur a quick rally. Our bet is that following the May WASDE report we all go back to following weather.
** ARC notes that the SE Pacific Ocean is rapidly warming which is producing El Nino like signature in the atmosphere which along the strong blocking pattern pattern in Greenland is producing the wet Central US weather profile. The last big Greenland block was back in 1993 when flooding became widespread across the Mississippii River. No two weather patterns are the same, but the risk is for additional and continued wet weather in the next 3-4 weeks. ARC notes that the extended forecast models have had much difficulty with this pattern and have been basically wrong since mid March. Our advise is to focus on weather 2 weeks at a time and not pay much attention to any longer range forecast due to world ocean temps being so warm.
** India estimated their 2017 wheat crop at a record large 97.4 MMTs vs 96.6 MMTs last month. India is expected to import just 2 MMTs of wheat in 2016/17.
** Funds have bought 3,500 contracts of corn and 3,900 contracts of soybeans, while selling 2,100 contracts of wheat. In soy products, funds have bought 2,200 contracts of soymeal and 1,200 contracts of soyoil.
** Midday GFS Weather Update: The midday GFS model is similar to the overnight run with showers/storms expected across the Plains, MO/S IA and the remainder of the Midwest from tonight through Friday. Rainfall totals in the Plains are estimated in a range of .5-3.00” with totals in the Midwest/Delta forecast in a range of .5-1.50”. Dry weather follows over the weekend and Monday, with a new chance of rain for the Plains/W Midwest from next Tuesday into Thursday. This system looks of producing rainfall of .25-1.00” with few dry/warm days following and another potent system in the 11-15 day period. This system looks to produce .5-3.00” of rain keeping many areas too wet and saturated. Temps are variable, but closer to seasonal levels.
** ARC Midday Market Comment; The soy market can’t seem to lay down amid strong demand trends and the need for US/South America to keep the string of record large crops going. Funds are still selling wheat, but with wet weather forecast for the Central US (disease?) and EU wheat offers firm, one has to look at the long side of the KC wheat on any weakness following the USDA May report. Excessive wet weather is the weather risk going forward for US crops.
