All Members: Mid-day

CBOT Down at Midday on Improving W Midwest Weather

May 8, 12:15 pm | Mid-day Commentary

** 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. 


Midwest too Cool for Crop Growth/Seed Germination: ITC Vote on Biodiesel

May 5, 12:11 pm | Mid-day Commentary

** It’s been a mostly green morning at the CBOT as funds turn buyers and corn fully reverses yesterday’s losses. The volume of trade has been active and the entire commodity spectrum appears to have a more bullish mindset this AM.

  China’s change in bank lending regulation has sparked sharp drops in crude oil, industrial metals which seemed to impact the CBOT on Thursday.

  ARC notes that the world economy outside of China is in a more rapid growth phase and there is no evidence of deflationary price trends developing. China needs to be closely watched for slowing demand, but it’s important to point out that globally, GDP rates in improving.

  A higher CBOT close is expected as fund managers appear more willing to cover their large net short positions. US nor South American farmers are selling cash grain, and in Europe, wheat stocks are historically low and prices look to be at worst – stable. ARC research maintains a view of CBOT choppiness unless something dramatically changes in US or world weather.

 ** CBOT brokers estimate that funds have bought 8,000 contracts of corn, 3,000 contracts of soybeans, and 3,300 contracts of wheat. In soy products, funds have bought 4,100 contracts of soyoil and 700 contracts of soymeal.

** FAS reported the sale of 132,000 MTs of US soybeans for the 2016/17 crop year. The US is competitive with Brazil for July/August and world importers are taking note.

 ** The US International Trade Commission has voted (5-0) in favor of imposing anti- dumping duties on Argentina and Indonesia biodiesel. However, the ITC and US Commerce Dept does not need to announce or place duties right away. That can take several months, but amid the ITC investigation and potential for duties to be retroactive, US imports of Argentine and Indonesian biodiesel are already sharply curtailed. The tug on domestic US soyoil supply to meet the EPA mandate for biodiesel has already started. The loss of 2 MMTs of Argentine B100 biodiesel imports could produce another 4 Bil pounds of US soyoil demand (for domestic biodiesel) – nearly twice the available US 2016/17 end stocks. US soyoil prices will have to rise sharply to encourage vegoil imports from others to meet the EPA mandate.

 ** Producers in IL, MO, and IN report that this is one of the coldest and wettest springs so far since 1993 – and that crops are suffering. Its not only the excessive rain, but the extreme cold that has caused crop plants to whither and in some cases perish. Some seed has been sitting in cold/wet soils for weeks. Friday’s rally in corn is realizing that the 2017 US corn crop is off to an unfavorable start and the early June crop ratings could be well under recent years. Ground temps are too cool for corn to show much growth.

 ** 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. There remains a chance of a frost/freeze Sunday/Monday/Tuesday AM as lows look to reach the lower 30’s with a few upper 20’s are expected across N IN and N OH. The cold could catch 20-30% of the SRW wheat crop in the reproductive stage. The only good news on E Midwest weather is that the heavy rains look to have ended. The sheer cold is not the big crop need.

  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 is brief with cold temps to return by late next week.  A storm system pulls across the southern half of the Midwest on late next week with rains of .25-1.00”. The rains further slow seeding.  

  ** ARC Midday Market Comment; Fund managers are waking up the need for warm temps to speed crop growth. ARC pegs US corn seeding at 42-44% on Monday with US winter wheat conditions to decline. Canada stocks were smaller than expected in canola/wheat. ARC maintains that wheat has scored seasonal lows and that summer row crop prices will continue in broad range.

** Midday GFS 10 Day Rainfall Estimate: 


Fund Selling Pushes CBOT Lower; Farmers Hold Fast To Cash

May 4, 12:24 pm | Mid-day Commentary

** 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!  



CBOT Mostly Higher on Concerning Midwest Weather

May 3, 12:14 pm | Mid-day Commentary

** More questions than answers……How does NASS measure yield in the snow covered fields of W KS? How many corn acres will need to be replanted due to cold/wet weather? Can “OK” wheat production in E Kansas help offset some of the acute losses of the west? And how does one balance expanding seeding progress in the N Plains and W Midwest against the near historical flooding across MO, the southern half of IL, and IN?

 Traders are asking for quantified loss estimates in terms of what recent cold/wet weather means for US grain production. However, no one will be able to respond for a few additional weeks with any confidence. Everyone can (and often can) guess at the impact of 2 weeks of adverse weather, but like other cold/wet springs, clarity on the impact on production does not occur until weeks later. All we know today is that yield and seeded acres has been lost and that this is not the kind of spring that producers wanted.

  Amid the more questions than answers, prices at the CBOT will continue to gyrate without a trend unless the Central US weather forecast turns more adverse and new supply concerns arise.

  Our advice to clients is to not chase rallies or breaks. We doubt that seasonal highs have been set which are not expected until mid to late May. 

** CBOT brokers report that funds have been net buyers of 4,300 contracts of corn, 2,800 contracts of wheat and 3,400 contracts of soybeans. Funds have bought 4,500 contracts of soymeal and are flat in soyoil. The opening of the day session traded 3,600K of meal which has so far set the range for the day                                       

** Informa estimated 2017 US all wheat produciton at 1,923 Mil Bu, down 387 Mil Bu from last year, but well above trade expectations. Informa used a yield of 48.4 BPA on harvested acres of 39.75 Mil acres. This would be a harvest percentage of 86% compared to 87% last year. Of course, Informa did not account for the weekend losses of HRW wheat which will likely cause abandoment rates of HRW to soar with lower yields. The CBOT sold off on the Informa estimate and have since recovered a large share of the losses.

 ** Informa also adjusted upwards their estimate of the Brazilian corn crop to 96 MMTs and their soybean crop to 113 MMTs. The corn increase was 1 MMTs while soybean production was raised 2 MMTs. Argentina’s soybean crop was lowered 800,000 MTs to 56.8 MMTs while corn was reduced 200,000 MTs to 38 MMTs.

 ** Informa also estimated the 2017 Russian wheat crop at 70 MMTs while Ukraine wheat production was lowered 1 MMTs to 25 MMTs.

 ** The Kansas Crop Tour has moved west and finding disappointing yield results. But, the Tour is having trouble defining the degree of frost damage.

** Heavy rains are falling across MO and IL which is exacerbating flooding woes. The midday GFS is little changed from the overnight run. An additional 1-3.00” of rain will drop from MO into OH with locally heavier amounts. Cold temps will pour southward following the storm system with upper 20’s and lower 30’s expected as far south as the S OH Valley including much of IN and E IL this weekend. This will produce a frost risk for SRW wheat that is reproducing or in the late boot stage. Planting progress is possible across the N Plains and the NW Midwest where mostly dry weather will prevail. Cool to cold temps will prevail east of the Miss River while above normal warmth will reside across the western US including the Plains and the NW Midwest. Plains highs could reach near 90 degrees which is not wanted by HRW that is trying to recover from the weekend freeze. Crop conditions will decline sharply on Monday.    

 ** ARC Midday Market Comment; More unknowns that knows is causing fund traders to reduce their net short position heading into the May WASDE report. CBOT Rallies nor breaks will be expected to have any follow thru until the damage can be better assessed.

**10 Day GFS Rainfall Estimate and Low Temps Sunday AM:


Corrective Tuesday as the CBOT Debates Lost Acres and Yield

May 2, 12:22 pm | Mid-day Commentary

** 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: 





Massive Short Covering Featured at CME

May 1, 12:18 pm | Mid-day Commentary

AgResource Daily Farm Marketing Advice for Monday: 1/ Corn Producers: Forward sell/hedge an estimated 30% of your estimated 2018 corn crop if Dec’18 corn futures reach $4.14.

Sharply higher has been the morning in ag markets, with additional fund short covering noted at the 9:30 CDT open. KC wheat futures have led the way on a percentage basis (and also have continued its upward technical reversal), as the debate over crop lost to disease, frost and freeze ramps up. Snow cover is noted across SE CO, W KS and the OK panhandle, and until this melts uncertainty will remain with regards to updated production estimates. US winter wheat crop conditions this afternoon are expected to drop 1-3 points 51-53% GD/EX.

The trade estimates US corn seeding through Sunday reached 31% complete, vs. 45% a year ago and 30% on average. Soybean planting is estimated at 12%, vs. 6% on average. Spring wheat seeding is expected to have reached 33% finished, vs. 54% a year ago and 39% on average in late April/early May. Year over year lags of course make early/mid-May weather all the more important.

Crude futures have extended overnight losses, with June down $.60 to $48.70. the US dollar is up slightly, having flirted with 98.8-99.0 since last week. Of note, the Brazilian real has inched higher again, and today’s rally in CME corn/beans is likely to trigger decent farmer pricing there.

US export inspections through the week ending April 27th included 43 Mil Bu of corn, down 15 Mil on the week; 19 Mil Bu of soybeans, down 5 Mil; and wheat shipments of 21 Mil Bu, down 2 Mil from the previous week. For their respective marketing years to date, the US has shipped 1,514 Mil Bu of corn, up 59% on last year; 1,817 Mil, up 15%; and 896 Mil Bu of wheat, up 33% on last year. Pace analysis suggests the USDA may be marginally too low with its corn and bean export forecasts, but major changes (of more than 25 Mil Bu) are unlikely.

Informa will provide its updated new crop US & world supply and demand estimates on Wednesday morning. Survey-based US winter wheat production will also be released, and the trade’s issue now is that freeze damage is rather hard to assess. On the margin, yield potential is in retreat, however, mostly due to the weight of snow on plants in the far Western Plains. Daily updates from the KS wheat tour will be of particular interest.

The US forecast ahead maintains a lengthy period of dryness, along with warming temps, but whether widespread precip returns in mid-May is less certain. ARC does note that the European/Black Sea forecast is improving. Rainfall worth .40-.80” was spread across France, Germany, Poland & parts of Ukraine on the weekend. Additional rain is indicated in W Europe over the next 5-7 days, and there remain hints of widespread soaking precip across much of the Black Sea May 7-12. Keep in mind that longer term price direction hinges upon the sum of major exporters’ balance sheets, rather than just the US.

The midday GFS maintains drier weather beyond the next 72 hours, which lasts into May 11-12. A warmer trend reaches all but the Eastern Corn Belt by late week, and regional planting progress will resume by the coming weekend. The extended pattern, however, is wetter and features another round of moderate but lingering shower activity in the 12-15 day period, with cumulative totals pegged at .50-2.50” across the Central Plains, AR, MO and S IL. Additional rain in the S Midwest especially is not welcomed, and following the recent surge in soil moisture several weeks of dryness is desired. The GFS’s 1-5 day (top) and 6-10 day precip outlook is attached.

 midday 5-1

The broad, longer term story of record global grain & soy supplies is little changed, but the question now is to what extend funds aim to pare back short positions? Additional buying/short covering is expected on the close. Follow through purchases early Tuesday will be critical, but we maintain producers should await $3.98+, basis Dec corn, $9.80+, Nov beans, and $4.80+, July wheat, to catch up on cash sales.  

Corn/Beans Weaker, Wheat Higher; Markets Await Weekend Weather

Apr 28, 12:15 pm | Mid-day Commentary

Ag markets are mixed at midday, with corn extending overnight losses on a relatively wetter and drier forecast in early/mid-May. Wheat is steady to higher amid coming weekend frost, while beans trade both sides of unchanged. Actual low temps this weekend, as well as accumulated rainfall, will drive early trading next week, but for the moment traders are in waiting mode. On the week, corn is unchanged, beans are down 6, and wheat futures are up 12-18 cents, led by KC contracts.

Macro markets are a bit more supportive today. Crude is slightly higher, having founds support at $49, basis spot, the US dollar is a bit weaker, and EU milling wheat futures look to settle up €.75-1.75/MT on the day. And amid a stronger euro, EU cash wheat prices will firm again, with French offers likely to exceed $190/MT this weekend.

This afternoon’s CFTC report, which includes data as of Tuesday, is expected to reveal a slight decrease in managed fund short positions in corn, soybean and soy oil, and an expansion in funds’ short position in CME wheat. Funds are also likely to be net short meal for the first time in 12 months.

ARC estimates managed funds’ net position in corn at a short 157,000 contracts, vs. 172,000 a week ago. Funds’ short in wheat is pegged at a record 154,000 contracts, vs. 142,000 last week. Funds’ short in beans is estimated at 35,000, vs. 46,000 a week ago, and funds’ combined short position continues to flirt with the record low established in March of 2016.

The Brazilian real continues to move higher on political instability, and ARC suspects some measure of producer soybean sales have occurred in recent days. Russian interior cash wheat market also continues to weaken, and at $160-170/MT, the market has fallen $10-12/MT since late March.

The European weather forecast continues to trend wetter across key areas of France, Germany and Poland through the next 10-12 days. Three systems of note are indicated through the period, and should the forecast verify, cumulative rainfall into May 10 will range from .50-2.00” – or some 100-250% of normal for late April/early May. This follows weeks of drier than normal conditions, and the coming change is welcomed. The GFS is also wetter across much of the Black Sea May 9-13, though confidence so far out is low. The point, however, is that major weather issues are lacking outside of North America.

Monthly US biofuel production data is due later this afternoon, which is two months in arrears, but we mention cash DDG prices continue to leak lower amid a record pace of ethanol production. Argentine biodiesel exports have also trended higher in recent months, and the future of US biodiesel supply and demand is especially uncertain.   

Wet and very cold is still the primary feature of the US weather pattern, near term. The midday GFS maintains rainfall of 4-6”, or greater, across the Southern Midwest into Mon/Tues. Additional chances of freezing overnight lows are offered to the Central and Northern Plains. Cool-ish temps continue into the middle part of next week, and amid slowed evaporation rates fieldwork will be rather limited – or nonexistent – over the next 5-7 days. Thereafter, however, a more seasonal temp pattern is forecast as the jet stream finally moves northwards. Highs by Wed/Thurs look to reach the 60s and 70s. Excessive rainfall is absent from the 6-15 day period, and any rain that does fall will be much more lite/scattered in nature. The GFS’s 6-10 day outlook is attached.

midday 428

ARC still cautions against chasing rallies and breaks, and no new sales are advised ahead of a growing season amid still-lofty fund short positions.

Ag Markets Sustain Modest Support; US Forecast Still Cold

Apr 27, 12:03 pm | Mid-day Commentary

AgResource Daily Farm Marketing Advice for Thursday: 1/ Corn Producers: Forward sell/hedge an estimated 30% of your estimated 2018 corn crop if Dec’18 corn futures reach $4.14.

Ag markets are slightly higher at midday, led by KC wheat on a percentage basis following more uncertainty over recent and upcoming freeze damage. President Trump’s change in tone on NAFTA – re-negotiating terms in the future rather than pulling out of the deal outright – has lent further support, though all markets are within 2-3 cents of unchanged.

Crude has extended its overnight losses, with spot down $1.25/barrel, and now looks to test $48/barrel. Gasoline and ethanol have followed. EU milling wheat looks to end the day flat, and otherwise there’s a lack of breaking news today.

Weekly US soybean export sales were better than expected, corn sales were within trade expectations but solid nonetheless, while old crop wheat sales were abysmal. Through the week ending April 20th, exporters sold a net 30 Mil Bu of beans, vs. just 5 Mil in the prior week and compared to 8 Mil on this week a year ago – even as South American production estimates were falling last March. Corn sales totaled 39 Mil Bu, up roughly 10 Mil on the week and double the pace needed to meet the USDA’s target.

Old crop wheat sales totaled just 2 Mil Bu, vs. 15 Mil in the previous week and the lowest of the 2016/17 crop year. Large wheat cancellations were made by an unknown destination, the majority of which were HRS and white wheat. New crop wheat sales totaled 11 Mil Bu, double the previous week but not overly impressive.

For their respective marketing years to date, the US has sold 2,010 Mil Bu of corn, up 38% from last year and already 90% of the USDA’s forecast with four months left in the season. Total soybean export commitments rest at 2,073 Mil Bu, up 24% on last year and a record 102% of the USDA’s forecast – the USDA will be forced to raise 16/17 soy exports 25 Mil Bu. Cumulative wheat export sales total 1,018 Mil Bu, up 39% from last year and just 7 Mil shy of the USDA’s forecast – though weekly sales of 2-3 Mil Bu are unlikely to trigger any revision to US exports within the May WASDE.

The US drought monitor this week now isolates actual drought to the Southeast and Eastern OK – which will be eliminated in the next five days – while abnormal dryness is shrinking rather quickly across the Western Plains. Overall, just 22% of the continental US is experiencing drought, vs. 36% a month ago and 40% on this week in 2016. Weather watchers are now debating planting dates – which are a concern – against the odds of drought this summer following a burst in soil moisture so far in spring.

Morocco has raised its tariff on imported soft wheat to 135% until the end of 2017, citing a much improved harvest, which also gives the first glimpse at N African production this year following widely variable estimates previously.

The Central US forecast at midday is unchanged, and so maintains a drier trend in the 6-10 day period, particularly across the Central Plains and Western Corn Belt. However, the midday GFS also maintains much cooler than normal temps into May 5th, with additional frost events scheduled through the period. Recorded minimums on Saturday morning will be watched closely. The model also continues to fine-tune weekend precip estimates, and currently centers rainfall of 5-6+” across E OK, the bulk of MO & IL and parts of IN and MI. The drier trend next week and beyond is welcomed, but amid the lack of sustained warmth ARC doubts much fieldwork will get done in the next 10 days. 1-5 day (top) and 6-10 day precip is below.

midday 4-27

ARC still cautions against chasing rallies and breaks, and no new sales are advised ahead of a growing season amid still-lofty fund short positions.

CBOT Mixed at Midday Awaiting the Rain and the Cold

Apr 26, 11:56 am | Mid-day Commentary

** 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: 





Funds huge buyers of Corn; Cold/Wet Weather Coming to Central US

Apr 25, 12:03 pm | Mid-day Commentary

** CBOT futures are mixed at midday with the grains higher while soy futures are slightly weaker. The volume of trade has been very active with more than 150,000 contracts of July corn and over 65,000 contracts of July Chi wheat changing hands. Soy futures volume has been more constrained, but we are noting solid grain/soy buying on weather and HRW wheat crop concern.

  The US wheat crop concern is interesting amid funds sitting on a record large short position. Too much rain is expected to fall across the S Midwest and Delta which will fuel disease pressure in SRW wheat, while scouts running through the HRW wheat crop are finding rust and blank heads that could be from prior cold weather events or the widespread incidence of streak mosaic disease that carried forward from late last fall.

  Corn futures are higher in a delayed reaction to wet weather forecasts amid reduced fund selling. July corn looks to test $3.75 resistance while December takes aim on $3.93-3.95 resistance.

  ARC is starting to turn more bullish of wheat as US and world wheat crop problems start to develop with new crop KC cash wheat offers just above the loan level. US wheat farmers are in no hurry to make sales with LPD potential in the offing (once the cash wheat is harvested).

** US wheat farmers do not appear to be in any hurry to apply fungicides on their disease rattled crop. The producer sees new crop cash wheat prices at their lowest level in a decade (loan level in some cases), and with finances already strained, producers are not going to spend more money on the crop with revenue insurance to make up the difference if the yield is reduced. The mentality of US wheat producer is depressed and he is hoping that another world producer to suffer from adverse weather to bump up his profitability.

 ** There are better rain chances advertised for French farmers late in the 10 day forecast while dry/warm weather envelops Ukraine and Western Russia. The dryness will allow Russian and Ukraine farmers to advance spring seeding, but rain will be needed in mid May to aid germination. The long wave weather pattern across the European and Russian grain areas is amplified, which argues that producers/traders should be paying close attention to future forecasts.

 ** Canadian farmers are fighting weather with a new covering of snow. The snow/wet soils will prevent seeding for another 10-14 days if temperatures turned more seasonal and precipitation ended. Unfortunately, cool to cold temps will persist and at least 2 more storm systems will keep planting on hold into May 8th. It’s mid May that farmers normally like to have wheat/canola seed in the ground for trend yields. The market will become more sensitive to Canadian weather in coming weeks. Right now it’s too cool/wet with the long range models suggesting that this weather trend persists into mid May.

** The GFS midday US weather forecast is wetter than the overnight solution.  Rain over the next 10 days will be heavy across the Delta and Central Midwest with totals of 5-8.00” of rainfall across the southern half of MO and much of IL. Such heavy rain would produce flooding/ponding and crusting of soils. The coming cool/wet weather would slow and cut corn crop emergence. And there is another storm offered for the 11-15 day period.

 Also, there is a risk of a frost/freeze across the W Plains. The real risk of temps reaching down into the lower 30’s in the TX Panhandle is Sunday AM. The HRW crop is at risk to any sub 32 degree reading with more 45% of the crop to be heading in KS as of Sunday.

 ** AgResource Midday Market Comment: KC wheat is working on an upside reversal with disease/cold temps in the offing. Funds have bought more than 12,000 contracts of corn on the risk of Midwest flooding and cool temps. US and world farmers are not selling with China still wanting offers for US soybean offers off the PNW. This is no place to turn bearish with funds holding a record large combined net short grain position. In fact, wheat looks to be turning up?

** 10 Day Rainfall Estimate GFS Midday Model: 


** Coldest Temps Sunday AM GFS Midday Model: