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Morning Commentary | Morning Commentary – Page 45 – AgResource Company

CBOT Mixed Awaiting Brazil’s CONAB

May 11, 6:41 am |

** 6:30 AM CST CBOT Prices: July soybeans are up 4 cents at $9.74, July corn is down .50 of a cent at $3.7325 while July wheat is up 2.25 cents at $4.34.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! Mixed in improved volume has been the overnight CBOT trade. Soybeans and wheat have traded mostly higher while corn languishes following Wednesday’s strong post report rally. Just over 12,000 July corn contracts, and over 16,000 July soybeans and over 4,700 contracts of July Chi wheat have changed hands.

  Wednesday’s CBOT open interest totals featured a decline of 4,322 contracts of corn, and a rise of 2,283 contracts of soybeans & 8,488 contracts of wheat.   The May USDA Crop Report will reverberate throughout the US grain industry for some time with WASDE always slow to alter their new crop demand forecasts without a significant change in the size of the pending new crop. Thus, the balance sheet debate shifts to supply and the impact of excessive rains and cold temps on US seeding totals and yield?

  For instance, if 2-2.5 Mil acres are enrolled in the FSA Prevent Plant option (1 Mil acres for corn/1.5 Mil acres for soybeans via wet weather), and ‘17 US corn yield fell 3 BPA (1.7%) to 167 BPA, US 17/18 corn end stocks would drop to 1.8ish Bil Bu. Such stocks would justify Dec corn range of $3.50-4.20.

  In soybeans, the loss of 1.5 Mil acres would reduce production by 72 Mil Bu assuming trend yield of 48 BPA and push 2017/18 stocks to just above 400 Mil Bu. Today, the odds of losing 1 Mil acres of corn appears far better than beans, but the point is that it does not take much of an acreage or yield loss to change the complexion of the long held bearish CBOT. This is why ongoing excessively wet weather will have to be monitored closely heading into June for its impact on both seeding and yield.

  Malaysian palmoil stocks at the end of April were up 3% to 1.6% with production up 5.7% to 1.55 MMTs and exports up 1.4% to 1.28 MMTs. The monthly data was considered bullish with July futures rising 47 ringgits to close at 2,669 RM/MT. Tropical oil prices likely scored their lows in April against   2,500 RM/MT. The recovery in production has not been as large as expected.    

 The heart of the Midwest will be dry for 5-6 days before wet weather returns which will facilitate planting/reseeding where overnight rains were less than 1.0”. Showers will continue today with warmer/sunny weather slated from Friday through the weekend. Big rains fall early next week across the N Plains and N Midwest with totals of .5-2.50” with severe weather and another round of heavy rain for the Plains and remainder of the Midwest in the last half of next week. The extended 11-15 day forecast features additional wet weather. This remains a wet pattern, but it will be warming up to seasonal temp levels!

  CONAB is out this AM with an update on Brazilian corn/soybean production.  It’s not expected that CONAB will exceed USDA’s 96 MMTs forecast for corn or 111.60 MMTs estimate on beans, leaving the report as mostly a non-event.

  One cannot be too bearish of CBOT prices until trend yields are assured in mid summer. Until then, it’s a debate of when does rain become detrimental?

 

Awaiting May Crop Report; All About Weather Thereafter

May 10, 8:24 am |

** 6:30 AM CST CBOT Prices: July soybeans are unchanged at $9.74, July corn is up .50 of a cent at $3.67 while July Chi wheat is up 1.75 cents at $4.3125.

AgResource AM Grain & Oilseed Comment: Good Morning! Mixed and low volume has been the overnight CBOT grain. Activity has been slowed by the USDA May Crop Report that will be released at 11 AM CDT this AM.

  Just over 6,000 contracts of July corn, 7,000 contracts of July soybeans and 4,500 contracts of July Chi wheat have changed hands overnight. CBOT open interest reflected modest changes from Tuesday with corn up 6,060 contracts, soybeans up 1,591 contracts and Chi wheat down 594 contracts.

  A back and forth morning is expected before the USDA May report is released.  Note that Brazil’s CONAB will release their monthly crop production estimates on Thursday. A slight rise in the Brazilian soybean crop to 111-112 MMTs is expected with virtually no change in their corn crop until weather can be better assessed. Pollination is underway and the forecast is generally arid this week with some rains indicated for next week.

   China’s Dalian September corn futures closed down 1 cent at $6.00/Bu with September soymeal up $2.00/MT at $410.30/MT. The volume of trade in Dalian has been routine as speculative interests have slowed their trading of futures.

Malaysian palmoil futures were closed for a holiday while Paris wheat futures are up .25 euro’s/MT at $169.50 basis September futures.  

  The Central US weather forecast remains wet with 3 storm systems slated for the Plains, Delta and Midwest over the next 10-12 days. The systems will favor the S and W Midwest with heavier rain totals. With April being the 2nd wettest in since 1895 for MO, any additional rainfall is unwanted during May.

 The Midwest/Plains have rain chances just about anywhere in the next 36 hours with some locally heavy rains across Kansas, Nebraska and through Missouri. The rain ends across the Midwest on Friday with new rains to fall early next week. A wet 11-15 day period is offered by all models. In the next 10 day, combined Plains and Midwest rainfall totals look to range from 1.5-4.00” with some locally heavier amounts. The rains across; MO, IL and IN will limit seeding or reseeding progress in the next 10 days.

  The only good weather news is that a more seasonal temperature profile will be offered with variability noted around passing short wave weather features.

  Chinese farmers are expected to seed 88.5 Mil acres of corn (about the same as US farmers) which is down 2.5% from last year due to lower profitability as China changed in minimal price paid to producers. The free floating farm program will lower Chinese corn acres, but not enough for the Gov’t to get rid of their massive corn stocks estimated at over 200 MMTs.  

  AgResource maintains that the CBOT will trade is a broad trading range until more is known about how excessive rainfall will impact US seeding/production.

  US winter wheat will likely endure an increase in fungal disease pressure as temps warm amid saturated soils and NASS was not be able to define freeze/snow damage for HRW wheat in today’s report. We await rallies to make new sales.

Awaiting the USDA May Crop Report; Thereafter its all about Weather

May 10, 7:18 am |

** 6:30 AM CST CBOT Prices: July soybeans are unchanged at $9.74, July corn is up .50 of a cent at $3.67 while July Chi wheat is up 1.75 cents at $4.3125.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! Mixed and low volume has been the overnight CBOT grain. Activity has been slowed by the USDA May Crop Report that will be released at 11 AM CDT this AM.

  Just over 6,000 contracts of July corn, 7,000 contracts of July soybeans and 4,500 contracts of July Chi wheat have changed hands overnight. CBOT open interest reflected modest changes from Tuesday with corn up 6,060 contracts, soybeans up 1,591 contracts and Chi wheat down 594 contracts.

  A back and forth morning is expected before the USDA May report is released.  Note that Brazil’s CONAB will release their monthly crop production estimates on Thursday. A slight rise in the Brazilian soybean crop to 111-112 MMTs is expected with virtually no change in their corn crop until weather can be better assessed. Pollination is underway and the forecast is generally arid this week with some rains indicated for next week.

   China’s Dalian September corn futures closed down 1 cent at $6.00/Bu with September soymeal up $2.00/MT at $410.30/MT. The volume of trade in Dalian has been routine as speculative interests have slowed their trading of futures.

Malaysian palmoil futures were closed for a holiday while Paris wheat futures are up .25 euro’s/MT at $169.50 basis September futures.  

  The Central US weather forecast remains wet with 3 storm systems slated for the Plains, Delta and Midwest over the next 10-12 days. The systems will favor the S and W Midwest with heavier rain totals. With April being the 2nd wettest in since 1895 for MO, any additional rainfall is unwanted during May.

 The Midwest/Plains have rain chances just about anywhere in the next 36 hours with some locally heavy rains across Kansas, Nebraska and through Missouri. The rain ends across the Midwest on Friday with new rains to fall early next week. A wet 11-15 day period is offered by all models. In the next 10 day, combined Plains and Midwest rainfall totals look to range from 1.5-4.00” with some locally heavier amounts. The rains across; MO, IL and IN will limit seeding or reseeding progress in the next 10 days.

  The only good weather news is that a more seasonal temperature profile will be offered with variability noted around passing short wave weather features.

  Chinese farmers are expected to seed 88.5 Mil acres of corn (about the same as US farmers) which is down 2.5% from last year due to lower profitability as China changed in minimal price paid to producers. The free floating farm program will lower Chinese corn acres, but not enough for the Gov’t to get rid of their massive corn stocks estimated at over 200 MMTs.  

  AgResource maintains that the CBOT will trade is a broad trading range until more is known about how excessive rainfall will impact US seeding/production.

US winter wheat will likely endure an increase in fungal disease pressure as temps warm amid saturated soils and NASS was not be able to define freeze/snow damage for HRW wheat in today’s report. We await rallies to make new sales.

 

 

Too Wet for Plains, S and E Midwest With Forecasts Calling for More Rain

May 9, 6:54 am |

** 6:30 AM CST CBOT Prices: July soybeans are unchanged at $9.6475, July corn is up .50 of a cent at $3.665 while July Chi wheat is up .25 of a cent at $4.3375.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! It’s a day of pre report positioning with the May USDA Crop report out on Wednesday AM. CONAB’s Brazilian crop estimates will be released Thursday AM.

  Overnight CBOT trade has occurred in modest volume with price little changed from Monday. Just over 8,500 contracts of July corn, just over 4,800 contracts of July Chi wheat and over 10,000 contracts of soybeans have changed hands.

  Monday’s preliminary CBOT open interest data shows a gain of 26,295 contracts in corn, 2,961 contracts in soybeans, and 3,962 contracts in wheat. Funds added to their net short grain and soy position on Monday’s decline. 

  The NASS weekly crop report showed that 47% of the US corn crop has been planted vs 61% last year and a 5 year average of 52%. US spring wheat is 54% planted vs 74% last year and 60% on average, while 50% of the US winter wheat crop is headed vs 46% on average with GD/EX conditions down 1% to 53%. Sharp crop condition declines were noted in the W Plains where snow/cold battered the crop. The future trend looks for additional US wheat condition drops. 

 Clearly the US weather forecast is turning wetter in the 6-10 and 11-15 day periods than what farmer’s desire. A blocking pattern over Greenland will keep a split jet stream active across the Central US into late May. Showers are noted this AM across; IL, IN and OH which is only add to the flooding woes with temperatures being more variable. 

  Normally, rain through the Plains is just what producer’s desire in May for HRW wheat production. However, this year the soils are already saturated and with disease pressure on the rise, sunshine/dry weather is now demanded to mend cold damaged wheat.

  Unfortunately, the forecast is wet for the Plains with 3 storm systems noted over the next 14 days with heavy rainfall of 1-3.00” expected with the first system due from tonight into Thursday. The 2nd system looks rather tame with another potent storm in the 10-13 day period with fresh rains of .5-3.00”. The odds are dramatically rising for disease/fungal pressure on US winter wheat.

  Midwest rain chances are almost anywhere today with the rains shifting southward into Friday. Next week looks wet and a potent system is offered in the 11-15 day period. Farmers will struggle planting or replanting in the flooded areas of; MO, IL, IN. Mud and yellow corn abound in the E Midwest.    

   In world ag markets, Malaysian palmoil futures rose 30 ringgits to close at 2,627 RM/MT, while China’s Dalian Sept corn futures lost 6 cents/Bu to close at $6.005 and Dalian Sept soymeal lost $3.25/MT to $408.25. Paris wheat futures are up $.75 euros/MT to $169.25 on a new round of hot/dry weather.   

  Producers in the west are rushing seed in the ground while producers in the east are stuck in the mud. The forecast calling for renewed heavy rains next week across the Plains, Delta & Midwest is unwanted. Wait for rallies to sell. Funds pile into new shorts on breaks only to get chased out with too much rain and growing crop concerns. 

CBOT Lower to Start Week Awaiting Weather/USDA

May 8, 6:50 am |

** 6:30 AM CST CBOT Prices: July soybeans are down 3.50 cents at $9.695, July corn is down 1.75 cents at $3.69 while July Chi wheat is down 4.50 cents at $4.3775.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! The week has started off slightly weaker in rather tame overnight CBOT volume. Reduced episodes of heavy Central US rainfall along with warming Western Midwest temps have produced early week pressure. However, the continued flooding woes of the E Midwest (and Arkansas), along with last week’s freeze damage to the HRW wheat crop has produced a reluctance by traders to sell a CBOT break.

  A slightly lower start is unlikely to garner much downside momentum leading to a late day recovery potential.

  ARC looks for the NASS Weekly Crop report to reflect US corn seeding of 41-48% completed with US winter wheat crop conditions down 2-3% in the GD/EX category. The 2017 crop year will not be considered an early seeded year with millions of corn acres needing to be replanted across IL, IN, MO and OH.

  The Central US weather forecast is not dry, but it will not feature the heavy rains that fell last week. Three storm systems will sweep across the Central US into May 19th with the heaviest of rain to drop across the Plains.

The next chance for significant rain across the HRW wheat areas of the Plains is Wednesday/Thursday when another 1-3.00” of rain is possible. Saturated soils will fuel disease concern. Widely scattered showers are possible across the Midwest from today in Wednesday with any heavy totals to fall across the southern third of the Midwest. There is another chance of rain for the S Midwest/Delta later this week. The 6-10 day period looks drier in many areas, but above normal rains are expected to return during the 11-15 day period. No lengthy period of warm/dry weather is offered to rush spring seeding ahead.   

  China imported a record 8.0 MMTs of soybeans during April with imports up 13% since January. ARC estimates that China will take more than 9.0 MMTs in May which will push WASDE to raise their annual total by 2-3 MMTs to 90-91.0.

 OPEC has indicated that it will likely extend their oil production cuts for another 6-9 months to further stabilize world energy prices.

  The ITC (US international Trade Commission) will present its Argentine and Indonesian biodiesel dumping case to the US Commerce Department today with a determination of countervailing duties by June 16, and antidumping duties by August 30th. Note that these duties are retroactive 90 days prior meaning that March imports into the US are subject to the new duty claims. Friday’s ITC vote of 5-0 for antidumping duties will shut down imports of Argentine B100 and Indonesia palm biodiesel making it a defacto ban on biodiesel into The US.

  An arid weather trend is noted across Europe and a good portion of W Russia that will have to be closely monitored in coming weeks as grain development advances. Temps are cool/cold across much of E Europe and W Russia this week.    The USDA May Crop Report looms on Wednesday with US/World wheat stocks to decline and US/World soy stocks to increase. We favor KC wheat against soymeal.

** QPF 7 Day Rainfall Estimate: 

Capture1

CBOT Bounces on Flooding, Cold Temps, USDA Report Next Week

May 5, 8:13 am |

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

6:30 AM CST CBOT Prices: July soybeans are down 1.00 cent at $9.7325, July corn is up 2.0 cents at $3.685 while July Chi wheat is up 2.00 cents at $4.3975.

Good Morning! The CBOT has traded mixed overnight with the grains mostly firmer and soy futures slightly lower this AM. The volume of corn trade has been large with more than 22,000 contracts of July corn, 14,000 contracts of July soybeans, and more than 8,000 contracts of July Chi wheat changing hands.

  CBOT open interest totals reflects a gain of 18,583 contracts of corn, and a decline of 374 contracts of soybeans and 3,756 contracts of wheat. It appears that funds added to their already large net short position.  

  For the week, corn is down 1 cent, soybeans are up 15 cents, while wheat is up 10 cents. Considerable emotion from the bulls and the bears is noted in this week’s trade due to extreme weather from Kansas through Ohio.

  The CME has placed a force majeure on CBOT May contract deliveries on the river due to all of the flooding.

   Traders are awaiting the finding/vote of the US International Trade Commission (ITC) this AM against Argentina/Indonesia on biodiesel dumping. A decision from the ITC has to be rendered by May 8th (45 days after it was presented). An ITC staff report was completed on May 1st and rumored to favor the Biodiesel Board dumping claim. A duty decision could follow if it is not postponed to mid to late summer. There is no timetable of when duty applications have to be completed, but it is expected no later than Aug 30th.

  China reduced its Value Added Tax (VAT) on soybeans imported after July 1st by 2% from 13% to 11%. Chinese soybeans crushers have been under pressure on margins in recent months, and the VAT reduction will help. Chinese crushers have imported record tonnages of soybeans since October 1st, and this VAT reduction will maintain that trend. ARC sees China taking a record 90-91 MMTs of beans from all sources compared to the WASDE 2016/2017 forecast of 88 MMTs.

  The Kansas Crop Quality Tour pegged the Kansas wheat crop at 281.7 Mil Bu with a yield of 46.1 BPA. The tour reduced Kansas harvested acres by a heady 1.4 Mil acres or 18% due to the widespread cold weather crop losses across the west. This estimate was down 53 Mil Bu from Informa’s forecast and 185 Mil Bu from last year’s harvest. Note that damage assessments cannot be fully made until 14-20 days following the frost/freeze event, and will likely grow. 

  The Central US forecast maintains the risk of sub 32 degree temps into E IL, IN and OH on Sunday/Monday/Tuesday AM. Any late boot or heading wheat could be damaged. US wheat crop ratings are likely to fall on Monday’s weekly NASS report to reflect the extreme weather of the week.

  China sold 91% of its corn reserve offering from the 2013 harvest at a price of $5.085/Bu into its domestic starch and ethanol market.

  The May WASDE report looms on Wednesday with US corn planting expected to be just 41-44% completed through Sunday. ARC sees US wheat as undervalued.

CBOT Slightly Lower Debating Central US Weather

May 4, 7:04 am |

 ** 6:30 AM CST CBOT Prices: July soybeans are down 3.75 cents at $9.715, July corn is down 2.5 cents at $3.7225 while July Chi wheat is down 4.00 cents at $4.50.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! The CBOT started out mixed and turned lower in the AM hours as traders bet on improved planting weather for the W Midwest and N Plains, while rain continues to fall across the E Midwest for another 36 hours. Flooding remains an serious issue for producers in MO, C IL and IN. The amount of corn and soybeans that needs to be replanted is rapidly rising.

  However, excluding the current E Midwest rainfall event, the forecast lacks any of the heavy rains that have been recently endured. This means that soils will slowly firm to support better spring planting and replanting in mid May. Note that there will be 2 additional storm systems indicated in the next 10 days, but the systems look to be more normal rainfall producers.

  The overall US weather pattern is a weak high pressure Ridge through the Plains and a deep Trough in the E Midwest. Such a pattern will produce near to above normal temps thru the Plains and the western portion of the W Midwest, but below too much below temps will be maintained across the E Midwest/Delta.

The forecast maintains the risk of lower 30 degree temps into E IL, IN and OH on Sunday/Monday/Tuesday AM with the risk of a frost event for SRW wheat. US wheat crop ratings are likely to fall on Monday’s weekly NASS report to reflect the extreme weather of the past week. CBOT wheat markets have likely scored their seasonal lows with big questions on US wheat crop quality going forward for millers and importers?

  The Plains Wheat Crop Quality Tour reported near to above average wheat yield potential in SW Kansas late Wednesday. However, participants remarked that it’s impossible to gauge the impact on sub-freezing temps on production as that will take more time. The Tour is expected to announce their final KS and other Plains States production estimates later today. The Tour has the same problem as NASS in that it’s impossible to gauge frost/freeze losses at this point. The market will see the May NASS estimate next week as a starting point and subtract yield/production as the crop matures.

  In other world ag markets, China’s Dalian meal futures were slightly firmer overnight with the most active Sept contract closing at $414.90/MT while September DCE corn gained $.01 to close at $6.06. July Malaysian palmoil futures gained 14 ringgits to settle at $2,533 RM/MT, while Paris wheat is down $.75 euros/MT at $169.50.

  Traders will be keeping a close eye out for the US Commerce Department to release its findings on whether Argentina and Indonesia are dumping biodiesel into the US market? A swift tariff/duty decision would end the imports and cause a huge jump in US domestic vegoil demand to meet the EPA mandate.

  Cold/wet Central US weather has adversely impacted wheat/corn production, but the bushels that are lost is up for debate. We await rallies for sales. 

More Heavy Rains for Flooded SW Midwest; A Freeze for SRW wheat?

May 3, 6:56 am |

** 6:30 AM CST CBOT Prices: July soybeans are up 1.00 cent at $9.6975, July corn is down 1.0 cents at $3.715 while July Chi wheat is down 5.75 cents at $4.4825.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! It has been a mixed and slower overnight     CBOT trade. Corn, wheat and soybeans have traded both sides of unchanged as traders try to gauge the upcoming Central US weather pattern and the amount of production loss to recent and upcoming cold/wet weather?  Mother Nature is not being kind to the Central US farmer in May.

  Tuesday’s CBOT open interest fell 12,434 contracts in Chicago wheat, but rose 4,557 contracts in corn and 759 contracts in soybeans. Fund short covering in wheat while fund sales likely occurred in the summer row crops.

  The overnight Central US weather forecast is much cooler for the E Midwest  with threatening cold for SRW wheat on Sunday/Monday as lows dip into the upper 20’s to lower 30’s as far south as Kentucky and Tennessee. 67% of the IL wheat crop is heading while, 32% of IN and 5% of OH thru last Sunday. The forecast frosty cold temps could catch SRW wheat in its reproductive stage thereby yielding wheat heads sterile. Moreover, wheat does not like wet feet and standing water will be widespread which will increase disease pressure. 

  US wheat futures are correcting based on reports from E Kansas of average yielding crop potential in the Crop Quality Tour, but it’s the western half of state where the cold weather damage will be noted. ARC doubts that wheat has scored its seasonal high, and any further CBOT correction should be modest.    The big overnight news is all of the flooding that is occurring across MO, IL and IN this AM! Road closures, fields underwater and rivers reaching record crests are causing a massive mess with more heavy rain is slated to drop today. Its already raining heavily this AM across E KS and S MO with 1-4.00” of new rain expected into the southern half of IL and IN to exacerbate the already critical situation. Crop replant will be widespread at some point with producers already asking about the US Prevent Plant Program and considering throwing in the towel in 2017 production.     

  Much needed dry/warm weather will occur across the Plains and extend northward into the Canadian Prairies this weekend. Highs across the S Plains will reach into the 80’s to lower 90’s. Spring planting will be scoring solid progress in the W Midwest and N Plains this weekend and early next week. However, the GFS model has a new storm system offered in the 8-11 day period for the Midwest, which unfortunately, will keep wet areas too wet for seeding.

  In world ag markets, China’s Dalian meal futures held steady overnight with the most active Sept contract closing at $414.50/MT while September DCE corn fell $.01 to close at $6.05. July Malaysian palmoil futures lost 26 ringgits to settle at $2,521 RM/MT, while Paris wheat is down $.50 euros/MT at $169.00.

  Cold/wet weather markets are hard to trade. 1993 was a cool/wet spring with widespread flooding with crop losses not evident until late June. ARC would caution against selling CBOT breaks with additional cold/wet weather forecast.

 

midday

Central US Too Wet/Too Cold; Funds to Cover Additional Grain Shorts

May 2, 6:55 am |

** 6:30 AM CST CBOT Prices: July soybeans are up 7.75 cents at $9.78, July corn is down .50 of a cent at $3.77 while July Chi wheat is up 4.0 cents at $4.60.

 ** AgResource AM Grain & Oilseed Comment: Good Morning! CBOT markets are mixed overnight with wheat/soy higher, while the corn market takes a breath following Monday’s sharp rally. The key question for traders going forward is the ability of funds to exit their hefty short positions (gracefully) amid threatening Central weather and potential sizeable US HRW wheat production?

  US farmers are waiting for clarity on the US HRW wheat crop and the future summer row crop seeding pace, while end users scramble for coverage. This leaves few sellers with funds having to buy their way out of a record fund short grain position as of the end of April.

  Preliminary CBOT open interest reflects a 13,108 decline in corn and 14,303 decline in wheat, while soybeans were up 3,850 contracts. KC wheat open interest was down just 1,696 contracts which suggests that funds have only started to liquidate their hefty short grain/soy positions. This hints that any early turnaround Tuesday weakness will be short lived.

  NASS reported that 34% of the US corn and 10% of the US soy crop was seeded.  Based on the 7 day forecast, ARC doubts that US farmers will be able to plant more than another 4-7%  this week of their corn crop with sizeable acres needing to be replanted in; MO, AR, IL, IN & MI. The ‘17 US corn seeding pace will be below 40% on Monday May 8th with yield drags becoming more noticeable. And US corn farmers are taking a closer look at the FSA Prevent Plant Option.

  45% of the KS, 70% of OK and TX wheat crops are headed. Crop maturity is 10 days ahead of the 5 year average and reflects the susceptibility of this HRW crop to cold/snow and wind damage. US winter wheat condition ratings held steady at 54% GD/EX this week, but will fall sharply next week amid the SRW wheat standing in water and W Plains wheat that endured freeze/snow damage.

  The US and EU weather forecasts are more threatening this AM with another chance of heavy rain slated for the Southeast and Eastern Midwest starting late Wednesday and continuing into early Friday with fresh totals of .5-3.00”. Such rain will fall on saturated soil and will further aggravate near record flooding in the area. The Miss River will crest just below its record level south of St Louis at 48.5”. 4-5 days of dry weather follows, but temps remain way too cool looking all the way forward into the middle of May. The 9-12 day period will likely feature additional storminess as a new system arrives.

  In world ag markets, China’s Dalian meal futures rallied sharply overnight with the most active September contract gaining $8.80/MT to $414.50/MT while September DCE September corn gained $.07 to close at $6.06. June Malaysian palmoil futures gained 42 ringgits to settle at $2,633 RM/MT, while Paris wheat is up $3.25 Euro’s/MT at $173.00.

  Funds are too short of grain/soy while the hardest hit areas of the Midwest have another chance of heavy rain midweek. It’s premature to be overly bearish.

3 Day QPF Rainfall Estimate:

Capture1

 

 

Markets Reacts to Larger than Expected Fund Shorts

May 1, 7:11 am |

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.

6:30 AM CST CBOT Prices: July soybeans are up 8.25 cents at $9.645, July corn is up 5.0 cents at $3.715 while July Chi wheat is up 9.0 cents at $4.415.

  Good Morning! Ag markets are up (relatively) sharply as traders react to weekend weather and larger than expected fund short positions at the CME. (The US government has, of course, averted a shut down, and a funding agreement has been reached to keep the lights on through at least September.) Managed funds as of last Tuesday were short a record amount of wheat, a near record amount of corn, and were net short meal for the first time in 12 months. Amid moderate North American weather threats, and ahead of the entirety of a growing season, periodic short covering rallies will remain a feature through spring.

  3-day rainfall accumulation as of this AM ranges from 1.5-5.0”, with heavier amounts recorded in parts of MO, S IL and far S IN. Low temps this AM range in the upper 30s and 40s, and overall weekend weather was generally in line with expectations. Perhaps the coverage of excessive rain was smaller than anticipated, but no doubt field work will be delayed until the later part of this week, and looks to be put off till next week across Southern Midwest amid additional rainfall expected there in the coming days.  

  The EU & GFS models are in agreement that follow up showers will sweep across OK, MO, AR and W IL Thurs-Fri. Drier weather develops elsewhere, and additional heavy rain is absent through May 17th.

  A moderation in Central US temp is also due in the next 2-3 days, and more seasonal readings will be established across the W Plains, and will work slowly eastward into mid-month. Highs by mid/late week will reach the 70s out west, and rise into mid/upper 60s across the Eastern Corn Belt. US weather input is mixed: soaking rain was largely expected, but is still a negative, while the pattern ahead will be much more conducive to planting.

  Deliveries against May futures included 936 contracts of corn, 104 contracts of meal and 936 contracts of beans.

  The US dollar this morning is up slightly, spot crude oil is down $.25/barrel, Malaysian palm oil futures rallied a modest 12 ringgits overnight, and European grain markets are closed due to today’s May Day holiday.   

 The Wheat Quality Council’s tour of Kansas will be ongoing this week, and of particular interest will be tour’s analysis of elevated disease pressure this year and of recent frost/freeze damage. The tour compiles an average of participants’ production estimates on Thursday, and ARC highlighted last week, the tour’s guess is historically pretty accurate relative to NASS’s first estimate in its May WASDE – which is due in just 7 trading sessions.

  Short covering is the theme today, and whether follow through buying occurs through the balance of the week will be key. Expect a modest boost in volatility, and we remain patient in extending old and new crop cash sales. Brazilian trade will be updated today; US trade updates are out on Thursday.