** 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?