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.
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.
