- Chicago futures are strongly higher at midday with May soybeans back targeting $9.00, a holding point for spot futures for many months. There is strong talk of additional China interest in a new crop position (September-November) while the grains rally on general short covering. The volume in Chicago has increased with all eyes on the US/China trade talks that start on Wednesday. The market has a firm tone at midday following Friday’s bearish USDA decline and with the volume expansion, it appears that seasonal lows were forged. It is now a question of future China demand for US ag goods and determining the time that US and S American farmers will increase their sales. Farm selling is nil this morning with a new growing season ahead. Our bet is for a higher close with the shorts nervous ahead of US/China trade talks.
- Chicago brokers report that funds have bought 4,500 contracts of corn, 5,200 contracts of soybeans, and 3,100 contracts of wheat. USDA reported that for the week ending March 28 the US exported 49.6 million bu of corn, 26.8 million bu of soybeans, and 15.4 million bu of wheat. For their respective crop years to date the US has exported 1,168 million bu of corn (up 201 million or 21%), 1,076 million bu of soybeans (down 449 million or 29%) and 691 million bu of wheat, (down 41 million or 5.6%).
- NASS will start its 2019 weekly crop condition/ratings report later today. The report will start with winter wheat ratings and shift to spring planting progress in the weeks ahead. We note that initial US winter wheat crop conditions do not correlate with yield, but the ratings are a good forecaster of wheat abandonment. Producers are reported to be grazing out as much winter wheat as possible amid low unprofitable cash bids and a strong cash cattle outlook.
- The CRB/CCI index is up over 200 points this morning with a more bullish macro tailwind for China’s PMI data. The strong crude oil rally is pushing the CRB higher. The PMI back above 50 confirms expansion on the Chinese manufacturing sector and stability for their economy. The 6-week high in China’s PMI has energy traders on the buy side and a flow of capital back into commodities. Most seem convinced that China’s economic outlook is brightening which should boost their raw material consumption. The weakening economic outlook for the emerging markets has produced a drag on world commodity valuations.
- The midday GFS weather forecast is wetter across IA and WI, with heavy rainfall of 1-2.5” expected over the next 10 days. And the forecast offers even heavier rainfall during the 11-15-day period with additional totals of 2-3.00″. The combined rain events will keep much of the Midwest saturated and soils too soft for large equipment. Temperatures will be variable and fan the storms with warmth noted next week to be followed by cooler temperatures during the 11-15 day period. This remains an active pattern that is going to further slow Midwest and Delta row crop seeding.
- China appears to be pricing out some of last week’s purchases in old crop soybeans and looking to secure additional new crop. We wonder if China played the USDA March report and came up with a draw. Rumours abound that China is looking to buy additional US corn, but no new sales can be confirmed. The Central US weather forecast is increasingly wet into mid-April thereby stalling initial corn seeding progress. Yet, the big factor for prices remains a US/China trade deal.