- It’s been a quiet and listless session so far in Chicago. Following the USDA’s confirmation of higher US and global grain stocks, there’s just little for the trade to grab onto with respect to establishing new positions. News is lacking from this week’s teleconference meetings between the US and China.
- The EU is now putting pressure on China with respect to trade and a lack of promises and follow-through regarding core issues such as IP and IT protection. Whether this will aid US negotiators is unknown, but China recognises that new investments are needed in order to accomplish long term strategic objectives. Better economic growth is also needed in China to even sustain standards of living. We’re hopeful world trade can be sorted out prior to summer.
- The EIA’s weekly energy report is generally positive corn and ethanol. Ethanol production last week totaled 295 million gallons, the highest in three weeks. A strong seasonal boost in production if US weather improves as margins remain slightly profitable and gasoline’s premium to ethanol widens further.
- US ethanol stocks are also being drawn upon as demand improves. Ethanol stocks last Friday totaled 974 million gallons, down 33 million from the prior week and the lowest since December. Total weekly US ethanol disappearance was a stout 328 million gallons, up 15 million on the week and unchanged from this week in 2018. Gasoline stocks also fell another 8 million barrels, and currently sit at the lowest level since November. Energy markets are firm at midday, with spot RBOB up $0.05/gallon.
- World Pork expo in IA has been cancelled due to fears that international participants will transmit Swine Fever. Additional ag inspectors have been requested to keep N America free from the disease.
- US exporters sold 134,000 mt of old crop soybeans to an unknown destination. Other world ag news is lacking.
- Radar maps show a narrow band of rain/snow working across SD, MN, NIL and WI. Snow cover will return in the next 24 hours, but the bulk of the coming blizzard is scheduled for Thurs-Sat. The midday GFS maintains accumulation of 30-33” across SD and MN. Light snow will be recorded as far south and KS/OK and far northern IL.
- The midday forecast is wetter in key areas of Eastern Ukraine and Southern Russia, but a rather large section of the EU corn/wheat belt will see only trace amounts of rainfall in the next two weeks.
- EU dryness will grab more attention from the wheat market if it persists into mid-May. 60-day rainfall across all but Germany in Europe ranges from 25-70% of normal.
- The midday Central US GFS weather forecast is again wetter across the Central Midwest in the 8-14-day period. Following the coming blizzard, active shower activity returns early next week and again April 18-20. A fast-moving jet stream and anchored low pressure aloft will sustain a pattern of moderate to heavy rainfall every few days into the last week of the month. Much cooler temperatures will be widespread beginning Fri/Sat.
- Balance sheet analysis argues for longer term neutral price action and a lack of volatility. We doubt breaks can be sustained until Central US weather improves or a Chinese trade deal is pushed aside. It remains that a deal with China changes the US ag landscape. And additional N Hemisphere weather scares are likely between now and early July.