- HEADLINES: Chicago low volume/mixed at midday; Cash corn sales tug may corn lower; Wheat traders watch new Russian maritime restrictions.
- Midday Chicago futures are mixed at midday with profit taking occurring on the early rally. The sag has been in wheat/corn futures while the complex has taken over the bullish leadership role with soy products rising to sharp daily gains on the prospect of diminished US crush rates. US soybean processors are having trouble replacing stocks, which will ultimately lead to a curtailed crush and lower product production. Strong pushes in elevator posted bids is not producing farm sales, which is worrisome for crushers if US farmers get back at corn/soybean seeding in late April or early May. Producers are more willing sellers of corn, which has weighed on nearby May corn futures. $6.00 plus cash corn bids have enticed improved corn movement. This is the key fundamental on why spreads and flat prices have weakened in recent day Chicago trade. The last time that Midwest farmers have been able to sell $6.00 plus cash corn was over 8 years ago.
- Chicago brokers estimate that funds have sold 4,700 contracts of corn and 3,900 contracts of Chicago wheat, while buying 4,300 contracts of soybeans. In soy products, funds have bought 3,200 soymeal and 2,500 contracts of soyoil.
- The Russians will restrict the navigation of foreign and other official ships in the Eastern Black Sea into November. The move is illegal and contradicts free maritime passage laws. This morning’s Russian ban only adds to the tensions of the Russian build of military troops on the Russian side of the Ukraine/Russian border. It is uncertain if Russia’s navigation ban will include the blocking of Ukraine grain shipments and trade from the Azov Sea Ports. Some 2-3 million mt of wheat pass through this channel and its blockage would impact trade flows and especially hit Turkey with its wheat coaster trade with Russia. The world will closely watch weekend political developments, but any military action would be bullish for world and US wheat values as Russia becomes less trustworthy as a supplier.
- The weather forecasts offer limited rainfall for the Northern Plains and the NW Midwest into May. The midday GFS weather forecast has rain across MO, with limited totals for the Dakotas, MN, NE, and IA. Drought conditions worsen across North Dakota with seeding progress being delayed until early May. Cold/dry soils are troubling farmers in the area that the drought could carry into the summer. The nearby risk is spring wheat where a lack of rain could shift acres to other summer row crops. Both the Canadian Prairies and the Northern US Plains need a northward shift in the jet stream to boost soil moisture. Farmers like to have their spring wheat, oats, and canola planted by May 12, with summer row crops having until May 25.
- US winter wheat crop ratings are expected to hold stable or decline slightly.
- The midday GFS weather forecast is wetter across Mato Grosso do Sul and Parana next weekend (than EU model). The forecast keeps pushing out the prospect of rainfall. Limited C Brazilian rain is expected over the next week which will cause acute stress to developing corn. The GFS forecast offers 0.5-1.50″ of rain next weekend and early next week, but our confidence in this rain is low. The GFS forecast has been too wet since March and it continues to struggle with rainfall totals/placement. The extended range forecast returns the arid weather trend in May, so the rains that fall in the next 2 weeks will be critical to Brazilian winter corn yields. Highs will hold in the 80′s to the lower 90′s with soil moisture in decline for most of next week.
- Weather and perceived crop size is the driver of price. Strengthening domestic cash basis levels underpin values on breaks until first notice day is closer. Cash soyoil basis bids are 5.50-6.00 cents above Chicago May futures while cash soybean bids scored new high on strengthening basis bids. It is a shortage of old crop supply along with the risk of new crop weather which makes being bearish/short so difficult. A close above $12.85 November soybeans will turn chart patterns bullish. Brazilian and Central US weather dryness will be closely followed early next week.
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