- Mixed has been the morning as Chicago futures trade either side of unchanged. The wheat market gave up early gains as Egypt secured French and Russian wheat for late May/June shipment, while the soybean market is trying to reach price levels that stimulate Chinese interest for US soybeans. Bull spreading has been noted in corn as interior cash markets firm on a lack of farm selling while improved weather is offered for new crop seeding beyond the weekend.
- Interest in trading will fade into the weekend as all await political developments on reopening the US and world economies. We look for a mixed close without much passion. Unless China shows up to secure US soybeans, few want to chase a rally amid improved US/European and Black Sea weather forecasts.
- Chicago brokers estimate that funds have been more moderate sellers of 3,200 contracts of wheat, 2,800 contracts of soybeans and 1,200 contracts of soyoil. Funds are flat in corn and soymeal, with spreading turning more active as first notice day against May futures comes into focus.
- China is strongly hinting that it will soon seasonally start their weekly corn auctions to restock the cash markets and pressure domestic feed prices.
- Egypt’s GASC secured 240,000 mt of Russian and French wheat at $243/mt. The purchase should cover GASC heading into the new crop when Russian price offers are as much as $.90/bu below the old crop. The line up to secure old crop wheat is in sharp decline and the wheat market now all depends on Black Sea weather going forward. Chicago wheat futures are under their 50-day moving average with the same price trigger resting at $4.745 in KC July.
- US export sales for the week ending April 9 were; 6.6 million bu of old crop wheat and 15.4 million bu of new crop wheat, 35.7 million bu of corn and 9.0 million bu of soybeans. The sales were disappointing and unlikely to improve unless China steps forward and secures more US soybeans. We would note that China booked US wheat, sorghum and pork in the past week.
- The 90 day forecast for Apr/May/June is attached and it reflects favourable growing conditions with average temperatures and near to above normal rainfall. If seed gets planted on a timely basis, the crops should be ok.
- For their weekly crop years to date, the US has sold 927 million bu of wheat (up 11 million bu or 1%), 1,365 million bu of corn (down 394 million bu or 22%), with US soybean sales at 1,383 million bu or down 15%). We believe WASDE is far too high with their 2019/20 old crop US soybean export estimate.
- The midday GFS weather forecast is much wetter and this model remains erratic beyond the next 7 days. We would argue that the GFS forecast is too wet and maintain that the drier EU model has a better handle on the pattern. Nonetheless, both models offering warming temperatures beyond Friday which will firm soils. We look for planting activity to restart on the weekend and become active next week. The W Midwest and N Plains is where seeding progress will be the most extensive. Any flooding will occur in the Gulf States.
- Higher wheat prices demand a deepening Black Sea drought while the soybean market demands the return of China for US soybeans. US ethanol markets are oversupplied and new stay at home orders into mid-May for the NE US will not be aiding US gasoline consumption.