- It has been a mixed morning in Chicago with wheat prices firm, while corn and soybean futures sink lower. The volume of Chicago trade has been restricted by the pending three-day holiday weekend (Good Friday Chicago is closed). Funds continue to pile into a larger net short position with the late March lows in May soybean futures were exceeded. The tone of the soy market is bearish on increased S American export competition. A mixed close is expected going home with few expecting that the FAS weekly export sales report will hold any bullish surprises.
- Chicago brokers estimate that funds have sold 4,400 contracts of soybeans, 3,200 contracts of corn, while buying 2,200 contracts of wheat. In soy products, funds have sold 2,700 contracts of meal and 2,100 contracts of oil.
- The Brazilian Real weakened this morning to 3.93:1 US$ while the Argentine Peso has rallied to 41.5 Pesos/US$. The Russian Ruble is holding steady at 64:1. The weaker Brazilian Real appears to be related to the Brazilian Government avoiding a truckers strike by not allowing diesel prices to rise.
- We would mention that Brazilian soybeans can be imported “duty free” into the US, which last occurred in 2012 during amid the dire Central US drought. If Brazilian soybeans can be imported duty free, it is the cost of loading/unloading and transit that will determine whether Brazilian soybeans could surplant US soybeans in its domestic crush rate (should the US/China sign a trade deal that includes 40-50 million mt of annual US soybean imports).
- US weekly ethanol production was 1,016 thousand barrels/day compared to 1,002 last week. This was the first weekly EIA report to reflect US ethanol production above a year ago since February. And US ethanol stocks fell to 953 million gallons, down 21 million gallons from last week, but still 6% above last year. US ethanol producers are enjoying a margin of around $0.22/gallon while blenders are seeing their best margins since last summer of around $0.07/gallon. The strong blender margin should keep stocks moving lower and for strong demand for Midwest cash corn. A strong push to expand US ethanol production is expected into year end.
- The US Government is open Good Friday and will operate normally. We expect that weekly CoT reports will be released on Friday afternoon with weekly export inspections and crop progress reports due Monday. US financial markets are closed on Friday for the holiday. The US/China are said to be close to a deal, but no one knows of when it will be completed.
- Central US GFS midday weather forecast is like the overnight solution with heavy rains for the Delta/E Midwest along with an arc of rain for WI/IA over the next 10 days. 10-day rain totals here are estimated in a range of 1.50-4.00″ with localised heavier amounts. Rainfall in other Midwest regions range from 0.5-1.50” with the only area seeing less moisture being the Northern Plains States. Temperatures are cooler in the 6-10 day period with those cool temperatures seeping into the 11-15 day timeframe. Another moderate storm system is evident across the E and N Midwest with rainfall of 0.25-1.50″.
- The ongoing absence of a US/China trade deal is weighing on old crop US soy prices as time is running down in the old crop year. And amid Midwest soils that are holding their best moisture supply in years, warming temperature will be helpful to firm soils, support machinery and start seeding. Wheat values are firm on the longer-term prospect of adverse weather for Ukraine/W Russia. The big unknown question is the timing of the completion of a US/China trade deal. We see the odds at over 80% that both sides will achieve a trade pact (at some point).