- Wheat has been the morning upside leader, with corn following and soybeans trading either side of unchanged. The volume of Chicago trade has been diminished as traders debate the impact of weather and politics on price. Traders fear that President Trump will raise the Chinese on their pending duties on US sorghum, by announcing a list of $100 billion of potential tariffs against Chinese goods at some point. And President Trump indicated that returning to the TPP (Trans Pacific Partnership) was not in the interest of the US. Bilateral trade agreements look to be the new working model for US trade into 2020. We anticipate a firmer close in the wheat market with the summer row crops closing mixed. Few have any real passion for new positions until more is known about May Midwest weather and whether the US places actual tariffs against Chinese goods in late May. FAS did not report any new sales today. New US daily sales announcements have been lacking for the past week. Cheaper S American corn, European wheat and S American meal is keeping fresh US export demand constrained.
- Chicago brokers report that funds have bought 3,200 contracts of Chicago wheat, 2,500 contracts of corn, while being on both sides of the soybean market. In soy products, funds have sold 2,100 contracts of soymeal while buying 1,900 contracts of soyoil.
- Brazil has announced that it has harvested 90.5% of its soybean crop with remaining bushels to be cut in far Southern and Northern Brazil. Bahia has harvested just 62% and RGDS just 70% of their soybean crops. All other areas are either finished or nearly so with cutting the 2018 soy crop.
- Open interest (OI) in May Chicago futures is historically large. May corn OI was 338,032 contracts, May soybeans 25,990 contracts, and May Chicago wheat OI at 85,615 contracts. We note that 1st notice day is only eight trading days off and liquidation is expected with option expiration on Friday. Fund length and large May open interest will act on a drag on Chicago rallies.
- US farmers have invested heavily in planting equipment in recent years and most producers can seed as much as 10% of their corn crop in a single day. Thus, when weather allows with warm/dry conditions, Chicago is not going to react favourably as seed reaches the soil. Midwest corn yield drag does not occur until after corn is seeded after May 10-15. Thus, Chicago will not place much weather premium in price until the calendar reads May 1. US ethanol production fell to 1,009 thousand per day from 1,034 last week.
- The GFS weather forecast for the US is like the overnight run and drier across the Central Plains with rainfall totals of .25-1.50”. Any rain that is greater than 1.00” (across Kansas) is no more than 40% of the area. Rains across the remainder of Kansas looks to range from .15-.85”. Rains across OK/TX have also been trimmed to traces to 1.25”. Some secondary light rain is possible from late Monday/Tuesday across Kansas and the North Central Midwest. Mostly dry weather is evident across IL/IA/IN/OH. Soils will be drying and producers will be waiting for warming soils before planting commences. Warming and dry weather will favour the start of active spring seeding late next week. 60- to 70 degree temperatures stream northward from Texas to the Dakotas and east to Illinois after Apr 25. The extended range forecast is changeable.
- Chicago lacks direction as traders are waiting for fresh news on the US/China trade and Central US spring planting conditions. HRW wheat will not see enough rain this weekend and frequent rains will be demanded through heading. The Plains Quality Wheat Tour starts on the 30 April. Our bet remains one of sideways trade without any passion, at least into May 1. We look to buy any price break as planting starts.