- It has been a mixed morning, with wheat down 4-6 cents and row crop markets stable. New selling has emerged in winter wheat futures this week amid lofty HRW crop ratings and as the USDA’s old crop wheat export forecast could still be a bit too high.
- It is not so much about weekly sales in wheat, but rather the pace of shipments needed between now and the end of May. Census wheat exports in Feb totalled 85 million bu, a bit higher than expected. Using FGIS data US wheat exports in March are pegged at 84-85 million, but it remains that monthly shipments of 105 million are needed in Apr and May to hit the USDA’s target. The pace of weekly inspections will be watched closely, but another hike in US wheat stocks of 10-15 million bu is likely.
- US export sales through the week ending April 11 included 37 million bu of corn, vs. 22 million the prior week; 14 million bu of soybeans, vs. 10 the prior week; and 12 million bu of wheat, vs. 10 million the week before. Corn sales were better than expected and well above the pace needed to meet the USDA’s forecast.
- For their respective crop years to date the US has sold 1,759 million bu of corn, down 9% from a year ago; 1,627 million bu of soybeans, down 18% from last year; and 915 million bu of wheat, up 8%.
- US exporters also sold another 40,300 tons of pork for export. More than half of the business was done with Hong Kong.
- The WTO has ruled that China’s TRQ import system breaches its previous WTO commitments. China’s system of importing grain has been deemed as not transparent, unpredictable and unfair. Whether this provides leverage for talks in late April is unknown, but this is viewed as another positive with respect to large Chinese demand for US agriculture if a deal is to be reached. Recall China needs open trade to meet longer term strategic objectives.
- NOAA’s updated spring/summer US climate forecast is unchanged from previously and still seems to hinge upon moderate El Niño conditions. May’s forecast included normal/below normal temperatures across much of the US, while above normal precipitation will continue to favour the Southern Plains and Delta/Southeast. NOAA’s May-Jul outlook leans wetter than normal in all areas, while heat will favour both US coasts.
- This week’s drought monitor, as expected, reduced the coverage of abnormal dryness in TX and LA. Only 14% of the entire US is experiencing some form of dryness. This compares to 43% in mid-April a year ago.
- The midday Central US GFS weather update is little changed nearby, but much wetter in the 10-15-day period. Confidence in the extended range outlook is low, but the GFS maintains a pattern of widespread active showers into May 3. Soakings totals upward of 3-4”, along with severe weather, are indicated in early May across KS, NE, MO and IA. Radar maps show organised rain working across the Delta and Central and Eastern Midwest currently. This system will linger in the region into mid/late Saturday. Follow up rain returns next Wed-Fri. It is still too early to adjust acreage but planting progress will stay limited 7-8 days, and possibly beyond.
- The USDA’s adding to US and world grain stocks remains a focal point. Funds’ bearish bets are getting sizeable, and while we doubt such large short positions will be sustained into summer, the spark needed to trigger covering remains absent.