- Mixed with reduced enthusiasm has been the morning trade in Chicago with corn/wheat trading both sides of unchanged, while soybeans endure selling pressure tied to the fear that the US and China won’t be able to achieve much progress in two day talks in Beijing. Option volulme rates have been steady to weak this morning and the bulls are talking that US weekly export sales could be disappointing on Thursday. However, it is NAFTA and China/US trade deals that are acting to cap Chicago rallies ahead of next week’s Thursday May Crop Report. We look for some additional index fund money to be put to work late day which will act to underpin values ahead of the close.
- Chicago brokers report that funds have been net buyers of 2,100 contracts of corn, while selling 1,200 contracts of Chicago wheat and 2,500 contracts of soybeans. In soy products, funds have bought 2,900 contracts of soyoil and sold 900 contracts of soymeal. Traders are lamenting the big fund purchases of Tuesday in corn has left the market feeling over on price.
- E Midwest farmers continue to rush seed into the ground with several IL farmers reporting that they are at 75-95% with intended seeded acres.
- There has been a report that Brazilian exports for April were down (below last year). This report is in error. The actual April loadout data will be out later today and a record large total is anticipated. Brazil has been active in selling/loading out the just harvested soybean crop, a trend that we expect will continue into mid-summer. The weekly vessel loadout data argues for an April Brazilian soybean export estimate of 11.2-11.6 million mt.
- Chinese demand for US soybeans continues to be lax as few are willing to secure new or old crop US soybeans with tax implications unknown. Kicking the negotiating can down the road is not expected to help in new US purchases.
- The midday Black Sea weather forecast is generally dry/warm this week with showers/cooler temperatures next week. The rain will be focused on Ukraine/SW Russia.
- The midday GFS weather model forecast is similar to the overnight run with rain totals of .5-1.50” with a frontal pass across the E Plains and Midwest in the next 36 hours. W Kansas and much of the S Plains will see just a few spits of moisture from this system. A few days of dry/mild weather follows on the weekend with the next chance of rain being mid next week. This system looks to produce .25-1.00” of rainfall with the coverage of rain being better across the Western Plains. The 11-15 day forecast offers another Central US storm system, and our confidence in this rain is increasing. The overall 10-14 day forecast offers a good mixture for US crops.
- The US wheat market keeps rising on fund short covering while summer row crops are caught in a range amid active Midwest planting and the rapid warming of soil temperatures. The US Central Bank will be out with their interest rate policy today, and no change in rates is expected. However, the US$ looks to strengthen as US interest rates rise and inflationary concern returns. Chicago wheat futures are overbought, but any setback in corn/wheat will be modest. Soyoil appears to be bottoming on strong US demand trends.