- Since April 25th and looking forward to mid-May, Central US temperatures have been cool. It is the chill and cold that is causing germination and emergence issues. Most traders look back in time and argue that too much rain appears to have a limited correlation with corn yield into mid-May. However, when years are segregated into cool and wet, the relationship becomes more important. This is not the spring start that producers desired.
- Chicago saw soybeans close higher on technical trade and weather issues, which impacted both old and new crop supplies. Soybean meal continued in its narrow range but led the complex higher with oil finishing just below unchanged. Argentine harvest progress appears to be holding up well if the volume of truck deliveries to port is anything to go by; formal updated figures will be released on Thursday, which should confirm this. Chinese import pace remains solid, at a record, and S American output estimates continue to edge even higher yet Chicago markets continue to focus solely upon US conditions. Fund short positions, which are large, conspire with the global situation to leave the way open for potential fireworks!
- Corn futures finished a couple of cents higher as the market saw additional rain in the Delta and S Midwest, which will likely lead to some widespread replanting. In S America it is becoming dryer in Mato Grosso and Goias in C Brazil in the coming ten days but forecasts do contain a low confidence that rain will follow thereafter.n The wet season traditionally comes to an end in C and N Brazil by mid to late April. Above normal rainfall will persist across Parana in S Brazil, but half of Brazil’s safrinha corn belt will see just 10-40% of normal rainfall into mid May, one more finishing rain is needed for optimal yield, and too much uncertainty exists with respect to planting dates in the S and E Midwest US. Domestic wheat supplies across the W Plains and finishing weather in Brazil are needed before adopting a bearish outlook.
- Global wheat markets ended widely mixed, as the trade continues to speculate on yield loss across the W Plains. Day two of the KS wheat tour offered little insight, and as expected yield measurements could not be taken due to snow cover and it is noted that recovery will simply hinge upon weather through the rest of the growing season. EU futures ended lower, EU cash prices ended noticeably higher, and spot Russian wheat fob offers are the worlds’ cheapest at $185/mt. Russia has also set its new crop intervention price at 9,000 rubles/mt, basis grade 4 wheat. Russian intervention purchases are rarely sizeable, but in recent years Russia’s domestic market has generally been well supported at the intervention price target. At today’s ruble value, Russian wheat replacement costs are pegged at $156-170/mt. This suggests downside risk in Black Sea cash markets requires currency weakness or above trend yields this spring/summer for new pressure. With US wheat acreage record low and EU cash markets well supported on breaks, our view remains that better than expected N Hemisphere production is needed to turn the market substantially bearish.