- Markets are widely mixed at midday, with the soy complex weaker amid another day lacking any new export sales announcements and with grains steady to higher. Plains rainfall over the weekend was a bit spottier than expected, and midday models lack any follow up rainfall into the first week of May, suggesting any drought improvement will be shallow and brief. NASS’s crop report this afternoon is expected to lean a bit bullish (and Central US temperatures currently range in the low 50s and low 60s) , but the trade is well aware of coming warmth, which looks to begin during the latter part of this week. Macro markets at midday are similarly mixed. Spot WTI crude is down $.25 at $68.20, well off session lows. The US$, however, has extended its rally, with a host of major exporting currencies (Russia’s Ruble in particular) declining in value. And like last week, other fresh meaningful news is tough to come by, thus allowing for speculative position squaring more than anything else.
- We would mention that broad support in energy markets continues, and futures-based ethanol blending margins have found new rally highs at just over $.06/gallon. This compares to $.04 in early March and flat to negative margins in April a year ago. Production and total ethanol disappearance will stay elevated relative to recent years.
- Stats Canada publishes its first new crop Canadian acreage estimates on Friday, and it is expected that intended canola (rapeseed) area this spring reaches a new record 24 million, vs. 23 last year. Other cropped area is expected to be steady to lower. The N American weather pattern through early May includes a fairly slow warming east of the MS River, and across the Lake States, but much of W Canada will see highs this and next week reach into the mid 70s. Farmers will be active across the Prairies beyond the next few days.
- The whole of Brazil’s safrinha corn belt will see little to no rainfall in the next two weeks, elevating odds that the wet season there has ended entirely. Assuming the forecast verifies, we peg April 1-May 7 precipitation in Mato Grosso, Mato Grosso do Sul and Parana at a meagre 2.2”, vs. 5” last year and 4.5” on average. Note that April/early May rainfall in 2016 was 2.7”.
- The midday US weather forecast is little changed from the morning run. Below normal temperatures continue for another few days, but a much more seasonal temperature profile will be established by Sunday/Monday, and this warmth will be much more lasting. Mostly dry weather persists across the whole of the Central US into May 2-3, after which the GFS forecast hints at widespread soaking rain across the far E Plains, Midwest and Delta.
- In recent days market focus has been on improved US weather and ongoing China-US trade issues. Structurally, it remains that big N Hemisphere crops are needed to turn bearish, and so we caution against chasing breaks.