- HEADLINES: US wheat prices rise on fund short covering; GFS weather forecast breaks out rain for SW Russia in 11–15-day forecast; Argentine farmers cut soybeans.
- Chicago choppiness as fund managers adjust positions ahead of May deliveries; May Paris wheat futures lower on the week on stable Russian fob wheat offers; Midwest corn planting is speeding ahead in areas that missed Tuesday’s rain.
- Position adjustments are featured (again) today as money managers adjust risk downwards. Q1 trades of long equities, metals and being short of grains have performed well and fund managers are wanting to bank profits as the heart of the Northern Hemisphere growing season is ahead. Managed money bids have underpinned soybean, soymeal, corn, and wheat markets with the wheat market showing the most upside vigour. July soybeans pushed above their 50-day moving average which pushed July soymeal futures above $350. The volume of Chicago trade is down from recent days, but the flow of capital is to the buy side of the ledger on short covering. Getting smaller is the theme of large investors.
- Chicago brokers estimate that fund managers have bought 4,400 contracts of wheat, 3,700 contracts of corn, and 4,800 contracts of soybeans. In products, funds have sold 3,500 contracts of soyoil and bought 3,900 contracts of soymeal. The soymeal market has pushed above its March high at $350.70/mt which makes the close important today. Chart based buying in soymeal is featured.
- The Argentine farmer is reported to be making soybean harvest strides. The Argentine soybean harvest had been delayed due to excessive wet weather, but fields have dried, and soils have firmed enough to support large machinery. By the weekend, Argentine soy harvest progress is expected to reach 19-22%, up from last week’s 14%. Normally, nearly 50% of the Argentine soybean crop would be harvested by late April. The excessive wet weather has slowed Argentine soy product offers into the world market with Argentine fob soybeans offered at 20 cents under Chicago, and soymeal offered $5.00/mt over, and soyoil at $0.05 under. This compares to US Gulf soybeans at $0.55-0.60/bu over, and US soymeal at $21-24/ton over, and soyoil at $0.50 over Chicago. The return of Argentina as a massive soy product exporter implies new export competition for US soymeal. US soyoil exports are miniscule due to biofuel demand with export demand tied to US aid programs.
- The US produced 280 million gallons of ethanol last week, down 9 million gallons on the week, and down 1% from last year. US ethanol stocks fell to 1,081 million gallons, down 14 million gallons from last week. Such ethanol stocks are up 6% from last year. US gasoline consumption fell to 8.42 million barrels a day, down a sharp 11% from last year. US consumer energy demand is wavering, a hint of economic weakness.
- The midday Midwest GFS weather forecast is wetter with 2-5.00” of rain to fall across MO/IL/IA/AR/IN into May 4. The midday GFS forecast run appears to be the wettest each day with showers/storms falling in frequency from Friday into early May. The rain falls every 3-4 days with warming temperatures. Producers should be able to get seed in the ground this week, but the progress will be curtailed beyond Friday. Temperatures will be warming across the Central US with highs in the mid 60’s to the lower 80’s next week. The GFS forecast is consistent in keeping Western Kansas dry.
- Flat price and spreads are reacting to fund de-risking. Brazilian farmers are selling cash soybeans on the rally while US farmers are focused on planting. Depending on how long the coming Midwest wet spell lasts, there could be a further shift out of corn to soybean acres. July Chicago wheat’s target is $6.25.