- Without a US/China Trade Deal Summit announcement, Chicago is back to focusing on large world supplies and the keen US export competition. The emotion of “deal on” and “deal delayed” has caused traders to be passive. This is the tenth month of US/China trade tariffs and the political aspects of Chicago trading has not been easy. Except for a wheat break that occurred during March and the corn break following the March Stocks report, Chicago prices have been largely range bound. We expect that same kind of pattern to be followed until a deal is completed or abandoned in coming weeks. It is all about the deal!
- Chicago brokers indicate the funds have sold 5,300 contracts of corn, 3,600 contracts of soybeans, and 1,700 contracts of wheat. Funds have sold 1,700 contracts of soymeal and 1,200 contracts of soyoil.
- President Trump speaking to reporters outside the White House said that negotiations with China are going well. This is the same Trump theme has been around for weeks. Yet, the headline risk is increasing that a deal will be announced or abandoned in coming days/weeks. As the US/China trade negotiations reach an endgame, the risk for an “event” is growing each day.
- There has been active corn spreading today out of May futures into July. There was a minute in which 63,000 contracts traded. The index fund roll starts today, and pre-positioning is occurring in spreads.
- China is on holiday and trade/demand is quiet. Yet CME hog futures rallied to new contract highs at $101.875 on estimates for the ERS (Economic Research Service) China watcher reported that pig numbers are in a landslide lower in several key provinces. ASF (African Swine Fever) has taken a big bite out of production with sow numbers down sharply according to private reports. No one wants to take the risk of production amid ASF which has elevated the hope of large US exports. China has secured record tonnages of US pork, but shipments of that pork appear to be modest until a US/China trade deal is done and 70% tariffs are lifted.
- The EU and portions of the Black Sea are arid with short soil moisture conditions becoming widespread. The dryness is not yet impacting production potential, but the dryness has to be closely monitored heading into late month. May will be the key month for Black Sea small grain crops.
- The CFTC will release their weekly CoT report later today. The report is expected to reflect that funds are short 240,000 contracts of corn, short 65,000 contracts of Chicago wheat, and 85-87,000 contracts of soybeans. The net short Chicago position will key early week price direction along with the Central US weather forecast.
- The midday GFS weather forecast is slightly drier for the NW Midwest. Rain totals have been reduced to 0.75-2.50″. The forecast offers 1-3.50″ for the C and E Midwest and the Delta. The abundant rainfall will maintain saturated soils and seeding concerns. This is an active and wet weather pattern into the third week of April. Snows are shifted west into IA by the midday GFS around April 10. The cold and wet weather looks to pose problems in early corn seeding. Warmth will occur for the next week followed by cool to cold temperatures into April 21.
- Chicago is in retreat amid the further delay in the US/China trade pact. The negotiations are ongoing, and China is pushing for a quick deal. This means that a breakthrough could occur at any time. The US and world are oversupplied with grain, yet the prospect of a deal is underpinning values on a break. If there is no deal, the outlook becomes rather bearish. With a deal, the outlook becomes bullish. Our expectation is for a deal, but the exact timing is unknown. Until then, choppiness prevails.
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