- It has been a mixed morning with corn/soy futures generally weaker, while wheat futures have pushed to double digit gains. The volume of trade has been more active than expected with funds buying new length in wheat, while shedding exposure in the summer row crops. We maintain that until more is known about US/China and NAFTA Trade pacts or a drought threatens the Central US, the market will continue its chop. There is just too much uncertainty for any Chicago trend to be maintained.
- The US exported an all-time record large 304 million bu of corn during April! That export pace was up 60 million bu from March, and double the export pace of 2017. Weekly shipping data called for a big number, but one must be impressed with world corn export demand. We note that it is the sky-high price of minor grains, feed wheat, barley and even sorghum that is allowing US corn exports to soar. There just are no substitute feeds for livestock feeders. The US exported 71 million bu of wheat in April, down 8 million from March, 20 million bu below last year. The US wheat export pace remains disappointing and WASDE is likely to adjust their 2017/18 US wheat export estimate downwards in its June report next week. The US exported 79.6 million bu of soybeans in April, down 39 million bu from March, and down 35 million bu from 2017.
- The US April soybean export pace was disappointing as China secured record soy totals from Brazil as the US threatened a trade war. The US exported 212 million pounds of soyoil and 1.03 million mt of soymeal during April, close to a year ago.
- Harvested OK HRW wheat yields continue to impress with totals often 2-5 bushels/acre above expectations. The better than expected OK yields has many wondering if the trend can push into Kansas, and raise US HRW wheat production. So far, the OK crop is impressive and likely offers a clue as to what will be found in Tuesday’s NASS report, a bearish surprise is possible. No real heat (lack of a high pressure ridge) across Black Sea wheat area has allowed crops there to wait for rain. The key unknown is whether such rain will return in mid June. The GFS forecast is wetter after June 13.
- The midday GFS North American weather pattern forecast is wetter with soaking rain across much of the Central US. The rain is farther south as the mean position of the ridge sinks. Rain totals should range from 0.5-3.00” with locally heavier amounts. Even Kansas would be slated for a soaking rain. The forecast is cooler with more of a zonal flow in the 11-15 day period. A trough of low pressure replaces the ridge which would offer cooler temperatures and near to above normal rainfall. We see no real weather threat in the midday forecast with abundant rainfall and cooler temperatures in the 9-15 day period.
- The market is waiting for clearer signs on the US/China trade dispute. However, US weather is less threatening and the Midwest crop has the makings of record yield potential. And with some rain for the Black Sea beyond the next 8 days, Chicago is likely to stay on defense until traders can confirm larger Chinese demand via some sort of trade truce. A real crop threat is needed for US corn or soybeans before a sizeable rally can unfold. Do not ignore the political and weather uncertainty.