- Chicago corn, soybean and wheat futures have been strongly higher this morning on the potential for reduced trade tensions with China, limited US farmer selling (busy planting their new crops), and worry that world wheat production is starting to decline. Moreover, a cargo ship has collided with a dock in the export hub of Rosario in Argentina which has added to the rally. Chicago has a firm tone this morning and a higher close is expected, but the highs for the day likely formed as the Rosario port collision was rumoured.
- Chicago brokers report that funds have bought 12,000 contracts of corn, 5,500 contracts of soybeans, and 4,800 contracts of Chicago wheat. In soy products, funds have bought 4,600 contracts of soymeal and sold 3,000 contracts of soyoil. The funds continue to pile into a larger net long position in soymeal and a huge net short position in soyoil. FAS did not announce any US daily sales. China remains starkly absent as a US soy buyer which is likely a “trade posture” ahead of next week’s meeting.
- We would remind that that China will be out on holiday from Thursday through Monday, with European and other Asian clients out from Friday through Monday. The May Day Holiday is a big spring holiday for everyone but the US. This along with key moving averages being crossed this morning, has sparked a large amount of new speculative buying.
- Producers report that seeding has become active across C IL, MO, IN, and the southern half of IA. Producers across the north (including the Dakotas) are hoping to go later this week. IL farmers report that they will be able to plant 10% of their corn crop in a day, and should the weather hold, they could be completed with their seeding by May 7-8.
- The Chicago wheat market is starting to pay more attention to conditions of key overseas producers. The Eastern Australian drought is deepening with the forecast calling for another two weeks of heat/dryness. The Argentine farmers are fretting about too much rain, while Europe is warm/dry with soil moisture being short. And in Russia, crop estimates are falling with most at 73-78 million mt vs last year’s harvest at 85 million. It is hard to be bearish of wheat in May.
- A cargo ship has collided with a loading dock on the Parana River which has caused some damage to the northern loading dock. The southern dock is operational, but some estimate that it will take 4-8 weeks to fix the northern dock damage. More information is needed for a full assessment of damage.
- The midday GFS weather model update shows that the forecast is drier across the W Plains with the GFS model shifting rain potential to the Midwest and Delta. There is a good chance of soaking rain across E OK, but otherwise, the Plains drought looks to deepen with temperatures warming. Highs next week look to reach the 80s/90s which will add acute stress to HRW Plains wheat. The Midwest will see a chance of rain next Tuesday/Wednesday with totals of .25-1.00”. This rain will not produce any lasting seeding delay. The good news is that the N Plains and N Midwest will be dry next week which will facilitate a more active spring planting pace. The 11-15 day forecast is drier and more in line with the European model solution.
- It feels as if a seasonal low was scored on Monday, and higher prices are anticipated into late spring. However, there will be setbacks on the improved Central US weather forecast and the rapid spring seeding campaign.