- Chicago futures are steady at midday, but generally unwilling to move. Wheat futures have held on to their rally overnight, and midday forecasts are little changed in Australia and Canada (still dry). Spot crude oil is at new highs, but clearly the market is concerned about the lack of progress in both NAFTA and Chinese trade negotiations. Choppy price action is expected into the weekend.
- US export sales through the week ending May 10 were mixed, better than expected in corn and meal, but rather so-so in beans, wheat and oil. Corn sales through the period totaled 39 million bu, up 11 million on the week. Meal sales were 376,000 mt, a six-week high. New crop wheat sales totaled just 5 million, and total new crop US wheat export commitments rest at 75 million, down 34% from this week a year ago and the lowest since 2007. Bean sales totaled 10 million bu, down 3 million on the week. Oil sales totaled 10,000 mt, vs. 45,000 the week prior. With 16 weeks left in the crop year, weekly corn sales must average only 11 million bu to meet the USDA’s target, and meal sales now account for a near record 91% of the USDA’s forecast. As such, the USDA looks likely to raise 2017/18 meal export demand, as well as crush, in coming WASDE releases. However, there is much attention being given to the lack of Chinese purchases. New bean sales made last week were primarily to Europe and Mexico, and switches from unknown destinations are noted. Also, there is little new to report at midday regarding US trade uncertainty.
- The Brazilian weather forecast overnight has trended a bit wetter, with weekend rainfall coverage to expand into Mato Grosso and Goias, where it is desperately needed. Contacts in S America suggest Brazil’s corn crop likely stabilises at 80-82 million mt amid recent spotty showers and assuming coming rainfall materialises as predicted.
- Friday’s CFTC report is expected to reveal a managed fund long position in corn worth 190,000, vs. 212,000 last Tuesday; a long in soybeans worth 120,000, vs. 127,000 last week; and a net short in Chicago wheat of 11,000, vs. last week’s very slight net long position. Such positions lead us to believe that the market has digested and priced most available news, and it is all Northern Hemisphere weather into early/mid-July. Weather itself remains rather mixed, with less than ideal conditions noted in Australia, Canada and Kazakhstan, but with favourable conditions to persist across the Central US into late month.
- The midday GFS North American weather forecast pattern shows that an active flow of moisture will be ongoing over the next 10 days, including parts of the driest areas of KS, NE and SD. Fortunately, relative dryness will be established across MN and WI moving forward, and corn planting likely gets finished there in the next two weeks. Clearly, ten-day totals are well above normal. We also note NOAA’s drought outlook, updated this morning, includes expected improvement across the Southern Plains, and drought development is not expected in the heart of the Corn Belt through August.
- Our work maintains that neither the bulls nor the bears will find much leverage in the near term. Trade issues have of course been well documented, and early-season US crop conditions should be above long term averages come June. However, May temperatures have been abnormally warm, and amid forecasts for tightening US and world grain stocks, the market won’t be able to push value down by any meaningful degree until mid-summer.