- It has been a mixed morning with pre-report positioning the feature ahead of the April WASDE report tomorrow. The re-opening of Chicago trade uncovered buying in wheat/soybeans and some modest selling in corn. The volume of Chicago trade has been tepid with forward spread rolling showing midday totals that are more normal. Large world grain/soy supplies are capping Chicago rallies while the hope of US/China trade deal offers support. The marketplace is unclear as how close or far off a US/China trade deal is following last week’s face to face talks. Traders and the market participants are growing tired of the progress promises from the Trump Administration. The fear of many traders is that the Trump Administration keeps asking for more and more from the Chinese which is frustrating the negotiations. US/China trade is a binary and important event for US agriculture which as of today, shows no end in sight.
- Chicago brokers report that funds have bought 2,100 contracts of wheat and 1,600 contracts of soybeans, while selling 3,100 contacts of corn. In soy products, funds have sold 1,200 soybean meal and bought 1,600 contracts of soyoil.
- US weekly inspections for the week ending April 4 were; corn 40.7 million bu, soybeans 32.6 million bu with wheat at 19.8 million bu. For their respective crop years to date, the US has exported 1,209 million bu of corn (up 166 million or 16%), 1,109 million bu of soybeans (down 430 million or -28%), and 712 million bu of wheat (down 36 million or 4.8%).
- The average trade estimate for the US 2018/19 corn stocks is 2,013 million bu, soybeans 913 million bu and wheat at 1,076 million bu. The report is not expected to be bullish as the US/world holds an abundance of supply. Yet, it will be the reaction of the market (with funds holding a sizeable net short and farmers not. selling) that will be the most important following the report. Research doubts that a bearish report can sustain much of a decline with much of the bearish March Stocks data already digested.
- Cash corn/soybean basis levels are firming throughout the W and N Midwest ahead of a late winter storm that promises to drop 8-24″ of snow. The snow will close roads and cause a cold 6-10-day outlook as it melts. A year ago, Chicago endured the coldest April on record and farmers were able to get back in their fields during the first half of May. US corn yields held up very well following a May that was record warm. The point is that the Chicago is unlikely to build in too much weather premium for Midwest snows/rain until its assured that planting woes will likely continue through the first half of May.
- The midday GFS weather forecast has a slight southward shift in W Midwest rain/snow indicated with much of IA now indicated to endure 1-2.50″ of rain with snows to the north and west indicated in a range of 8-24” across; ENE, S MN and WI on Wednesday/Thursday. Much colder temperatures follow the storm with warming not indicated until the 11-15-day period. Two additional storm systems will pass across the Delta and the Midwest in the next last 10 days of the forecast which is keeping an active and wet pattern overall. A ridge of high-pressure resides across the Eastern US which will push Gulf humidity northward. A wet and cooler than normal April is forecast into early May.
- Chicago prices are caught between US/China trade politics and hefty world grain/soy supplies. Tuesday’s USDA WASDE report is not expected to hold any big surprises with CONAB out on Thursday with Brazilian crop sizes. The bulls need a trade deal or adverse weather to force funds to cover their record large short position. US and S American farmers show no willingness to sell cash grain in a down market. Our bet is that Chicago choppiness will persist until more is known on a US/China trade.