• It has been a mixed/low volume session at the Chicago. Wheat prices have slipped which has pulled corn lower, while soy futures rise on the exodus of long corn vs short soybean spreads. The new crop soybean/corn ratio has come into 2.2:1 which is prompting speculative profit taking with 2019/20 US soybean end stocks expected to decline. Our lean is for a mixed Chicago close with values finishing near their highs as heavily short traders/funds fret about reduced US crop production and next week’s US/China trade talks. We look for next week’s Chicago trade to be much more volatile as weather and planting progress hold a much larger influence on seeding/yield/supply.

• Old time traders lament that the Chicago has become “less anticipatory” in terms of weather/politics. Amid delayed seeding Midwest progress (May 3) and wet 10-day forecasts, Chicago would be much more aggressively adding weather premium (into price to account for supply losses) in previous years. And if US/China could reach a seminal trade event next week that would focus a larger share of China’s ag imports on the US, the stage could be set for a big demand rally with managed money holding a record net short position.

• The market no longer anticipates, but “flat out” reacts when it is sure that crop losses are occurring or that new China demand has arrived. Our point is that next week, the calendar is far enough advanced, and the Trump Administration argues that it is either deal or no deal with China, that Chicago volatility will be heightened. It is an important week with a May WASDE report as well. As such, 2019/20 US corn, wheat and soy balance sheets are in dramatic flux.

• Illinois, Indiana, Ohio, Missouri, Wisconsin, Minnesota and Dakota farmers have scored limited progress in spring seeding this week. We expect that US farmers may have seeded another 6-8% of the US corn crop and 5-7% of the soy crop compared to Sunday. HRS wheat seeding advanced, but cold temperatures are slowing or preventing germination. In years of diminished yield potential, its temps during May that make a difference. Last year a record cold April was followed by a record warm May. That won’t occur in 2019 with combined temperatures into mid-May looking to be one of the top ten coldest on record. Initial US corn crop conditions will be well below last year when released in early June.

• Chicago brokers estimate that funds have sold 3,100 contracts of corn and 2,400 contracts of wheat, while buying 1,900 contracts of soybeans. In soy products, funds have sold 1,800 contracts of soyoil and bought 900 soymeal.

• Frosty temperatures are likely across European crop areas this weekend and through Wednesday. Traders will be watching minimum temperature readings for any crop damage. To date, EU grain crops are advanced in maturity due to lasting spring warmth.

• The midday Central US GFS weather model continues to struggle with the exact placement of rainfall in the next ten days. The midday model has pulled rain northwards from the SE Plains north into the W Midwest late next. Heavy rains are still slated to drop across the E Plains and through the Delta, but the GFS offers a break from the heavy rains for the E Midwest. Cool to cold temperatures will hold across Canada, the N Plains and Upper Midwest for the next ten days. The flow of cold air southward from W Canada shows no sign of ending, in fact the overall North American pattern is static. The weekly EU model called for cool/wet weather to persist across the Central US into early June. Confidence in this forecast is increasing based on pattern stability.

• It is a corrective/tentative Chicago trading session. Market volatility will be increasing next week amid the importance of Central US weather and US/China trade negotiations. The US$ is weakening which is placing a bid under Chicago. US/S American farmers have slowed their cash selling. There is a risk of a frost/freeze for the German/French wheat crop areas this weekend while snows continue across the Canadian Prairies. Our lean is bullish corn and bottoming wheat/soy.

To download our weekly update as a PDF file please click on the link below:

Weekend summary 3 May 2019

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Fund positions disaggregated data

• An overnight Chicago rally uncovered fresh selling amid weak Argentine fob offers from Tuesday. Most EU, Russian, Chinese and S American markets are closed for the May Day holiday. Volume from overseas for the rest of the week is limited by those taking an extended holiday. The May Day holiday is being felt with Chicago volume anemic at midday. This allows funds the ability to push values around. We look for Chicago choppiness into Friday with next week’s trade more volatile as Central US weather forecasts and along with US/China trade talks taking on more meaning.

• Chicago traders estimate that funds have sold 4,300 contracts of soybeans, 2,100 contracts of meal and 1,600 contracts of soyoil. In the grains, funds have bought 2,200 contracts of wheat and 1,200 contracts of corn. Funds booked 4,000 contracts of corn early, but have sold most of that back out at midday.

• Argentine corn/soy fob offers are cheap relative to the US Gulf. Tuesday’s fob corn offer for Argentine May corn at $144/mt was the lowest in a decade!

• Argentine corn and soybean yields are reported to be fantastic and private crop estimates are rising. Commercial traders peg the Argy corn crop at 48-51 million mt with the soybean crop at 56- 58 million mt. The soy yields are so good that protein content is being adversely impacted. Yet, farmers are aware that the forward Peso rates are likely to fall sharply which means that they must store as much of the crop as possible to beat inflation. Argentina is unlikely to be able to repay its foreign debts leaving the chance for their October election up for debate. A prior Argentine President, Christine Fernandez released a book Monday called “Sincerely” which immediately sold out. It is expected that the book is a precursor of her entering the Argentine Presidential race. Argentine farmers will see a return to a sizeable export taxes with (if) her re-election.

• US farmers are sharpening their pencils and often finding that taking the Prevent Plant option is the best profit option for acres that have not laid down fertilizer. Farmers never like to let soils lie idle, but this year there is enough discontent, that taking a year off seems like a good option. If a corn farmer has a 200 bushels/acre APH (actual production history), taken the 85% revenue policy with a 55% PP (prevent plant)  option, the payment would be over $370/acre. The payment looks more attractive that switching the acres over to soybeans at today’s low price. The point is that from a crop risk perspective, farmers need to calculate their PP option if mother nature does not turn around quickly. Switching to soybeans via todays depressed new crop bid is not the best cropping option. Most new crop Midwest soybean cash bids are between $7.80-8.40/bu.

• The midday central US GFS weather update stays wet across the Midwest, the E Plains and the Delta over the next 10-14 days. And cold temperatures will hold across Canada and much of the N Plains and Upper Midwest next week. These northern areas will be drier than the C and S Midwest, but the relative coolness will not allow seeding progress. The midday forecast is slightly drier across the E IA and NIL, but rains here of 1-3.00″ will still prove to be too much amid saturated soils. The 11-15-day period offers flooding rains for the S Midwest and the Ohio Valley. The excessive rain will further slow seeding and call into question that quality of SRW wheat.

• Amid the cheapness of Argentine corn/soybeans, US weekly export sales are not expected to be very good on Thursday. Traders are hoping for tepid levels to secure a break if the Midwest weather forecast is wet for the Midwest, Plains and Delta into mid May. US farmers are not willing sellers amid static planters and cool/wet weather. Mudding in corn is not yet an option, which may change next week. US seeded corn acres are in decline with yield to follow if 50% of the US crop is not planted by May 15; Prevent Plant is being widely discussed.

• Ag markets turned lower after the normal opening, with US wheat and soybean futures finding new contract lows. There is no real spark to the decline, but rather it is just more of the same. Better rains will fall across the wheat belts of Eastern Europe, Ukraine and Russia through the next 5 days. Ample soil moisture will keep heat absent from the US Plains into the middle of May. Northern Hemisphere production potential has improved.

• US Gulf wheat is chasing aggressive new crop Black Sea offers, and whether Russian origin at $185/mt for Jul-Aug is too cheap will be determined by May/June weather. $185/mt, ex Black Sea, reflects the lowest world cash fob price since late summer 2017. $185 seems cheap amid depleted Russian carry-in stocks and domestic prices that continue to sit near record highs.

• Chinese soybean crush margins remain negative despite the collapse in US and world prices. Gulf soybeans this morning are actually offered at a modest discount to Brazilian origin through August. But weakness in Chinese soy products has weighed.

• Iowa Senator Grassley has stated the USMCA (US, Mexico and Canada Agreement) won’t be approved by Congress unless tariffs on non-US steel and aluminum are lifted. The real frustration is that no new US trade deals have been approved, and clearly Chinese compliance is taking longer than originally expected. Better US exports and overall world trade is needed to clear excess supplies, which are building following record corn production in S America and improved rainfall across Europe and the Black Sea.

• There is talk that US-Chinese negotiations will be completed this week, or possibly next, but the market has grown weary. The lack of a deal by mid-May will extend negotiations into summer, when S America will have attracted yet more global market share.

• Other news is lacking. Energy markets have been very back and forth this morning, but current sit in positive territory as Venezuela’s crisis deepens. US biofuel margins continue to improve. Another boost in US ethanol production is expected in Wednesday’s EIA report. Margins argue for a sustained recovery in production into the end of summer.

• The EU/Black Sea weather forecast at midday maintains solid regional shower activity in Ukraine and key areas of Southern Russia. Soaking rains lie ahead for Eastern Europe, which has been a growing producer of corn and wheat.

• The Central US GFS weather update at midday is much wetter across the Southern Midwest and Northern Plains. An outright excessively wet pattern lies ahead, and guidance in the 11-15-day period keeps showers rolling across the Plains and Midwest into May 15^. Heavy precipitation will be stuck across the E Plains, Midwest and Delta throughout the next 72 hours. Another frontal system blankets the Plains and Midwest during the second half of next week. Cumulative rainfall totals upward of 5-8″ are offered to LA, AR, MO, IL, IN and OH. National fieldwork/planting will be halted for the next 10- 12 days. Flooding returns.

• Implied 2019/20 global stocks are rising, which has kept short covering limited/brief. But US weather concerns are growing, and we would be extremely careful holding onto short positions ahead of any US-Chinese agreement.

• It has been one of the slowest starts to the Midwest planting season in years. NASS reported that last week there was just 1.5 days suitable for fieldwork in IN, 2.5 days in IL, and 4.3 days in IA. For the month of April, the 3-state average number of days suitable for fieldwork was 8.5, or the lowest in 6 years. Much of the Midwest has been soaked in the last 24 hours, and the forecast is leaning cool/wet for the next week. It has been a far from perfect start to the year, and acreage and yield expectations are now far less certain.

• Slow exports along with expectations for delayed corn seedings/increased soybean acres weighed on Chicago soybean prices at the start of the week. Soy products closed sharply mixed, with meal following soybeans lower, while soyoil bounced from contract lows marked on Friday. Funds were estimated sellers of 6,000 soybean contracts After the close, NASS reported national soybean planting progress advanced 2 points to 3% complete, versus 5% last year and the 5-year average of 6%. It is still early in the season for the Cornbelt, but IN is 4% behind average, while IL and MN were both 3% behind. The largest drags are in the Delta where MS is 21% behind average, LA is 19% behind, and AR is 26% under its 5-year average. The latest round of storms will further push back planting dates, while the ten-day forecast stays cool/wet for the Cornbelt. Funds continue to add to their already record net short soybean position, waiting on confirmation of a China trade announcement that is at least a week out in the best-case scenario. An announcement is likely to trigger a major Chicago soy recovery.

• Chicago corn futures ended fractionally higher despite a plunging wheat market. The advance in last week’s planting progress was less than expected, and very little fieldwork looks to be accomplished in the next 10 days. Note that last year, there was surge in activity beyond late April, but a similar surge in 2019 requires a massive and quick shift in the Central US climate pattern. 15% of the US corn crop was seeded as of Sunday. This compares to 15% a year ago and 27% on average. It is estimated that national planting progress in the next 7 days will advance just 5- 7%. If the two-week weather forecast verifies it is possible that progress on May 14 will reach just 30-32% complete, vs. 60% on average. Corn prices will stay firm until lasting Central US dryness appears. US-Chinese talks resume on Tuesday and amid funds’ record short, risk is beginning to lean to the upside at current prices. Spot oat futures are up to $3.18/bu on adverse US weather.

• CME wheat fell to new contract lows; Spot KC fell to the lowest level since December of 2016. Fresh input continues to lean bearish, though work does suggest the world’s exportable surplus won’t be nearly as robust as it was in 2016-17. Black Sea cash prices should form a bottom in the next 1-2 weeks, but Northern Hemisphere weather remains broadly favourable. US winter wheat conditions on Sunday were pegged at 64% good/excellent, vs. 62% the prior week and 33% a year ago. SRW ratings fell slightly, but substantial improvement was recorded in OK, SD and TX. It remains that Chicago will gain on other classes longer term as North American high-pro supplies stay more than abundant. A more normal pattern of rainfall is forecast across Eastern Europe and key areas of Ukraine and S Russia. More is needed to validate record production, but trend yields there are becoming more probable. We also note that Russian new crop is now offered at $185/mt, vs. $190/mt last week. World wheat supplies now appear as if they will rebound from last year.

• Chicago futures have recovered as the US$ retreats from its session highs. The dollar is still in positive territory, but the macro landscape today is moderately improved. Gasoline futures are up another two cents, which has pushed ethanol blend margins to new six-month highs. Currencies in Brazil and Australia are a bit stronger at midday. EU grain and oilseed futures are steady to higher.

• Funds as of midday are estimated to have bought a net 2,500 contracts of corn, 2,000 contracts of wheat and 3,500 contracts of soybeans.

• US weekly export sales were also at/above expectations. Through the week ending April 18, the US sold 31 million bu of corn, down 6 million from the prior week but a solid 5 million above the pace needed to hit the USDA’s target. Soybean sales totaled 22 million bu, vs. 14 million the previous week. 8 million bu of beans were sold to China. Wheat sales last week totaled 16 million bu, vs. 12 million the previous week amid enlarged demand from Mexico. No new pork sales were made to China.

• For their respective crop years to date, the US has sold 1,790 million bu of corn, down 9% from a year ago; 1,649 million bu of soybeans, down 17%; and 931 million bu of wheat, up 9% from a year and just 18 million bu shy of the USDA’s forecast. Following this week’s much improved wheat shipment pace, it is no longer certain that the USDA will lower US wheat exports further.

• US Treasury Secretary will be meeting with Japanese negotiators today as bilateral trade progress continues. The aim for ag trade is to match those included in the TPP agreement. Limited news is available on US-Chinese progress, with the US team travelling to China early next week.

• Australian wheat planting typically begins today (Anzac Day), but it is unlikely that progress will be widespread amid little/no soil moisture across the whole of the wheat belt. FAS estimates that soil moisture in Australia ranges from 0-20% of capacity, and the two-week forecast maintains complete dryness there through May 10. New crop Aussie wheat futures have climbed $7/mt since early April, and today are trading at $6.40/bushel.

• The US weather forecast is little changed at midday, but we mention that heavy snow is possible across the Dakotas and parts of IA, MN, WI and far northern IL on the weekend. Ongoing wet/snowy weather has pushed spot oats futures above $3.00 today. Oats have added some $.40/bu of weather premium since the early part of March.

• The midday Central US GFS weather update remains consistent in the return of wet and cooler weather beginning today. Confidence in the details is rising, and the primary concern remains potential flooding in the 5-10-day period. Moderate rainfall will linger across much of the Corn Belt through the weekend. Heavier showers occur next Wed-Sat, with totals upward of 3-6″ offered to the OK, AR, MO, IL and IN. The extended forecast is a bit wetter and includes yet another event sweeping across the N Plains and Upper Midwest. The forecast is not conducive to planting/fieldwork between now and May 10.

• World supplies are adequate and will remain so without widespread adverse Northern Hemisphere weather. It is just that very little weather premium exists in current prices and a host of stock/use analysis suggest the markets today are the lower end of fair value. Funds net short position in corn and KC wheat remains excessively large.

• It has been another weak session amid continued fund selling in the US and Europe. KC wheat is leading the way down again amid favourable Plains weather and the rising potential of needed rainfall in Western and Southern Europe over the next 4-5 days. Corn has recovered from session lows amid positive weekly ethanol data. The next issue for the trade is whether funds add to massive/record short position amid oversold technical conditions. RSI in wheat, corn and soybeans is near or below 30 (read very oversold!).

• Stats Canada this morning released its planting intentions forecast using data compiled in March. Like in the US, the theme in Canada is higher grain and lower oilseed seedings. Canadian spring wheat acreage in 2019/20 was put at 7.85 million hectares, vs. 7.01 a year ago. Corn intentions total 1.3 million hectares, vs. 1.2 million a year ago. Combined canola and soybean seedings are forecast at 10.9 million hectares, vs. 11.8 million in 2018/19.

• Canada’s spring wheat area will be largest since 2001. Assuming trend yield Canadian exports in 2019 will be unchanged at 23-24 million mt. Even amid reduced oilseed area, Canadian canola and soy markets will maintain a search for demand and look to end the recent Chinese-Canadian trade dispute. Work suggests Canada’s exportable canola surplus will stay in a range of 10.5-11.5 million mt, which is near record large.

• This week’s EIA report included a modest rise in total US crude stocks, but was otherwise supportive. US ethanol production last week totalled 308 million gallons, up 9 million on the prior week and 6% higher than the same week in 2018. In fact, this was the largest production total for mid-April on record. The market has responded to improved weather and better margins. US ethanol stocks last Friday totalled 955 million gallons, unchanged on the week. And total US motor gasoline stocks fell to 226 million barrels, down 5% on last year and the lowest since late November. Note that seasonally US gasoline stocks trend lower into mid/late May. Crude at midday is down $0.50/barrel. RBOB is just marginally weaker.

• Following today’s break in wheat, we look for Gulf HRW to be offered at $199 per ton for Jun-Jul arrival. This is highly competitive with comparable wheat out of Europe. And old crop US wheat’s discount to other origins will widen to $16-26/mt, which is historically large.

• The US$ is finding a new two-year high on continued weak economic data in other developed economies. S American currencies are sharply weaker, which continues to weigh on corn and soybean fob offers there.

• Argentine exporters are now offering corn for Jul-Aug arrival at $0.03-0.08/bu over Chicago prices. Soybean fob basis is $0.15-0.30 under futures. S American crops are priced to sell.

• The Central US midday GFS weather update is similar to the morning run. The recent bout of mild, dry weather ends in the next 48 hours and will be replaced by another lasting period of wet and cooler conditions. The primary concern is that of totals upward of 3-4″ falling across AR, MO, IA and IL in the 6-10-day period. Light showers then linger across much of the Central US May 6-9.

• The market continues to digest adequate grain/soy stocks and a shift in demand from the Northern to the Southern Hemisphere. This is fair, but very little weather premium exists currently. Note that funds are short an estimated 355,000 contracts of corn. This beats the prior record short by a massive 125,000 contracts.

• Chicago summer row crop futures continue their decline amid weak S American corn/soybean offers amid fresh fund selling. Argentine fob corn for August is offered at 7 cents over September futures compared to US Gulf offers of 48 cents over (US corn 41 cents/bu more expensive). Brazil is offering August corn at 24 cents over, 24 cents/bu cheaper than the US. Argentina is offering June soybeans at 30 cents under Chicago July compared to the US Gulf at 33 cents over. The point is that Argentine soybeans are 63 cents cheaper than the US and 66 cents cheaper than Brazilian fob offers. The discount of S American offers via their discounted currencies is pressuring Chicago. It is a surprise that Brazilian fob soybean offers are above the US as they enter the “gut slot” of their new crop shipping period. Chicago is reacting to the weakness of world corn/soy fob offers and potential of reduced China demand for US soybeans amid the ongoing trade battle. Chicago traders have given up trying to forecast a US/China trade deal as the length/uncertainty of the negotiations has caused apathy. Most traders say show me a deal, and I’ll decide whether I need to cover my short position. A China deal or adverse weather is needed to alter prevailing price trends.

• Chicago brokers estimate that funds have sold 7,300 contracts of corn, 6,900 contracts of soybeans, and 900 contracts of wheat. In soy products, funds have sold 3,100 contracts of soymeal and 3,400 contracts of soyoil.

• The Argentine Peso has weakened 0.8% this morning to 42.54 vs. the US$ with the Brazilian Real 0.35% weaker at 3.96:1. The currency fall (US$ rally) has helped offset the Chicago decline with Argentine farmers adding to new crop sales.

• The soybean market is decline as China import demand has been tepid and analytics show that US exports to China are not keeping pace with the 2018/19 forecast. Research argues that WASDE will cut their US 2018/19 soy export forecast by 25-50 million bu in May which will add to end stocks. China’s African Swine Fever has ended their soybean import demand growth. This means that it is enlarged corn/wheat trade that must garner any bullishness. Of course, if the US could persuade China to secure US soybeans to narrow their trade differences, this could underpin Chicago. Yet, that US captive demand won’t be known until a trade deal is completed.

• The US S&P has pushed to a new record high with crude oil futures posting another strong day with June WTI up $0.80/barrel to $66.35. Investor flows are into equities and energy. The trend is your friend; grains that have not shown any bullishness outside of prior rallies tied to a US/China trade deal. Funds are adding to net shorts, but a bullish catalyst is lacking to tell them they are wrong. The next chance for bullish news is next week’s US/China talks.

• The midday Central US GFS weather forecast is little changed into May 1 and wetter thereafter. Warm/dry weather is expected into the weekend with showers/thunder storms redeveloping next week. High temperatures look to range from the 60′s to the upper 70′s. Colder Canadian air will be pushing southward next week producing more frequent showers/storms. The rains are expected to become heavier into the closing days of April. Note that the rains are farther north than was indicated by the EU model overnight, but we suspect that the models are having trouble in deciphering where the frontal boundary needs to lie. Some 2-4” of rain is projected for IA/N MO with 1.50-3.00″ for the remainder of the Midwest. This is a wet start to May that will reintroduce localised flooding and slow the spring planting progress.

• The red ink continues to flow with fresh lows in Chicago corn/soybeans on renewed fund selling. The discounts in S American corn/soy are not new, but they are not narrowing as Chicago declines. This keeps the US in a non-competitive export position. We remain optimistic for a US/China trade deal and a turn in the market. A bottom is expected this week before next week’s US/China talks.

• Improved Northern Hemisphere weather is pressuring Chicago values amid a lack of fresh export news at midday. Wheat is the downside leader on new fund selling while large S American crops overhang corn. Soybeans have had some bounce, but any rally has been less than 2.5 cents. In a nutshell, it is more of the same as funds pressure Chicago by adding to a large net short, cash basis firms in the country on a lack of farm selling, and July-May spreading is the big feature ahead of first notice day. Chicago values are grinding lower. Note that May options expire on Friday. We look for a lower close today with some modest support noted in soybeans. Traders are discussing that China may make an additional purchase of US soybeans late week, ahead of the US delegation heading to China, to fulfill their obligation to purchase 10 million mt of US soybeans. However, note that the same rumour existed last week which did not result in any new purchases.

• Chicago brokers estimate that funds have sold 3,000 contracts of wheat, 2,000 contracts of corn and 500 contracts of soybeans. In soy products, funds have sold 1,000 contracts of soyoil while being flat in soymeal.

• US grain export inspections for the week ending April 18 were; 53.3 million bu of corn, 14.0 million bu of soybeans, and 29.8 million bu of wheat. And 3.7 million bu of US sorghum was shipped out to Spain and South Africa (combined). The US export pace was slightly better than expected in the grains and less than expected in soybeans.

• For their respective crop years to date, the US has shipped out 1,310 million bu of corn (up 136 million or 11.5%), 1,140 million bu of soybeans (down 433 million or 27%), and 762 million bu of wheat (down 28 million or 3.5% from last year). The US needs to export 51 million bu of corn per week to reach the USDA 2018/19 corn export forecast of 2,300 million bu, 36.6 million bu of soybeans/week to reach 1,875 million bu and 28.7 million bu of wheat/week to reach the annual forecast of 945 million bu. A further cut in US 2018/19 US corn/soybean export estimates is expected in the May WASDE.

• The US announced that it will exclude all waivers for Iranian crude oil after May 1, which is expected to drive Iran’s crude exports near zero. Iran has been exporting 2.5 million barrels per day before the sanctions were imposed a year ago, but the latest OPEC estimate is that Iran is exporting just over 1.2 million barrels per day in recent months. The Trump Administration claimed that Saudi, UAE and others would try to make up the difference. But, with sanctions in place for Venezuela and Libya struggling with internal strife, the world is lacking adequate spare supply of crude. A further rise to $70-75.00 WTI is expected with some suggesting a summer price high closer to $80.00 .

• The midday Central US GFS weather forecast is wetter in the 7-15 day period. Confidence in the extended range outlook is rising as the GFS model forecast is looking more like the wet European solution. The best rain looks to drop across the NC Midwest with a spell of heavy rain through NE/IA. One storm system is now moving eastward through the Lake States with another several systems due next week. The midday forecast is also cooler than what was offered overnight with high temperatures ranging from the 50′s to mid 70′s. The cooler/wetter forecast needs to be closely monitored with the seeding just underway across much of the South-Central US.

• Chicago grain prices are lower on a more of the same kind of day with fund selling pushing values slightly lower. However, the volume is not heavy and we would put money on a turnaround Tuesday as the midday Central US forecast went cooler/wetter. Grains are the only commodity group that has not rallied in 2019. The supply bear is ongoing, but with funds holding a record short and the US/China talking a deal, one must be careful in holding a short position.

• It has been a mixed morning, with wheat down 4-6 cents and row crop markets stable. New selling has emerged in winter wheat futures this week amid lofty HRW crop ratings and as the USDA’s old crop wheat export forecast could still be a bit too high.

• It is not so much about weekly sales in wheat, but rather the pace of shipments needed between now and the end of May. Census wheat exports in Feb totalled 85 million bu, a bit higher than expected. Using FGIS data US wheat exports in March are pegged at 84-85 million, but it remains that monthly shipments of 105 million are needed in Apr and May to hit the USDA’s target. The pace of weekly inspections will be watched closely, but another hike in US wheat stocks of 10-15 million bu is likely.

• US export sales through the week ending April 11 included 37 million bu of corn, vs. 22 million the prior week; 14 million bu of soybeans, vs. 10 the prior week; and 12 million bu of wheat, vs. 10 million the week before. Corn sales were better than expected and well above the pace needed to meet the USDA’s forecast.

• For their respective crop years to date the US has sold 1,759 million bu of corn, down 9% from a year ago; 1,627 million bu of soybeans, down 18% from last year; and 915 million bu of wheat, up 8%.

• US exporters also sold another 40,300 tons of pork for export. More than half of the business was done with Hong Kong.

• The WTO has ruled that China’s TRQ import system breaches its previous WTO commitments. China’s system of importing grain has been deemed as not transparent, unpredictable and unfair. Whether this provides leverage for talks in late April is unknown, but this is viewed as another positive with respect to large Chinese demand for US agriculture if a deal is to be reached. Recall China needs open trade to meet longer term strategic objectives.

• NOAA’s updated spring/summer US climate forecast is unchanged from previously and still seems to hinge upon moderate El Niño conditions. May’s forecast included normal/below normal temperatures across much of the US, while above normal precipitation will continue to favour the Southern Plains and Delta/Southeast. NOAA’s May-Jul outlook leans wetter than normal in all areas, while heat will favour both US coasts.

• This week’s drought monitor, as expected, reduced the coverage of abnormal dryness in TX and LA. Only 14% of the entire US is experiencing some form of dryness. This compares to 43% in mid-April a year ago.

• The midday Central US GFS weather update is little changed nearby, but much wetter in the 10-15-day period. Confidence in the extended range outlook is low, but the GFS maintains a pattern of widespread active showers into May 3. Soakings totals upward of 3-4”, along with severe weather, are indicated in early May across KS, NE, MO and IA. Radar maps show organised rain working across the Delta and Central and Eastern Midwest currently. This system will linger in the region into mid/late Saturday. Follow up rain returns next Wed-Fri. It is still too early to adjust acreage but planting progress will stay limited 7-8 days, and possibly beyond.

• The USDA’s adding to US and world grain stocks remains a focal point. Funds’ bearish bets are getting sizeable, and while we doubt such large short positions will be sustained into summer, the spark needed to trigger covering remains absent.

• It has been a mixed morning in Chicago with wheat prices firm, while corn and soybean futures sink lower. The volume of Chicago trade has been restricted by the pending three-day holiday weekend (Good Friday Chicago is closed). Funds continue to pile into a larger net short position with the late March lows in May soybean futures were exceeded. The tone of the soy market is bearish on increased S American export competition. A mixed close is expected going home with few expecting that the FAS weekly export sales report will hold any bullish surprises.

• Chicago brokers estimate that funds have sold 4,400 contracts of soybeans, 3,200 contracts of corn, while buying 2,200 contracts of wheat. In soy products, funds have sold 2,700 contracts of meal and 2,100 contracts of oil.

• The Brazilian Real weakened this morning to 3.93:1 US$ while the Argentine Peso has rallied to 41.5 Pesos/US$. The Russian Ruble is holding steady at 64:1. The weaker Brazilian Real appears to be related to the Brazilian Government avoiding a truckers strike by not allowing diesel prices to rise.

• We would mention that Brazilian soybeans can be imported “duty free” into the US, which last occurred in 2012 during amid the dire Central US drought. If Brazilian soybeans can be imported duty free, it is the cost of loading/unloading and transit that will determine whether Brazilian soybeans could surplant US soybeans in its domestic crush rate (should the US/China sign a trade deal that includes 40-50 million mt of annual US soybean imports).

• US weekly ethanol production was 1,016 thousand barrels/day compared to 1,002 last week. This was the first weekly EIA report to reflect US ethanol production above a year ago since February. And US ethanol stocks fell to 953 million gallons, down 21 million gallons from last week, but still 6% above last year. US ethanol producers are enjoying a margin of around $0.22/gallon while blenders are seeing their best margins since last summer of around $0.07/gallon. The strong blender margin should keep stocks moving lower and for strong demand for Midwest cash corn. A strong push to expand US ethanol production is expected into year end.

• The US Government is open Good Friday and will operate normally. We expect that weekly CoT reports will be released on Friday afternoon with weekly export inspections and crop progress reports due Monday. US financial markets are closed on Friday for the holiday. The US/China are said to be close to a deal, but no one knows of when it will be completed.

• Central US GFS midday weather forecast is like the overnight solution with heavy rains for the Delta/E Midwest along with an arc of rain for WI/IA over the next 10 days. 10-day rain totals here are estimated in a range of 1.50-4.00″ with localised heavier amounts. Rainfall in other Midwest regions range from 0.5-1.50” with the only area seeing less moisture being the Northern Plains States. Temperatures are cooler in the 6-10 day period with those cool temperatures seeping into the 11-15 day timeframe. Another moderate storm system is evident across the E and N Midwest with rainfall of 0.25-1.50″.

• The ongoing absence of a US/China trade deal is weighing on old crop US soy prices as time is running down in the old crop year. And amid Midwest soils that are holding their best moisture supply in years, warming temperature will be helpful to firm soils, support machinery and start seeding. Wheat values are firm on the longer-term prospect of adverse weather for Ukraine/W Russia. The big unknown question is the timing of the completion of a US/China trade deal. We see the odds at over 80% that both sides will achieve a trade pact (at some point).