• Active fund selling, and a lack of end user demand has pushed Chicago corn, soybean and wheat futures to sharp losses at midday. Wheat has paced the decline with KC July setting new contract lows. July soybeans are back to testing their lows that were set following the March Stocks/Seeding report. And corn is following wheat/soybeans lower in moderate volume. Record large S American corn supplies along with improving weather in the US and portions of the Black Sea has provided the bearish fundamental background. And, when US/China trade news falls to the bottom of the media page, the bearishness of world supply comes forward. Traders remain frustrated by the rhetoric that a trade deal is close, without any actual announcement. Frustration over the lack of a deal is building across much of the Central US as farmers wonder if the Trump Administration will delivery on his promises.

• Chicago brokers estimate that funds have sold 6,800 contracts of corn, 5,500 contracts of wheat, and 5,200 contracts of soybeans. In soy products, funds have sold 3,400 contracts of soymeal and 1,200 contracts of soyoil. The funds are piling into a larger net short corn, wheat and soybean position.

• There is little or no US or S American farmer selling on the Chicago decline as they continue to hold stocks in the hope of higher prices. Cash basis bids are rising to spur enlarged cash movement. A top in cash basis levels should be set in early May as farmers focus on getting seed in the ground.

• Russian interior wheat prices are rising as cash supplies tighten for millers. The spread between the interior and fob markets are at levels that should produce a near halt in Russian May/June wheat exports. The new crop harvest won’t start across SE Russia until the last half of June, and even then, the spot domestic market should secure much of the early harvest.

• The US is asking if China would shift their retaliatory tariffs on ag goods to other goods so that the Trump Administration can claim a bigger win for US farmers. US meats (in particular) are of interest for imports into China. The US would like to leave some tariffs in place so that as China performs on its promises, they can be removed. China has a history of not performing on its trade import promises such as their 2001/02 WTO entry pledge to secure 7.2 million mt of corn and 9.0 million mt of wheat annually.

• EU 2019 wheat production will rise sharply in 2019 with normal summer weather. Dryness/heat are noted across Northern Europe, but amid favourable soil moisture, it is too early to be overly concerned. History argues against a second consecutive year of European drought in 2019.

• The midday Central US GFS midday forecast is wetter across the E Midwest and slightly drier across the W Midwest. The midday GFS forecast is more like the overnight EU model solution with the best rains across IN/OH. Fieldwork and an increase in W Midwest spring seeding is expected where soils are firming. The Delta will endure an additional 1-3.00″ of rain which will keep flooding potential high. Temperatures look to be highly variable, but average near to above normal. The extended range forecast offers a wet east and drier west type of forecast.

• The news today is not much different from yesterday. What is different is the technical condition which is more bearish on active fund selling. US/China trade deal talk has become stale as political rhetoric has not produced a deal. Farmers are fretting on their weakening profit outlook. The world has an abundance of grain with a new Northern Hemisphere growing season at hand. Corn will not be able to rally with wheat values at fresh contract lows. The big question traders are asking is how short can funds become.

• Soybean futures were higher overnight and up 3-4 cents at the close on Monday. Both the US and China continue to express hopes that a trade deal is close, which along with uncertainty for the start of the upcoming planting season supported Chicago. There were two cargos of old crop soybean sales to an unknown destination announced, while export inspections fell to a marketing year low of 17 million bu. The weekly Crop Progress report indicated that national soybean planting progress estimates would be available next week. But based on recent snowfall/rain, and the current forecast we doubt that much progress has been made across the Cornbelt. There were just three states that are reporting planting progress in the individual state reports for this week. Planting progress in LA, MS, and AR are ahead of last year, but all three states were behind their five-year averages. Support in July soybeans was established following the quarterly stocks report below $9, while major moving averages are just above the market from $9.20-9.30.

• Chicago corn futures ended a bit higher as US/China negotiations near an end, and as funds (index and managed) have very little long exposure. A choppy holiday-shortened week lies ahead. US corn seeding as of Sunday reached 3% complete, even with this week a year ago vs. the five-year average of 5%. Less than three days since April 1 have suitable for fieldwork in IA and IL. Little or no progress is expected there this week, and so key will be whether drier model guidance verifies in late April/early May. Brazilian corn is offered for mid/late summer arrival at $158/mt, a full $10/mt below US Gulf origin. Argentine origin even when adding cost to port is offered at $155-158. Drought is unlikely across key areas of Brazil during safrinha pollination. World demand will drift increasingly to the S Hemisphere, which again underscores the importance of reopening China’s market to the US farmer. Enlarged S American export potential will act as a weight on Chicago rallies. Global corn supplies are abundant. It is now about looking for the spark (China or US weather) that drives managed money out of a near record short position. A US/China trade deal offers the best chance for a rally.

• US wheat futures ended steady to lower, with weakness most pronounced in KC. Another round of moderate showers will impact critical areas of Ukraine/S Russia in the next two days. Early crop development in the Black Sea is said to be favourable at this early date. Funds sold 3,400 contracts in Chicago. US winter wheat ratings were unchanged at 60%, vs. 31% a year ago. The HRW index this week rests at 364, up a point on last week. Warming temperatures across the Southern and Central Plains will accelerate growth. Positive soil moisture anomalies are noted across the whole of the Plains wheat belt. The US spring crop is only 2% planted. A drier trend develops across the Dakotas moving forward, and so it is premature to be concerned about spring wheat acreage and planting dates. It remains still too dry in Europe and too wet across the E Midwest/Delta, but a larger Northern Hemisphere wheat crop appears to be in the making. Recall seasonal trends turn positive between mid-April and late May when Black Sea weather has more meaning.

Fund positions disaggregated data

• Chicago markets at midday are only fractionally changed and we anticipate a quiet end to the week. The midday GFS is wetter across the W Midwest in the 6-10-day period, but otherwise fresh input is lacking.

• Egypt’s GASC on Thursday released a tender for optional origin wheat for late May/early June arrival. US SRW was the cheapest wheat offered to Egypt on a fob basis, but Egypt ultimately secured 240,000 mt of Romanian and Ukrainian origin. Algeria is also seeking wheat today. HRW pencils into North Africa, but it is very close to French execution. Details are awaited. European milling wheat futures closed slightly higher on the day and on the week.

• Russian interior wheat prices are higher this week, and quietly have rallied to retest all-time highs in Central Regions. The Ruble is stronger, replacement values are again at or above fob offers, and Russian exports will be limited in the remaining two and a half months in the international trade year. We also point out that interior Russian values are 30-50% above this time a year ago. Replenishing Russia’s supply pipeline will surely take some time.

• World pork prices have followed the trend in US hog futures, with meat manufacturers in Europe concerned that the bull market will continue well into summer and autumn. We noted this week that Swine Fever incidences are spreading, not contracting. Biosecurity will be an issue in North America, but in the near-term world pork trade will be rising. Livestock herd growth will be featured in the US and Europe.

• Brazil’s Congress is debating the repeal of a law that prohibits states from taxing ag exports. Brazil needs cash, and higher costs of execution will level the field between exporters there and in the US. Brazil’s soybean and corn export industries are relatively young. Moderate reforms are expected at some point.

• The US$ is slightly weaker and rallies since late March have struggled. Guidance on future fed rate changes is lacking following this week’s comments indicating there are opinions on both sides. Work maintains that the US$ index will struggle above 97 longer term. Crude is firm at $64.05/barrel. US equity markets are higher despite concerns over earnings, with the Dow just 580 points shy of its all-time record scored in October 2018.

• The Brazilian weather forecast is wetter in southern areas beyond April 20. The driest areas of Parana and Sao Paulo will see needed rains just ahead of safrinha corn pollination there.

• Again, the Central US midday GFS weather forecast is wetter across the Western Midwest in the 6-10 day period, but maintains a drier/warmer outlook thereafter. The EU and GFS will end the week in poor agreement on the pattern beyond April 20-21, and important differences remain. Sunday night’s forecast will be key to guage whether a pattern shift occurs in late April, or not. The EU model this morning kept an active pattern of Midwest rainfall intact through April 27.

• Widespread showers impact the Midwest and Delta into Mon/Tues. Follow up showers return to IA, MN, IL and WI late next week. The GFS then allows the jet stream to move northward, ushering in warmer/drier conditions Apr 21-27.

• The markets continue to wait; on China, May Central US weather and new crop world supply and demand estimates. Chinese demand still would be a big deal for US agriculture.

• It’s been a quiet and listless session so far in Chicago. Following the USDA’s confirmation of higher US and global grain stocks, there’s just little for the trade to grab onto with respect to establishing new positions. News is lacking from this week’s teleconference meetings between the US and China.

• The EU is now putting pressure on China with respect to trade and a lack of promises and follow-through regarding core issues such as IP and IT protection. Whether this will aid US negotiators is unknown, but China recognises that new investments are needed in order to accomplish long term strategic objectives. Better economic growth is also needed in China to even sustain standards of living. We’re hopeful world trade can be sorted out prior to summer.

• The EIA’s weekly energy report is generally positive corn and ethanol. Ethanol production last week totaled 295 million gallons, the highest in three weeks. A strong seasonal boost in production if US weather improves as margins remain slightly profitable and gasoline’s premium to ethanol widens further.

• US ethanol stocks are also being drawn upon as demand improves. Ethanol stocks last Friday totaled 974 million gallons, down 33 million from the prior week and the lowest since December. Total weekly US ethanol disappearance was a stout 328 million gallons, up 15 million on the week and unchanged from this week in 2018. Gasoline stocks also fell another 8 million barrels, and currently sit at the lowest level since November. Energy markets are firm at midday, with spot RBOB up $0.05/gallon.

• World Pork expo in IA has been cancelled due to fears that international participants will transmit Swine Fever. Additional ag inspectors have been requested to keep N America free from the disease.

• US exporters sold 134,000 mt of old crop soybeans to an unknown destination. Other world ag news is lacking.

• Radar maps show a narrow band of rain/snow working across SD, MN, NIL and WI. Snow cover will return in the next 24 hours, but the bulk of the coming blizzard is scheduled for Thurs-Sat. The midday GFS maintains accumulation of 30-33” across SD and MN. Light snow will be recorded as far south and KS/OK and far northern IL.

• The midday forecast is wetter in key areas of Eastern Ukraine and Southern Russia, but a rather large section of the EU corn/wheat belt will see only trace amounts of rainfall in the next two weeks.

• EU dryness will grab more attention from the wheat market if it persists into mid-May. 60-day rainfall across all but Germany in Europe ranges from 25-70% of normal.

• The midday Central US GFS weather forecast is again wetter across the Central Midwest in the 8-14-day period. Following the coming blizzard, active shower activity returns early next week and again April 18-20. A fast-moving jet stream and anchored low pressure aloft will sustain a pattern of moderate to heavy rainfall every few days into the last week of the month. Much cooler temperatures will be widespread beginning Fri/Sat.

• Balance sheet analysis argues for longer term neutral price action and a lack of volatility. We doubt breaks can be sustained until Central US weather improves or a Chinese trade deal is pushed aside. It remains that a deal with China changes the US ag landscape. And additional N Hemisphere weather scares are likely between now and early July.

• The USDA’s April WASDE report was generally neutral for the Ag markets with no major surprises found in either the US or the world balance sheets. Corn and soybeans had spent the morning trading around unchanged, and prices turned positive following the report. Chicago wheat futures had spent the morning trading in the red, but have managed to pare back losses following the report release. Statistically, there were no major surprises for either the bulls or the bears to grab hold of.

• The USDA raised the US corn end stocks by 200 million bu to 2,035 million bu. The increase in stocks was a result of a 75 million bu decline in feed/residual use to 5,300 million bu, and a 75 million bu cut in the amount of corn to be exported in the year ahead. Corn used for ethanol production was also cut by 50 million bu to 5,500 million based on the most recent monthly data from NASS and weekly production figures produced by the EIA. Despite the lower usage rates and rising ending stocks figure, the midpoint for the USDA’s season average price forecast was unchanged from March at $3.55/bu.

• 2018/19 world corn production was increased by 6 million mt with a 1 million increase in Argentine production to 47 million mt, and a 1.5 million mt increase in Brazil to 96 million mt. Brazil’s crop forecasting agency CONAB will weigh in with their crop report to be released on Thursday. 2018/19 world corn ending stocks were forecast at 314 million mt, up 5.5 million from March, but still 26 million mt less than last year. No changes were made to the Chinese corn balance sheet, with imports held at 5 million mt and ending stocks a 204.8 million mt. Note that 64% of the world’s corn stockpile is held captive within China. The world corn balance sheet remains supportive for corn prices on breaks, though traders will be looking forward to the May WASDE which will offer the USDA’s first official estimate of the 2019/20 world corn estimates.

• US 2018/19 wheat end stocks were raised 32 million bu to 1,087 million. The US wheat export outlook was lowered by 20 million bu to 945 million, while feed and residual use was lowered by 10 million bu to 70 million. This is still an historically low US feed/residual rate as more corn is utilised in US livestock feed rations. We disagree with the cut in US wheat export, and we expect that the USDA is still overestimating US wheat stocks.

• World 2018/19 wheat stocks were raised 5.6 million mt to 275.6 million. Half of that increase was due to revisions of the old crop carry in. The USDA raised 2017/18 ending stocks in N Africa, the Middle East, FSU-12, and Russia.

• The USDA lowered their estimate of 2018/19 US soybean end stocks by 5 million bu to 895 million bu, with a 3 million bu decline in imports to 17 million and a 2 million bu increase in seed use to 98 million. The USDA did not make any changes to their crush, export, or residual use estimates. The season-average farm gate price was narrowed, but the midpoint of the forecast was unchanged at $8.60/bu versus $9.33 a year ago. The USDA increased the estimate for soyoil use in biodiesel by 150 million lbs to 8,350 million. The stronger domestic use was nearly countered by a 100 million lbs increase in soyoil imports.

• 2018/19 world soybean production was increased fractionally to 360.6 million mt. The USDA left the Argentine soybean crop unchanged at 55 million mt ( up 17 million from last year), while the estimate for Brazilian soybean production was increased by 500,000 mt to 117 million mt versus 122 million mt last year. The USDA did not make any changes to Chinese soy estimates. 2018/19 soybean imports were held unchanged at 88 million mt (94.1 million mt in 2017/18), while China’s soybean crush estimate was steady at 88 million mt (90 million a year ago).

• The USDA’s April WASDE report did not offer much new information for Ag grain traders. S American corn production will be up 29 million mt from last year, and soybean production will increase 13.4 million mt, but similar figures have been in the market for months. We expect Chicago market’s focus to turn back to record large fund short positions, China trade negotiations, and spring weather across the Cornbelt. This week’s blizzard across the N Plains and Midwest is a concern.

• 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.

• Without a US/China Trade Deal Summit announcement, Chicago is back to focusing on large world supplies and the keen US export competition. The emotion of “deal on” and “deal delayed” has caused traders to be passive. This is the tenth month of US/China trade tariffs and the political aspects of Chicago trading has not been easy. Except for a wheat break that occurred during March and the corn break following the March Stocks report, Chicago prices have been largely range bound. We expect that same kind of pattern to be followed until a deal is completed or abandoned in coming weeks. It is all about the deal!

• Chicago brokers indicate the funds have sold 5,300 contracts of corn, 3,600 contracts of soybeans, and 1,700 contracts of wheat. Funds have sold 1,700 contracts of soymeal and 1,200 contracts of soyoil.

• President Trump speaking to reporters outside the White House said that negotiations with China are going well. This is the same Trump theme has been around for weeks. Yet, the headline risk is increasing that a deal will be announced or abandoned in coming days/weeks. As the US/China trade negotiations reach an endgame, the risk for an “event” is growing each day.

• There has been active corn spreading today out of May futures into July. There was a minute in which 63,000 contracts traded. The index fund roll starts today, and pre-positioning is occurring in spreads.

• China is on holiday and trade/demand is quiet. Yet CME hog futures rallied to new contract highs at $101.875 on estimates for the ERS (Economic Research Service) China watcher reported that pig numbers are in a landslide lower in several key provinces. ASF (African Swine Fever) has taken a big bite out of production with sow numbers down sharply according to private reports. No one wants to take the risk of production amid ASF which has elevated the hope of large US exports. China has secured record tonnages of US pork, but shipments of that pork appear to be modest until a US/China trade deal is done and 70% tariffs are lifted.

• The EU and portions of the Black Sea are arid with short soil moisture conditions becoming widespread. The dryness is not yet impacting production potential, but the dryness has to be closely monitored heading into late month. May will be the key month for Black Sea small grain crops.

• The CFTC will release their weekly CoT report later today. The report is expected to reflect that funds are short 240,000 contracts of corn, short 65,000 contracts of Chicago wheat, and 85-87,000 contracts of soybeans. The net short Chicago position will key early week price direction along with the Central US weather forecast.

• The midday GFS weather forecast is slightly drier for the NW Midwest. Rain totals have been reduced to 0.75-2.50″. The forecast offers 1-3.50″ for the C and E Midwest and the Delta. The abundant rainfall will maintain saturated soils and seeding concerns. This is an active and wet weather pattern into the third week of April. Snows are shifted west into IA by the midday GFS around April 10^. The cold and wet weather looks to pose problems in early corn seeding. Warmth will occur for the next week followed by cool to cold temperatures into April 21.

• Chicago is in retreat amid the further delay in the US/China trade pact. The negotiations are ongoing, and China is pushing for a quick deal. This means that a breakthrough could occur at any time. The US and world are oversupplied with grain, yet the prospect of a deal is underpinning values on a break. If there is no deal, the outlook becomes rather bearish. With a deal, the outlook becomes bullish. Our expectation is for a deal, but the exact timing is unknown. Until then, choppiness prevails.

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

Weekend summary 5 April 2019

• Chicago values are tentatively higher at midday on the hope that an end game in US/China trade negotiations is near. The volume of trade as active on the opening but has slid to modest levels at midday. We look for a firm close as traders and producers await US/China trade deal news later today. Media reports are offering differing views on whether a 3:30 pm (CST) Oval Office meeting between US President Trump and Vice Premier Liu He will announce a signing summit between President Trump and Chinese President Xi later this month. Several media reports have suggested that a signing summit will be announced, while others said that it will occur at future date as a few details (of the deal) are still being ironed out. President Trump just said that the deal is moving along nicely and that it will be a wonderful deal for US farmers. The uncertainty of whether the US/China deal is done/completed or that negotiation is ongoing has produced uncertainty in morning Chicago trade. Yet, the bottom line is that US/China trade negotiations are nearing completion, and it is expected that a deal will be reached in coming days.

• Chicago brokers report that funds have bought 3,000 contracts of corn and 2,500 contracts of soybeans, while being flat in wheat. In soy products, funds are flat in soymeal while buying 3,200 contracts of soyoil.

• President Trump reduced the pressure on US ag product exports into Mexico by offering a plan; “If Mexico does not aid in the prevention of illegal aliens into the US over the next year, he will tariff autos”. President Trump suggested that this would tariff up to $500 billion annually in autos and that would be a huge incentive for Mexico to help in the US illegal alien effort. The likelihood for the closure of the US border to ag trade has been diminished by President Trump’s midday comment on Mexico.

• For the week ending March 28, the US sold 25.9 million bu of wheat, 21.2 million bu of corn, and 72.4 million bu of soybeans. The soybean sales were expected, but US wheat demand was larger than anticipated. For their respective crop year to date, the US has sold 894 million bu of wheat (up 52 million or 6%),1,700 million bu of corn (down 164 million or 8.8%), and 1,603 million bu of soybeans (down 289 million or 15%). Pace analysis on US corn/soybeans exports suggests that WASDE may trim their 2018/19 annual export estimates. However, they may wait to make any reductions if a US/China trade pact is announced before next Tuesday. China appears to be pledging to make sizeable initial purchases should an agreement be achieved. WASDE will not want to cut estimates next week and reverse that trend in May.

• The midday GFS weather forecast is slightly drier for the W and Central Midwest. Rain totals have been reduced to 0.75-2.50”, down about 0.25-0.50” from the overnight run. The forecast offers 1-3.50” for the Delta and much of the Gulf Coast States. The abundant rainfall will maintain saturated soils and keep flooding concern in the forefront for the Lower Mississippi River. This is an active and wet weather pattern into the third week of April. Snows are shifted west into IA by the midday GFS forecast around April 10. The cold and wet weather looks to pose problems in early corn seeding. Warmth will occur for the next week followed by cool to cold temperatures into April 21.

• The Vice Premier of China and US President Trump will be meeting at 3:30 pm (CDT) in the Oval Office. Media reports offer differing solutions of whether (or not) a signing summit will occur. Yet, the odds are high that a deal will be completed, it is just a question of timing and working out the final details. Saturated soils and cool/wet forecasts will delay Midwest corn seeding. This is no place to make Chicago sales in our opinion as the market awaits news on whether a US/ China signing summit can be announced. Corn should be the upside leader.

• Low volume/mixed is the Chicago market at midday with corn, soybean and wheat futures pulling back from early morning highs. Traders are tired of buying rallies related to US/China trade talk progress, they just want to see a deal. The volume of morning trade is poor/low and few see reasons to place new Chicago positions. Fund managers are defending their large net short positions in corn, wheat and soybeans with new sales. The charts are pointing down and selling a bounce is the right strategy based on prevailing grain market fundamentals. Moreover, traders understand why China may secure US pork via their fight with African Swine Fever, but hard to get your head around why China would secure US corn or wheat when their domestic stocks already account for 51% of the world’s total. Chicago should become political in its pricing as US/China near an end game in negotiations. US and world stock markets are rising on the elevated prospect of a US/China deal while Chicago grains are fading on prevailing price trends. Chicago has little or no price premium if a deal is scored. The surprise in US/China negotiations would be a deal that produces the media reported US ag goods demand of $50 billion annually.

• Chicago brokers report that funds have sold 2,200 contracts of corn, 1,600 contracts of soybeans, and 2,100 contracts of wheat. In soy products, funds have bought 1,900 contracts meal while selling 1,100 contracts of soyoil.

• IEG Vantage (Informa) estimated the 2019 Brazilian soybean crop at 114.5 million mt with Argentina at 55 million mt. In S American corn, Brazil was at 94.5 million mt with Argentina at 46.5 million mt. The Informa soybean crop below most other private forecasts that range from 116-118 million mt.

• USDA Under Secretary Censky is advising the Trump Administration on the importance and need for two-way trade between the US/Mexico. The Trump Administration is considering closing the US/Mexican border to stem the flow of illegals into the US. The hope is that truck/rail crossings will be allowed via the impact on the US with $1.7 billion of goods and nearly 500,000 people legally crossing the border each day. US dairy would be the hardest hit ag sector with over $1.3 billion of product value annually flowing into Mexico. Closure of the border with Mexico (and retaliatory tariffs from China) would make it extremely difficult for US agriculture to endure for any length of time.

• US White House Chief economist Kudlow expressed optimism explained this morning that US/China talks are going well and that China has admitted to IT/IP theft. The Chinese admission argues that both sides are working hard to reach a deal, it is just unknown as to its timing. US farmers are not selling any grain on the hope that President Trump will be able to reach a deal in days/weeks.

• The midday GFS forecast is wetter across upper Midwest with rains of 1.50-3.50″ over the next 10 days. And the forecast offers similar rainfall for the Delta and much of the Gulf Coast States. The abundant rainfall will maintain saturated soils and keep flooding concern in the forefront for the Lower Mississippi River. This is an active and wet weather pattern into the third week of April. Temperatures will be variable with warmth noted for the next week which is followed by much cooler temps during the 11-15-day period with additional storm systems.

• Chicago wants to see a US/China trade deal before reacting. Traders are just plain tired of the constant rhetoric surrounding trade progress. When a deal is reached, we expect a violent upside reaction in Chicago values. Our hope/expectation is for a deal, it is just a question of timing. If 90% of the deal is already completed, it will be tough for the US to walk away.

• Mixed is the Chicago market at midday with corn and soybeans trading either side of unchanged, while wheat futures hold in the red due to near average US winter wheat crop ratings. Market volume is tailing off with all having adjusted their positions following the USDA Stocks and Seeding Report as of Friday. The tone of the midday market is pensive with traders understanding that the US/world has an overabundance of grain/soy. However, a US/China trade agreement would alter prevailing world trade flows and the US demand profile. A US/China trade deal would be bullish for US corn, soybean and wheat price direction for at least the next 2-3 years as a new demand driver emerges. DC sources suggest that the US/China trade deal will be done as an executive order rather than a trade treaty that would need US Congressional approval. This may also limit or curtail any WTO challenge to a bilateral pact. The Chicago marketplace is having trouble deciding whether it should focus on the abundance of supply nearby (Brazilian and Argentine corn and soy crops are growing in size) or the ongoing political saga of US/ China trade and whether a deal will be accomplished and signed. US farmers ahead of spring planting show no willingness to part with any stored or new crop grain, but their patience is thinning as flooding and political trade uncertainty are taking a toll. This week’s US/China trade meetings are highly important, and the hope of farmers is that President Trump can keep his pledge to return farm profitability, cut the US trade deficit with China and protect IP. The US will have a full contingent at the talks starting tomorrow morning, and traders will be watching for any hint of progress.

• Russia has now exported 31.5 million mt of wheat through the end of March. This is a 1% gain vs. last year. The big difference is that there is not one new wheat vessel loading at a Russian port this week. We fear that due to exceptionally strong domestic prices that Russian wheat exports will be down 50-70% from last year in coming months leading up until their new crop harvest. This means that the final 2018/19 Russian wheat export pace could end up at 34-35 million mt, not the 37 million that the USDA and others are suggesting.

• US soil moisture at the end of March is one of the wettest on record and with additional rains forthcoming, seeding spring crops on a timely basis is going to be trying. NE and IA will likely never fully dry out by July amid their acute wetness.

• Chicago brokers report that funds have sold 1,500 contracts of wheat and 2,500 contracts of corn, while buying 2,100 contracts of soybeans and 1,900 contracts of soyoil. Funds are flat in soymeal.

• The midday GFS weather forecast is wetter across IA, NE and MO with heavy rainfall of 2-3.5″ expected over the next 10 days. And the forecast offers similar rains for the Delta and much of the Gulf Coast States. The heavy rains will maintain saturated soils and keep flooding concern in the forefront of the media. This is an active and wet weather pattern into the middle of April with above normal rainfall trends. Temperatures will be variable with warmth noted next week to be followed by cooler temperatures during the 11-15 day period.

• Chicago volume of trade is poor with few wanting to add to their market risk ahead of the start of US/China negotiations. Wheat is down on renewed fund selling, but any break is unlikely to be sustained amid funds that are already holding a large net short position. We look for a mixed close with crude oil and other macro markets punching higher.