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Archive for March, 2018

Market Report

Wednesday March 28th, 2018

May 17 corn closed down ½ at $3.73 ½ and July 18 closed down ¼ at $3.82 ¼. May soybeans closed down 1 ½ at $10.18 and July closed down 1 ½ at $10.28 ¾. May wheat closed down 3 ½ at $4.45 ½ and July 18 closed down 3 ¾ at $4.62 ¾. Crude oil closed down $.83 at $64.35.

Another quiet trading day as the markets seem to be pausing ahead of tomorrow’s USDA report. Grain complex was weaker across the board today. Funds were sellers of 7,000 today bringing their estimated net long to 244,000 going into tomorrow’s report. Keep in mind the grain markets are closed on Friday for the Good Friday holiday. Tomorrow’s USDA report will feature US planting intentions and an update on wheat acres,  along with March 1 Quarterly Grain Stocks.  No reports for South America, and no updates to US S&Ds. USDA planting intentions report, commodity analysts expect US corn acres at 89.4 MA, that compares to the 90.0 MA predicted at the 2018 outlook forum and last season’s 90.17 MA. Analysts are forecasting US Corn stockpiles at 8.70 BB down from the 12.516 billion on December 1, 2017 and compared to the 8.62 billion in March 2017.

More of the same trade for beans ahead of tomorrow’s important USDA reports. Beans traded both sides of unchanged today, ultimately finishing lower. It may be surprising to some that beans are on a five day skid, finishing unch/lower each day.  Over that timing, the market has lost a whopping $.10 or an average of $.02 per day. Funds are heading into the report moderately long beans and meal and close to flat oil. It’s all about the report tomorrow, as has been the case for most of the week. For beans, the most important number will likely be acres. Most expect a new record in U.S. bean acres, though it is apparent that other crops have been chipping away at these intentions over the past month. The average estimate for tomorrow is right at 91 million versus 90.1 last year.  The range of estimates is moderately wide 90 million on the low side and 92.6 million on the high side. The other report, U.S. Quarterly bean stocks, is estimated at 2.03 BB, up from 1.735 billion in March 1, 2017. This number is moderately important, too, given the need for the U.S. to extend its normal “sell season” in beans into the summer due to the Argentine crop shortfall.

The trend is your friend, and so far this week that has been selling on any strength. Overnight, early support quickly faded and prices gradually weakened through the start of the European trade. Prices in Chicago managed to rebound a little into the morning break and those markets finished the night around a $.01 lower. During the day, around an hour into the session, out of left field came a rally. Did not see or hear of any news that sparked this run, but like we have seen all too often this week, the rally was short-lived. Prices gradually weakened the rest of the day, and although trade did not re-test their earlier lows. Lack of export business (because the US is still priced too high) has been a little negative to trade this week, condition data Monday afternoon was more negative to trade this week, and weather has been the most negative to trade this week. With limited fresh news around, it makes it hard for the wheat complex to rally. Unless something changes, see no reason why that quiet, slightly lower bias towards trade won’t continue as we await Thursday morning’s acreage intentions-crop report.

USDA Crop Report Thursday morning. A little tweaking from yesterday. First, acreage breakdown. Winter wheat acres should be roughly around 32.5 mil, which would be slightly below last year’s winter acres which finished at 32.696 mil. The wild card will most likely be Spring wheat intentions. It is almost a foregone conclusion that Spring acres will be above the final Spring wheat acres last year of only 11.009 mil. But how we get there may be the surprise. It is easy to suggest that planted Spring wheat intentions will be close to 12 MA, but will the USDA really give us a number that large? Doubtful. Look for the USDA to be a bit more conservative on that front, and maybe give an initial Spring acreage number of around 11.4 MA. The thinking is that initially, some of these acres go to either beans or barley. So, add it all up and look for 2018 US all wheat planting intentions to come in around 46.25 mil acres vs last year’s final total wheat acres of 46.012 mil. USDA quarterly grain stocks as of Mar 1, 2018 in wheat should come in around 1.499 BB, which would be 20% below the USDA estimate in Dec (which was est at 1.874) and also below the year ago date stocks figure which was 1.659 BB.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday March 26th, 2018

May 17 corn closed down 3 ¼ at $3.74 and July 18 closed down 3 ¼ at $3.82 ½. May soybeans closed down 2 ¾ at $10.25 ½ and July closed down 2 ¾ at $10.36 ½. May wheat closed down 6 at $4.54 ¼ and July 18 closed down 5 at $4.71 ½. Crude oil closed down $.30 at $65.41.

May corn opened lower and never looked back. The funds were sellers of 6,000 today bringing their estimate net long to 248,000 contracts. The market has seen 62% retracement of the entire move from January to March and has found support in the near term here. The technical gave a buy signal from oversold territory on Friday. Ahead of this week’s USDA planting intentions report, commodity analysts expect US corn acres at 89.4 MA, that compares to the 90.0 MA predicted at the 2018 outlook forum and last season’s 90.17 MA. On Monday, China’s February customs data pegged Corn imports at 102,485 mt off -28% from the year ago month, Jan-Feb imports totaled 494,515 mt up +63.9% from the year earlier period. Survey of US farmers by Farm Futures released Friday pegged 2018 US Corn planting at 90.0 MA, off -0.2% from the USDA’s 2017 final figure

The soybean market featured very mixed trade today. The markets opened firm but gains gradually eroded throughout the day.  The funds were viewed small net sellers of meal and beans today, while holding close to “even” on oil.  Position-wise, they remain heavily long meal and moderately long beans. Most of the news of the day centered around export trade. Mid-Day Grain Inspections found 584,612 metric MT is up slightly from both the prior month and year. The report would take YTD soy shipments to 40.8 mmt vs. 46.4 mmt this time last year. As for northern hemisphere planting, Europe will continue too wet. The U.S. Midwest, Delta and southeastern states, are also in a similar posture, although some recent good weather has promoted some field progress in the Delta/SE. The big feature here in the short-run will be the Quarterly Stocks and Planting Intentions data due out this Thursday. Average trade guess for soy acres is right at 91 million versus 90.1 last year. Quarterly bean stocks seen 2.03 BB, up from 1.735 billion in March 1, 2017. Technically, May beans found the expected short-term resistance at $10.40. For the bull, we still need to trade above the March 14th reversal high near $10.55 to entertain thoughts of another leg up. Support was noted at Friday’s low in beans (near $10.10 May), below which we could pursue counts at $9.95.

Not a lot of friendly news around the wheat complex over the weekend. It probably started late Friday afternoon when the COT report was released. It showed that despite the markets unraveling last week the funds barely got out of any their long position. The dry weekend over western Kansas may have been behind the early overnight strength, but when the morning weather models showed much of the HRW wheat production areas wetter over the first half of this week before turning drier over the second half of this week, the sellers took over. Maybe the fact that there is going to be a lot of data to absorb this week outside of weather, kept the markets from breaking down further. Inspections this morning were poor, and that did not help but when was the last week we actually saw a good export sales report? Condition reports saw improvement across the board, but despite that improvement, Kansas and Oklahoma still have the worst ratings on record. Texas ratings this week are identical to 2009, and comparable to 2011, when both years ended up having a 25 yield. The knee-jerk reaction will most likely be a lower start to the night on the improved conditions week over week.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday March 23rd, 2018

May 17 corn closed up 1 ¼ at $3.77 ¼ and July 18 closed up 1 ½ at $3.85 ¾. May soybeans closed down 1 ½ at $10.28 ¼ and July closed down 1 ½ at $10.39 ¼. May wheat closed up 4 ½ at $4.60 ¼ and July 18 closed up 4 ½ at $4.76 ½. Crude oil closed up $1.53 at $65.71.

FOR THE WEEK ENDED 3-23-18

CORN – Big trading ranges bookended the week.  Corn began the week with a gap lower from the previous Friday’s low and moved sideways without much direction at mid-week.  Funds were longer than anticipated on the Commitment of Traders report as of March 13th.  The week ended with a nice rebound after trading to its lowest level since early February.  Prices on Friday spiked below the 50-day moving average support line, but recovered and closed above it before the final bell for the week.  Improving weather in Brazil’s safrinha areas and spillover weakness from other products counteracted our status as the cheapest source of corn in the world.  As of March 21st, Brazil’s first crop corn harvest was 51% compete versus 47% last year.  Their safrinha or second crop corn planting was 93% complete versus 95% last year.  Argentina’s corn harvest was 13.3% complete as of March 22nd compared to 8% complete last year.  The BAGE put Argentina’s corn crop at 32 mmt, down from their previous 34 mmt estimate.  The USDA is at 36 mmt.

We are in the infant stages of a trade war with China.  The US is proposing $60 billion worth of import tariffs and China has responded with a possible $3 billion in import tariffs of their own on 128 different US products.  Pork was a standout target, but no beans, corn, milo, or wheat were included on China’s list.  Pork will have a 25% import tariff imposed and a 15% tariff will be focused on wine, fruits, and nuts.  There will be a 30-day comment period for US businesses to respond to President Trump’s list.  China has not set a time line for their import tariffs to begin.

Weekly export sales were delayed a day this week when Washington, D.C. experienced severe weather.  Weekly corn sales were good, but nothing spectacular at 57.9 million bushels.  This was the lowest weekly sales number in eight weeks.   Total commitments of 1.78 billion bushels are only 3% behind last year.  The USDA is projecting yearly exports at 2.225 billion bushels or a 3% decline year on year.  We need to average18.5 million bushels in weekly sales to achieve the USDA’s forecast.

Weekly ethanol production was up 24,000 bpd from 1.025 million bpd to 1.049 million bpd for the week that ended March 16th.  Ethanol stocks were down 500,000 barrels from 24.3 million barrels to 23.8 million barrels.  Net ethanol margins were up 6 cents per gallon to 15 cents per gallon. President Trump signed the $1.3 trillion spending bill that will keep the government open.  The unintentional consequences of 199A were reportedly fixed on the spending bill.   Supposedly the fix will be something close to the old Section 199 deduction, repealing the 20% deduction on gross sales to coops that was in Section 199A.

The International Grains Council is forecasting 2018/2019 world grain stocks to fall by 46 mmt to 560 mmt, with 42 mmt of the decline to occur in corn.  Corn ending stocks are projected at 265 mmt.  World soybean stocks are expected to drop 3 mmt. A little history of the March Grain Stocks report:  March 1 corn stocks have been above the average guess in 5 out of the last 8 years.  March 1 soybean stocks have been below the average guess in 8 out of the last 11 years.

OUTLOOK:  For the week, May corn was 5 ½ cents lower at $3.77 ¼, July was down 5 ¼ cents at $3.85 ¾, and December fell 4 ½ cents to $3.99 ¼ per bushel.  The 50-day moving average may provide support ahead of the March 29th USDA reports, but the door has now been opened to additional weakness.  The 100-day moving average at $3.68 per bushel and the February low at $3.64 ¼ per bushel are the short-term support numbers.  The gap left this week from $3.82 to $3.82 ½ is nearby resistance.  It’s a short trading week ahead with significant reports thrown in for good measure.  We could be in for a roller-coaster week, but there seems to be a “buy the breaks” mentality.

SOYBEANS – Soybean prices got stung to begin the week, posting their largest one-day loss since August.  Rain in Argentina may have helped curb further soybean production losses and crop estimates continue to climb for Brazil’s crop.  The BAGE did cut their Argentine soybean crop estimate this week from 42 mmt to 39.5 mmt.  Argentina’s soybean harvest usually begins at the end of March.  There was trade chatter about the possibility of Brazil’s soybean crop exceeding 118 mmt!  Safras & Mercado increased their Brazilian soybean estimate to 117.3 mmt versus USDA at 113 mmt.   Their Brazilian bean export number is 70 mmt compared to USDA’s 66.7 mmt figure.  Brazil’s soybean harvest was pegged at 56% complete as of March 21st versus 59% on average.  The threat of a trade war with China that could eventually include a tariff on US soybeans imports into China was a black cloud shrouding the market all week. Soybeans tried to rebound, but Friday brought another sharp sell-off.  Soybeans were able to rally off the new low for the move on Friday, but still posted significant losses for the week.

Some food for thought on China and possible import tariffs on US soybeans:  if China puts a tariff on US beans, more beans may be sourced from South America.  However, some South American customers may be pushed to the US for soybeans.  If China puts tariffs on US pork, they may source more pork from Brazil.  Brazil’s demand for domestic meal may increase, and there could be less soybeans for export.  This makes for an interesting chess game. Weekly export sales were on the low end of expectations at 27.9 million bushels.  Total commitments of 1.8 billion bushels is down 7% from last year.  The USDA is forecasting a year on year drop in exports of 5% to 2.065 billion bushels.  We only need 10.5 million bushels of sales per week for the balance of the marketing year to hit the USDA’s target.

OUTLOOK:  For the week, May soybeans tumbled 21 ¼ cents to $10.28 ¼, July dropped 21 cents to $10.39 ¼, and November fell 14 ½ cents to $10.26 ½ per bushel.  May meal rallied $5.00 per ton to $377.90 and soyoil was 56 ticks lower at $.3142 per pound.  May soybeans first level of support is the 100-day MA at $10.10 per bushel (as of the close March 23), then $10.00 per bushel.  First resistance is the 10-day moving average (as of 3/23) at $10.35, then $10.50 per bushel.  A holiday shortened trading week is ahead, which can lead to volatility leading into the USDA reports. March 1 soybean stocks have been below the average trade guess in 8 of the last 11 years.

The wheat market turned higher after taking a beating the better part of the week. Prices were pushed higher as bargain hunters surfaced. Some of the weather models are looking a bit dries in the US Southern Plains area. The poor/very poor conditions in the winter wheat are not expected to have improved much this week, despite the rains over the weekend and earlier in the week. Crop conditions were at 10% G/E in TX, 11% in KS and 5% on OK in last Monday’s afternoon report.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Thursday March 22nd, 2018

May 17 corn closed up 1 at $3.76 and July 18 closed up 1 ¼ at $3.84 ¼. May soybeans closed unchanged at $10.29 ¾ and July closed up ¼ at $10.40 ¾.  May wheat closed up 2 ¼ at $4.55 ¾ and July 18 closed up 2 ¾ at $4.72. Crude oil closed down $.77 at $64.18.

Corn settled slightly higher today. The funds were buyers of 5,000 contracts bringing their estimated net long position to 225,000 with futures and options. The market has seen 50% retracement of the entire move from January to March and has seen sideways trade since that move. Support in the near-term registers at about $3.70. Analysts expect weekly Corn export sales data in range of 1.5-2.3 MMT. Informa Economics increased their 2018 US Corn planted acres forecast to 88.9 million acres compared to the previous 89.18 million. Buenos Aires Grain Exchange weekly report Thursday again lowered 17/18 Corn crop production estimate to 32 MMT down 2 MMT from the previous outlook.

Unless you were a meal/oil trader, today was an ultra-quiet day in beans. Beans finished “sharply unchanged”, trading both sides of a $.13 range. The funds were viewed net sellers of 2,000 beans and are net long 140,000 contracts. Well, it’s in the books. President Trump imposed tariffs on $60 billion worth of Chinese goods today, aimed at reducing the U.S. trade balance with China and “punishing” them for intellectual property theft. Trade reps expect a “measured” response from China, and no doubt agriculture will be in their crosshairs, given that represents the vast majority of U.S. exports to China. Pork appears to have a target on its back if today’s near “limit down” performance is to be believed, but soybeans continue to be bantered around as a potential item, too.  Yesterday, we said this is the perfect “timing” to do so, given South American soy harvest offtake, but Argentina’s drought may have quashed this particular option. Keep in mind, Brazil can ship a lot of beans, but China will likely need more than even they can offer to satisfy their insatiable appetite. China may have to avoid taxing U.S. beans out of necessity, or make it a very temporary measure.  China’s response could make our lives interesting soon.

The wheat complex saw some recovery Thursday. The weekly drought monitor index, which came out this morning showing little change to the HRW wheat belt even after last weekend’s rains may have been one of the influences behind price action, but we had already begun to see some stability during the night session. What do the wheat markets do over the next week while we await next Thursday’s prospective planting crop report? Weather will continue to play a key role for the HRW wheat states, but in reality, we will not see any of that significance until the next condition report which is Monday afternoon. Export sales are out Friday morning. Normally, they do not mean much, but any significant bump up in sales from the past two weeks would be welcome sight. The good thing is that while US wheat futures have been in a free-fall over the past week, World wheat prices have not really moved, so maybe we are getting more in line with the rest of the World.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Wednesday March 21st, 2018

May 17 corn closed up ½ at $3.75 and July 18 closed up ½ at $3.83. May soybeans closed up 1 ½ at $10.29 ¾ and July closed up 1 ½ at $10.40 ½.  May wheat closed up ½ at $4.53 ½ and July 18 closed up ½ at $4.69 ¼. Crude oil closed up $1.64 at $64.95.

The corn market traded in a $.02 range and closed mixed, with the front month slightly higher and the rest slightly lower. Funds were said to be net buyers of 10,000 corn bringing them to an estimated net long of 220,000 combined futures and options. The market has now experienced a 50% retracement of the entire move from Jan to March support in the near term registers at about $3.70. This Morning the USDA reported a private sale of 138k mt of corn sold to South Korea for 17/18. 3 separate South Korean houses picked up 197,000 of corn in private deals late yesterday. US Ag Secretary Perdue signaled on Tuesday that the Trump administration was backing off major changes to biofuel policy through executive action, instead leaving any changes to be made on the issue to Congress.

Beans appeared to be on a mission early to extend Tuesday’s “Turnaround” higher, but struggled to maintain the momentum.  Soy briefly traded lower on the day at noon, but settled on a limp-wristed penny higher close. The feature early was meal gaining on oil, but by mid-day, this also reversed course

Exports were probably the theme of the day, as they will likely also be tomorrow. Trump metal tariffs are due to go into effect by the end of the week as things currently stand, and few know exactly which countries will be included or not as the hours tick down. Recent newspaper articles in China suggested US farmers were “dumping” beans in their market. Keep in mind, media writings are no accident in China, and these articles are often preludes to gov’t action. It is really an excellent time of the year for China to threaten/impose a tariff on US soybeans. Brazil is currently harvesting a bin-buster crop. Not only that, the Brazilian Real fell to a one month low overnight before stabilizing today with an outside day reversal. We doubt China will need a lot of convincing to “Buy Brazilian”. Recent USDA attache reports have discussed China making the leap to “100 mmt” in total soy imports next year vs. 97 this year, as they modernize their animal husbandry. With that large of an import tally!, analyst doubt if a tariff on US beans would last long, but it would certainly spook the markets for a moment.

South American weather likely leans a little bearish, though make no mistake, plenty of damage has been done to the Argentine crop. Another good chance for rain in Argentina’s drought region will evolve Friday into Saturday. Sufficient rain will fall to take the edge off a bit for Cordoba, Santa Fe and western Buenos Aires, but more rain is needed. That which is coming may prove to be a little late in seriously bolstering production, though we note soy is the best positioned to benefit, potentially.  Technically, May beans have done the “bare minimum” on a modest recovery and will likely feature some tough resistance closer to $10.40.  For the bull, the trade to watch would be the March 14th reversal high near $10.55.  Initial support is Tuesday’s low of $10.22, but active counts suggest a break to $10.12, then $9.95 are possible.

The wheat market opened lower on follow through selling from recent beneficial moisture in the US Southern Plains area. Outside of the liquidation, today’s selling was said to be tied to a couple of the private weather forecasters calling for multiple chances of precipitation for the Kansas crop and Russia once again increasing their export expectations. Many models, including the GFS, continue to show western Kansas dry over the next few weeks. Regardless, as of Monday afternoon the Kansas crop was still only rated 11% G&E and 55% P&VP. The worst rating during the third week of year prior to this year. That was back in 2011 when the crop was rated 27% G&E and 37% P&VP. Will we see a 16% jump next Monday in the crop ratings? Doubtful. Which means even after next week the Kansas crop will continue to be the worst rated on record. Texas and Oklahoma on the other hand have nine lives, and like a weed, rains quickly rejuvenate the crop. For those interested, the worst rated Kansas crop at the end of March/beginning of April was either 2011 when it was 31/34 or in 2013 when it was 29/31 and in those years, the yields ended up coming in at 35 and 38 respectively. Using those yields gives us a Kansas crop of between 245 and 266 mil bu.

What do the wheat markets do over the next week while we await next Thursday’s prospective planting crop report? Weather will continue to play a key role for the HRW wheat states, but in reality, we will not see any of that significance until the next condition reports Monday afternoon. We do get an export sales report tomorrow morning. Normally, they do not mean much, but any significant bump up in sales from the past two weeks would be welcome sight. The good thing is that while US wheat futures have been in a free-fall over the past week, World wheat prices have not really moved, so maybe we are getting more in line with the rest of the World.

Anna Kaverman

anna@mercerlandmark.com

By~Brad Miller
As Wheat is now starting to emerge from dormancy it is time to check the stand count and check for winter kill. You should have a stand count of 20-24 plants/square foot with 3-5 tillers is optimal. If your Stand count is 10-12 plants/square foot or less then you should consider replanting to a different crop. An Old rule of thumb is 1.3 to 1.6 bu/ac for each head/square foot. So how much Nitrogen should get applied on once we determine the wheat has survived the winter? Wheat uses 1.1 Lbs. of Nitrogen for each bushel of expected yield and utilizes 70-75% of its total Nitrogen needs between Feeks scale 4 (Beginning of erect growth) and Feeks Scale 8 (Visible Flag Leaf). Usually between 70-100lbs of Nitrogen is recommended. The chart below shows Nitrogen recommendations.

A question I get asked is should I Apply Sulphur with the nitrogen. Sulfur affects plant metabolism, enzyme activities and protein production. A good rule of thumb is a wheat crop will take up about a quarter-pound of sulfur for each bushel of wheat produced. So 100 Bu wheat will use 25 lbs of sulphur.

For more information or to have your wheat field scouted contact your Mercer Landmark representative.

By~Ben Stoller
The talk has been all about dicamba, but 2,4-D (Group 4, growth regulator) remains a viable and inexpensive option for many smaller broadleaf weeds.
In order to reduce the likelihood of crop damage, certain labeled pre-plant delays should be followed. The chart below outlines several formulations and the needed wait times prior to planting corn or soybeans.

Please contact your Mercer Landmark sales agronomist on the effectiveness and availability of 2,4-D formulations.

Market Report

Tuesday March 20th, 2018

May 17 corn closed down ½ at $3.74 ½ and July 18 closed down ¾ at $3.82 ½. May soybeans closed up 5 ¾ at $10.28 ¼ and July closed up 5 ½ at $10.39.  May wheat closed up 2 ¼ at $4.53 and July 18 closed up 1 at $4.68 ¾. Crude oil closed up $1.35 at $63.31.

The corn market was two-sided today, spending plenty of time on both sides. The market threatened to make a legitimate “Turnaround Tuesday” reversal, but ultimately came up just short. Futures would close fractionally lower today, toward the bottom-end of a range. The funds were viewed net sellers of 5,000 corn today, which would pare their net length in corn back to an estimated 210,000 combined futures and options.

Policy concerns remain front and center. There was another informal biofuel policy meeting at the White House today, this time just between Ag Secretary Perdue and EPA Admin Pruitt.  They are once again hard at work to try and find a compromise that would offer some relief to merchant refiners, while also not imposing a “hard price cap” on RIN credits. We are still not completely sure of the legality or feasibility of these efforts. There was not a lot of fresh news around today as we grind our way into the important months’ end reports next week. One can feel the attention of the markets drifting away from South America and more toward U.S. planting prospects. In the big picture, most private analysts are angling toward a total corn acreage number just below last year’s 90 million. AgResource was the latest, publishing 89 million. Expect more numbers to trickle out in front of the intentions report. Quarterly Stocks could be more influential, potentially, given very strong corn demand prospects.

Beans and meal demonstrated stability after the sharp sell off on Monday and that is about all that can be said about today’s session. The charts held at some key levels that if they continue to hold, should encourage a more two-sided trade heading into the month end report. The Argentine production loss rally and subsequent long liquidation trade potentially have run their course with a more balanced market for the moment. Fund buying in meal has notably picked up on the break with the realization that the floor in this market has also been raised.  Elsewhere in the news, the latest USDA report from China suggests 17/18 soybean imports will reach 97 MMT and then rise to a forecast of 100 MMT in the 18/19. Continued modernization of the country’s livestock and feed sectors, increasing incomes and urbanization will help continue to push oilseed and oilseed product demand. AgResource published new crop soybean acreage at 90.5 vs. 89.5 last year. While Allendale has bean acres at 92.1.

The wheat complex first has to find stability before any thoughts of trying to climb back from its recent free fall. Seasonally, the wheat complex usually has a hard time rallying during the month of March. Trade was higher overnight, tried to regain that momentum during the day, and had to settle for a mixed finish with Chicago settling a couple cents better. From Thursday’s high to today’s low, Chicago wheat lost more than $.43. Outside of the condition reports Monday afternoon showing more deterioration, there really is not a lot of other positive news. The 6 to 10 day and 8 to 14 day maps shows ample chances that the HRW wheat crop will see more rains, and we have to remember, US prices continue to be not very competitive to the rest of the World. Not only has the export sales report shown that over the past several weeks, but the Iraqi tender that closed Monday reiterated that fact with US offers $26 above the Aussie offers.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday March 16th, 2018

May 17 corn closed down 4 at $3.82 ¾ and July 18 closed down 3 ½ at $3.91. May soybeans closed up 8 ¾ at $10.49 ½ and July closed up 9 at $10.60 ¼.  May wheat closed down 11 at $4.67 ¾ and July 18 closed down 11 at $4.85. Crude oil closed up $1.16 at $62.41.

FOR THE WEEK ENDED 3-16-18

CORN – Happy St. Patrick’s Day!  Corn started the week on a sour note, but spiked higher at mid-week, only to tumble on profit taking into the weekend.  The news is stale as funds have been looking to buy setbacks; however, this was only the second week in the last nine weeks to close lower.  On the continuous weekly corn chart, this week’s range was a bearish outside week lower. The question now is corn running out of momentum?  The market may have finally absorbed a smaller South American corn crop and excellent demand for cheap US corn supplies.  Weekly export sales that were the highest in 23 years couldn’t inspire any upside traction.  When markets don’t react bullishly to bullish news, it tends to make one cautious.

The Rosario Grain Exchange this week decreased their Argentine corn production figure from 35 mmt to 32 mmt.  The BAGE’s refreshed number was left alone at 34 mmt with 8% of the harvest complete.  The March USDA forecast was 36 mmt.  According to reports, from December 1 through March 11, Argentina has experienced its driest period in 40 years.  At a grain conference in Singapore this week, an official with Brazil’s largest shipping company said Brazil could add 24 million acres of corn/soybean production “immediately” if there is a demand for it.  Brazil’s first corn harvest was estimated at 45% complete versus 44% last year, as of March 9th.   Their safrinha corn planting was 83% complete versus 87% last year by March 9th.

Weekly export sales were enormous at 98.6 MB, a marketing year high! Total commitments at 1.717 BB are 77% of the USDA’s 2.225 BB target.  This is spot on with the 5-year average of sales as a percentage of exports.  US corn remains the cheapest source of corn in the world. Weekly ethanol production was down from 1.057 million bpd to 1.025 million bpd, but ethanol stocks were a record 1.020 billion gallons.  Stocks were up 48 million gallons for the week.

Corn planting in the US has begun.  Texas reported 26% of their corn was planted as of March 11th, versus 18% on average.  Mississippi was just getting started with 1% planted, right on the average. A little history of the March Grain Stocks report:  March 1 corn stocks have been above the average guess in 5 out of the last 8 years.  March 1 soybean stocks have been below the average guess in 8 out of the last 11 years.

OUTLOOK:  While not a boring week, it certainly was quieter than we’ve been seeing lately.  It’s too early to say we’ve seen the high; but in the short-run, the elusive $4.00 level remains out of our grasp.  This week’s high in May corn was $3.95 ¼ per bushel.  Short term resistance in the May contract is $3.89 with support falling to the $3.70 area.  Market action this week suggests we’ve priced in good demand and lower South American prospects.  We may be range bound ahead of the March 29th planting report.  For the week, May corn fell 7 ¾ cents to $3.82 ¾ per bushel, July was down 7 cents at $3.91, and December was 3 ½ cents lower at $4.03 ¾ per bushel.

The Prospective Planting and Quarterly Grain Stocks reports will be released on Thursday, March 29th at noon.  The markets will be closed on Friday, March 30th in observance of Good Friday.  The markets will reopen on Sunday night, April 1st (Easter) at their normal time.

SOYBEANS – Soybeans recovered a small portion of the previous Friday’s sell-off to begin the week, but it didn’t last when a key reversal lower occurred at mid-week.  May soybeans traded to their lowest point in a month as forecasts for rain in Argentina continued to stay on the deferred maps.  Demand was okay, but nothing impressive.  Meal was down for the week but was very flat as any rally was met with decent selling.  Attention will begin to focus on how many acres US growers intend to switch from corn to soybeans this spring.  One private survey suggested soybean acres could reach a record 92.1 million acres this year, with corn acres falling to 88.5 million acres.  Last year, we planted 90.1 million acres to beans and 90.2 million acres to corn.  We will begin to see more forecasts as we approach the March 29th Prospective Planting report.  The spring weather maps from NOAA indicate slightly warm, wet conditions in the upper Midwest.

The Rosario Grain Exchange cut their Argentine soybean outlook from 46.5 mmt to 40 mmt this week, citing drought conditions.  The BAGE left their projection at 42 mmt with 2% of the soybean harvest complete.  The USDA’s latest number was 47 mmt.  Brazil’s soybean harvest was pegged at 46% complete versus 50% on average, as of March 9th. The February NOPA crush report showed 153.7 MB crushed, a new monthly record and well above the 149.4-million-bushel pre-report expectation.  Weekly export sales were better than anticipated at 46.6 million bushels.  Total commitments at 1.81 BB are equal to 88% of the USDA’s 2.065 BB export forecast.  This is behind the 93% average. Farm groups and exporters in Brazil are discussing how to increase soybean exports using the Panama Canal.  This outlet could cut transit time from northern Brazil to Asia by 5 days, saving transportation costs.  Only 2 mmt of soybeans were shipped last year via the Canal.

OUTLOOK:  Soybeans closed the week higher as South American soybean estimates continue to decline, despite a key reversal lower in the middle of the week.  Can late rains help reverse some of those losses?  We really won’t know until the combines roll.  Increasing attention will be focused on US planting weather.  For the week, May soybeans rallied 10 ¼ cents to $10.49 ½ per bushel, July was 12 cents higher at $10.60 ¼, and November was up 11 cents at $10.41 per bushel.

Wheat

Egypt purchased more wheat this week and to nobody’s surprise it was sourced from Russia and Romania. Soil moisture in Russia has them set up for a strong planting season again this year.  They are already the world’s leading wheat exporter and look to grow enough to support expanding their position. The wheat market is being driven by weather activity in the plains.  With big rain and snow events for most of the wheat areas, prices dropped sharply this week.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Thursday March 15th, 2018

May 17 corn closed down 2 at $3.86 ¾ and July 18 closed down 2 ¼ at $3.94 ½. May soybeans closed up 8 ½ at $10.40 ¾ and July closed up 8 ¼ at $10.51 ¼.  May wheat closed down 10 at $4.78 ¾ and July 18 closed down 10 ¼ at $4.96. Crude oil closed up $.23 at $61.25.

May corn settled fractionally lower. Funds were sellers of 9,000 corn today bringing their estimated net long position to about 211,000 contracts with futures and options. Export sales were way above expectations with the USDA announcing 2,505,100 mt with expected sales of 1.3-1.8 MMT. Two issues on traders’ minds in the corn market are likely USDA’s big export estimate of 2.225 BB and USDA’s Grain Stocks and Prospective Planting reports on March 29.

In the weather, Heavy rain fell on portions of northeastern Argentina Wednesday while most key corn and soybean producing areas were warm to hot and dry. Today’s forecast is a little wetter for key crop areas in and around Cordoba Mar. 22-24 with improvements in soil moisture and some relief from drought expected in a large part of Argentina during the next two weeks.  Most of the notable crop improvement in yields should be confined to a small portion of the country where rain this season has been most timely and crops are still immature. In Brazil, Some of the driest areas will benefit from rain during the next several days and stress to crops should be eased.  Sunday will be wettest. Meanwhile, rain elsewhere during the next two weeks will cause regular interruptions to fieldwork, but the focus of rain should not remain on one region long enough to cause serious delays to fieldwork.

“Recovery” was the word of the day in the soy complex. Futures sported double-digit gains at one point. Meal finished “sharply unchanged” in a $5 range. Fund traders were viewed net buyers of 10,000 soy today, sellers of 3,000 meal, and buyers of 5,000 oil. That would leave them net long the entire complex to varying degrees: +135,000 soy, +8,000 oil, and +105,000 meal.  Heading into Friday, the weekly soy continuation chart is clinging to $.11 gains, mostly by virtue of the March contract expiration. Next week’s price direction will hinge almost exclusively on the Argentine forecast. That being said, it may take some time to figure out exactly whether that ends up bullish or bearish. Today’s forecast is a little wetter for key crop areas in and around Cordoba Mar. 22-24. The system is expected to be somewhat erratic, potentially missing many crop areas. Placement of the rains will be important, as well as how mature the crop is in those areas, too. 2% of the soy crop is now believed harvested. Big overnight rains fell Wednesday on the NE part of Argentina, far from production regions. Brazil remains in much better shape with a monster crop expected.  The focus back at home will no doubt be the potential for big acres in the March intentions report on the 29th.

A fairy robust weekly export sales report helped reignite bulls.  The USDA found 1.27 MMT in new soy sales, which was 30% greater than the prior 4 week average and toward the high-end of forecasts. China was a decent-sized buyer taking 1/3 of the total, but it was encouraging to see a decent slug of business to a wide range of other buyers. This would take total US soy sold and shipped to 49.3 mmt versus 53.4 mmt on the books this time last year. Meal sales were “ok” at 173,000 MT, while oil exceeded very low expectations with 31,600 MT of sales.

Technically, the bean market staged a tentative minor reversal out of a push to new lows overnight, though they still really never threatened the prior day’s settlement. Taking out today’s lows would be a negative technical signal, and would likely cue a more substantial correction in soy. Meal is similar, with today’s lows key to a deeper break. Both feature significant resistance near recent highs.

Chicago weakened a little into the morning break, but trade was still poised to start the day a little better. Very disappointing export sales data may have been the trigger behind for what was about to come during the day session. Not because the numbers were bad, but it just reiterates the fact that despite the recent break, US wheat prices continue to be not that competitive to the rest of the World. Taking a look at World values, it still shows US prices above everyone else. US is currently around $213/mt compared to French, Romanian and Russian at around $208, Baltic around $209 and German around $211. We have a big disadvantage in freight as well. There also was a seasonal trade (for roughly two weeks) that started today that bought beans and sold wheat. That may have put a small burden on trade as well. The drought monitor index this morning showing no relief across the HRW belt, and the three-month outlook maps showing above normal temps and below normal temps for that same region, just could not offset the other news. The sell-off did take futures to an area where we should start to see support.

Export sales this morning were awful, coming in at 163 MT with an additional 57 MT of new crop for a combined total of 220 MT. Total sales to date are 815 mil bu vs 932 mil bu last year and USDA projections of 925 MB. Still no confirmation of SRW wheat sold to private Egyptian buyers. After Wednesday’s close, Egypt’s GASC announced they were in for wheat for April 15-25. The GASC received only six offers (three Russian and three Romanian) this morning. The lowest two offers were Russian. That was roughly $4.00 more expensive than their previous purchase last week.

Anna Kaverman

anna@mercerlandmark.com