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Archive for April, 2018

Market Report

Friday April 27th, 2018

July corn closed up 3 ¼ at $3.98 ½ and December closed up 3 ¼ at $4.14 ½. July soybeans closed up 16 ¾ at $10.56 ¼ and November closed up 13 ¾ at $10.47. July wheat closed up 9 at $4.98 ½ and September closed up 8 ¾ at $5.15 ½. Crude oil closed down $.10 at $67.98.

FOR THE WEEK ENDED 4-27-18

CORN – Corn worked its way higher throughout the week on slower than expected US planting progress and a lack of rain in Brazil’s safrinha corn area.  For the week, July corn was up $.13 and the December contract gained $.12.  Fieldwork across the Corn Belt had picked up going into the weekend.  The next rain event for the US is expected around May 3-4 and some forecasts call for a return to below normal temperatures in its aftermath.  This could once again slow corn planting.  US weather will be a front-page item for the next few weeks.  A fly may be nearby demand.  This week’s sales were disappointing and sales next week are also expected to be on the low side.  We only saw one corn sale announcement from the USDA this week of 107.6 tmt of old crop to unknown.  This was the first announced sale since April 6th.  Brazil’s safrinha crop needs rain.  Brazil is the second largest corn exporter in the world.  They harvest their safrinha crop from June through August.  This crop makes up 71% of their total corn production.  For now, traders are keeping their corn production numbers unchanged.  The USDA is carrying total Brazilian corn production at 92 mmt.

Weekly export sales were poor at just 27.4 MB, keeping us 2% below last year’s sales.  The USDA is predicting exports to be down 3% year on year at 2.225 BB.  We only need to average 13.2 MB of sales through the end of the marketing year, thanks to good early sales.  Net cancellations of 3 MB by Japan were seen for new crop corn.  Total new crop commitments are 77.2 MB compared to 92 million bushels last year.  US corn planting as of April 22nd was 5% complete compared to 14% on average.  The average for the coming week is 27% complete.  Estimates for planting range from 16% to 22% by April 29th.  Planters are rolling and according to a University of Illinois study, the US farmer can plant the corn crop in 14 days.

After China implemented the nearly 179% deposit for US sorghum imports, boats loaded with US sorghum have looked for new destinations.  It was reported that sorghum has been diverted to Saudi Arabia, Spain, Japan, and others.  Late in the week, it was reported that a boat bound for Singapore was switched to a southern Chinese port.  Some Chinese sorghum importers have asked the government to grandfather in sorghum that was already loaded and headed to China.  The government had yet to respond.

OUTLOOK: This week, the July and December contracts each held the previous week’s low at $3.85 ¼ and $4.02 ¼ per bushel respectively.  These levels will be viewed as the first line of support as we head into a good week of planting. The next resistance in the July contract is $4.02 ¾, the March high.  The next resistance in the December contract is $4.16 ½, then in the upper $4.20’s per bushel. Continue to monitor the weather for Brazil’s safrinha corn crop.  If the dry weather persists, crop estimates may be cut and provide underlying support to corn prices.  US weather, however, will be at the forefront.  If the planters can roll without interruption, it could crimp any additional upside potential for the time being.

SOYBEANS – Soybeans had a slow start to the week as Chinese trade war concerns loomed in the background and ideas late planting in corn would lead to additional soybean acres in the US.  Soybeans were fractionally higher on the week going into Friday’s session, but a surprise rally into the weekend resulted in a strong weekly gain and close.  For the week, July soybeans jumped $.16 higher and November soybeans were $.12 higher.

Friday’s unexpected rally was two-pronged.  Support stemmed from a stronger soymeal market as a result from slower meal loading in Argentina.  Earlier in the week, a major loading dock sustained major damage at Argentina’s main export hub of Rosario, at the port of San Martin, when a ship hit it.  Estimates of the repair time have ranged from a few months to a year.  The terminal has two berths and only one was damaged.  This has raised worry that meal shipments will be delayed and some business may be pushed to the US.  The line-up at the berth jumped from 8 days to 17 days.  There is chatter that the crush category on US balance sheets could climb 20-50 million bushels, cutting the current 550-million-bushel soybean carryout.  Adding to problems in Argentina, there was a fire at a crush plant and two other plants are having labor trouble.

China imported 5.66 mmt of soybeans in March.  Of the total, 55% came from the US, down over 26% from last year.  Brazil’s share of China’s bean imports rose 33% from last year.    In the first quarter of the calendar year, US soybean exports to China are down over 20%, while Brazil’s are up nearly 130%!  Gee, I hope we don’t get into a trade war.  China and the US are scheduled to meet for trade talks on May 3-4 and hopefully we will get some clarity as to whether import duties will be imposed on US soybeans into China.

Weekly export sales were the fourth smallest of the marketing year for old crop at 13.6 million bushels. Total old crop commitments stayed 3% behind last year.  The USDA is projecting sales to decline 5% year on year to 2.065 billion bushels.  We need to average just 4.8 million bushels of sales per week to hit the USDA forecast.  New crop sales were a measly 6.2 million bushels.  Total export commitments are at 97% of the USDA’s 2.065-billion-bushel target.  The 5-year average is 95% of target at this point in the marketing year.  The only announced sales this week by the USDA were 60 tmt of old crop soybeans and 70 tmt of new crop soybeans, both sold to Argentina.  These were the first sales since April 11th.  Argentina’s soybean harvest was 54% complete as of April 26th, compared to 39% on average.  Brazil’s soybean harvest is virtually complete.  With a weak currency, Brazil’s farmers are already expected to add soybean acres this fall.

OUTLOOK:  A strong close into the weekend can’t be ignored, but can it be extended if US weather continues to be favorable for fieldwork?  The meal market has been a major contributor to the soybean rally this week; but on the continuous meal chart, we haven’t traded over $400 per ton since June 2016.  Will the current situation provide the impetus to punch above $400 per ton? Just how long will it take to repair the loading dock in Argentina?  China will be on holiday for their May Day celebrations April 30th and May 1st.  Bulls need to be fed every day, so keep watching the news and weather forecasts.

StatsCan released their acreage estimates.  The market was looking for 23 million all wheat acres but they are expecting 25.3 million. They also think spring wheat acres will be 15% more than last year at 18.2 million. There will be a big crop tour next week to check out the condition of HRW wheat in Kansas. The wheat has gone through drought and a couple of freeze events. The market will react to the findings of the tour. The HRW wheat tour begins April 30th.  The tour has underestimated the final Kansas wheat crop in 7 out of the last 10 years.  Stats Can released their first Canadian acreage numbers on April 27th.  Spring wheat acres were estimated to be up 15% from last year, corn acres up 5%, canola acres down nearly 7% and soybean acres down 11%.  The report was bearish for wheat, but bullish for canola. The next WASDE report will be released May 10th.  Beginning with this report, the USDA will add a new line to the world wheat and rice balance sheets to show beginning stocks, production, imports, domestic use, exports and ending stocks, after subtracting China’s numbers.  This is being done to better reflect the world situation.  On the April WASDE report, world wheat ending stocks were forecasted at 271 mmt, an all-time high.  China’s ending wheat stocks were forecasted at 127 mmt, nearly half of the total.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Thursday April 26th, 2018

May 17 corn closed down ½ at $3.86 and July 18 closed down ½ at $3.95 ¼. May soybeans closed up ½ at $10.28 and July closed up ¼ at $10.39 ½. May wheat closed down 5 ½ at $4.80 ¾ and July 18 closed down 9 ½ at $4.89 ½. Crude oil closed up $.16 at $68.08.

The corn market had a lot of “quiet” days lately, but this one in particular took the cake. Corn spent most of the day slightly in the red, occasionally poking its head above unchanged. The market would end fractionally lower. Volumes remained extremely light when excluding spread activity. Managed Money traders did not appear very active on the day, and will likely head into tonight net long 185,000 combined futures and options. CFTC tomorrow will tighten this up.

Export sales were not particularly robust, but as per usual, did not seem to cause much fuss in price action. Net new sales of 697k MT for old crop were 33% below the four week average, missing general trade expectations for something north of 1 mmt.  More than half of this week’s business was to Mexico, with the balance to traditional buyers Japan and Colombia. This takes total sales shipped for the year to 50 mmt, which compares to the year ago week at 51 mmt, and USDA projections of 56.5 mmt.  While new business has been slowing, note that we only need to sell about 300,000 MT per week to have enough outstanding sales to meet USDA projections (assuming they are all loaded out in 17/18). Robust loadings should continue well into the spring.  There was 107,600 metric tons of corn sold to “unknown” under daily reporting today; the first announced USDA sale in corn in nearly three weeks.

The soybean market struggled to hold its gains but managed to settle slightly higher in a two-sided choppy trade. Meal once again provided upside leadership following yesterday’s barge accident in Argentina that will hamper meal exports. Trade remains very quiet with a sense that the grains are creeping towards summer markets. Soybean weekly export sales totaled 538 mt which is down 64% from last week’s total and 63% from the recent 4-week avg. China cancelled 10 mt. The USDA is projecting exports to fall 89 million bushels short of last year.

Trade negotiations continue to show signs of encouragement. The latest is China’s Premier says China is open to negotiating trade with U.S. so both sides are putting positive spin on things. US trade representatives will be in Beijing around May 3 and May 4th with May 11 being the deadline for the submission of public comment on imposing additional tariffs on Chinese products valued at $100 billion. This is a key timing where we should either see a deal struck or look for a much more volatile period in the markets. A resolution to the trade dispute would likely be construed as positive for soybean prices even if more out of perception and removing uncertainty for fall exports than for current trade realities.

Price action across the wheat complex was on the defensive throughout the day. The wheat complex started the evening strong, racing out to nickel gains before stalling around midnight and reversing during the early morning hours. The market did bounce back a little heading into the morning pause, but still settled around three cents lower. You don’t often see $.13 ranges in the wheat complex overnight, especially in a time frame where there is not a lot of fresh news and not a whole lot going on. With that in mind, have to think the traders are loving how easy it has been to push the wheat complex around the past couple weeks. With farmer selling basically shut off, rallies have probably extended farther than they should have gone, and with burdensome World wheat supplies, when the market does reverse and move lower, traders have been able to push trade lower than prices probably should have gone. With Stats Can coming out tomorrow morning, crop conditions Monday afternoon and the wheat Commission/Kansas Wheat Growers Association kicking off their HRW Wheat Tour on Wednesday, there will be plenty of fresh data around to find the right spot to get into the market.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Tuesday April 24th, 2018

May 17 corn closed up 2 ¾ at $3.81 ¼ and July 18 closed up 2 ½ at $3.90.  May soybeans closed up 1 ½ at $10.22 ¼ and July closed up 1 ¾ at $10.34.  May wheat closed up 11 at $4.72 ½ and July 18 closed up 9 ¾ at $4.84 ¼. Crude oil closed up $.29 at $67.57.

The grain markets showed a few tentative signs of life, overcoming another lukewarm day of trade to finish higher. With the “Monday-Tuesday higher”, corn has almost fully made up for Friday’s losses. The market’s poise was somewhat more impressive given a minor wash-out in the financials, with the Dow trading 500 pts lower as of this writing. Managed Money traders were viewed net buyers of about 10,000 corn today, which would leave them net long 170,000 combined futures and options. We struggle to identify a specific catalyst to the mid-day bounce in the markets, but if forced, we would suggest a little less “rain in the Plains” in the forecast boosted wheat, which in turn helped corn. USDA Crop Progress reports last night confirmed what we already knew; U.S. farmers are off to a slow start in planting.  The gov’t reported just 5% of U.S. corn was planted, advancing 2% wk/wk and compares to average levels near 15%. Given normalizing weather and fairly dry conditions in the center of the belt, we remain somewhat cautious about making a big bullish deal out of this.  Weather in the southern reaches of the belt was near ideal for planting today.

The Soybean market trade two-sided today ultimately closing in positive territory with the support of a fresh sales announcement of 60 mt old crop and 70 mt new crop beans sold to unknown. This reverses a streak of 4 consecutive sessions lower and 6 out of the past 7. We have been looking for a signal that the market has identified support and it is possible today’s reversal is the start of a recovery trade. Overall volume was slightly larger, mostly in old crop beans, but news and trade remains fairly quiet. Weather for the 6-10 day and 8-14 day outlooks show normal to above normal for the entire corn belt with only a portion of the Dakotas and NW MN seeing a cold shot pushing in from the north in the second week. Trade negotiations continue with some positive headlines vibes coming out in recent days on both the NAFTA and Chinese fronts.  With NAFTA there appears to be an effort to get a deal made by all three parties ahead of the July elections in Mexico with talks resuming today.

After trading quietly lower for much of the morning, the wheat complex firmed midday. Mpls was a reluctant follower, but there too prices eventually moved higher. Maybe our wheat has gotten cheap enough that we are finally doing some business. The wheat complex today was surely not trading the condition reports from Monday afternoon. The only thing that was not surprising with price action earlier in the day was when the SRW wheat market was losing to corn. But even that reversed midday and eventually settled right off its highs. Some will suspect that maybe trade has simply just bottomed out and we had a technical bounce. And that very well can be the case. Midday weather maps had minor changes, but nothing that would have sparked a rally and an eventual settle $.15-$.17 off our lows. Trade negotiations with Mexico continue to progress. An official familiar with NAFTA talks suggested that a revised principle agreement could be reached within the next 10 days. The problem is we have heard this rhetoric before, and until the negotiations become more concrete it is hard to get too excited. This is the second consecutive week the wheat complex has ignored the data from the weekly condition reports. Obviously, trade does not hold these Monday reports close to the vest any longer as we have been trading a struggling HRW wheat crop for a month now. Maybe that will change in a week or two when we start getting our first feedback from the crop tours accessing more in-depth damage done to the HRW wheat crop.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday April 23rd, 2018

May 17 corn closed up 2 at $3.78 ½ and July 18 closed up 2 at $3.87 ½. May soybeans closed down 8 at $10.20 ¾ and July closed down 8 at $10.32 ¼. May wheat closed down 1 ¾ at $4.61 ½ and July 18 closed down 2 ¾ at $4.74 ½. Crude oil closed up $.29 at $68.47.

Quietly mixed trade today in the corn. At least it didn’t close lower, but today’s gains made up for less than half of Friday’s decline. The funds were small net buyers today, taking their net length in the market back up to 160,000 combined futures and options, estimated.

The mid-day grain inspections report gave corn a much-needed shot in the arm. For the week ended 4/19, U.S. exporters shipped out 1.72 MMT of corn, which was slightly above the prior week and better than the 1.47 mmt shipped out in the year ago week.  YTD shipments now stand at 29.8 mmt versus 37.4 mmt this time last year. A large outstanding sales book suggests we should catch up to last year at a minimum, even despite the recent slowdown in fresh bookings.  There is both Asian and Latin interest around for summer corn, though Brazil is doing their best to compete for the July/Aug export slots. Markets were buoyed in part overnight by a continued “warming” in trade sentiment, with negotiators reportedly making some head way on both the China and NAFTA fronts.

Traders were expecting the USDA to report U.S. corn plantings at only 7-8%, which compares to 3% last week and a five year average closer to 15%. Most of the Midwest is in the midst of warming temps (to “just” slightly below average), with mixed rain prospects over the next week or so. Conditions for fieldwork are certainly improving. The other big issue of note will be a dryer trend in Brazil’s southern safrinha corn crop areas, which is not yet a major issue but will warrant watching into pollination in May days. Soil moisture is still favorable, but traders will want to see some rains in the forecast soon, particularly given the growing importance of this crop regionally (given Argy crop declines).

The Soybean market was unable to sustain modest overnight gains and sold off after the morning break. It has been the pattern of late (6 of past 7 sessions) where disappointment in a lack of fresh export announcements has weighed on prices through the day and that seemed to be the case today as well. In addition, an improving outlook for US planting and a breakout trade in the dollar didn’t help matters.

One can argue improved weather only limits a potential last minute acreage switch to beans but at this stage in the decision process most growers know what they will plant based on existing economics and normal rotations. If you are talking about planting issues 30 days from now that can change but if planters are getting busy in April this argument doesn’t hold much sway.

The dollar has broken out to a 3.5-month high with a strong base of trade to work with. If the chart can hold its rally tomorrow it will confirm upside Price Count objectives but that is not a given yet considering the near term overbought posture.  Interesting development to watch. The dollar strength may not be terribly bearish to physical soybean export trade considering the current discount of US to Brazil values particularly to EU destinations.

Minneapolis wheat futures were the story of the day across the wheat complex as for the second consecutive session the Spring wheat markets finished double digits lower. In fact, over the past three days Mpls July has lost more than $.30. That may have been behind the Spring wheat weakness of the past several days, but regardless, today’s trade seemed to weigh on Chicago. Condition reports after the close should be looked at as bearish towards Chicago and it could be an ugly day.

There was a little bit of something for everyone overnight. Weekend rains for the dry areas of the HRW wheat belt came about as advertised, that is from the forecasts of the later stages of the last week. If you recall, during the first part of last week the forecast was for one to two-inch rains over those dry areas, but as we moved towards the latter stages of last week, the forecast took out some of the precip. Southwest Kansas looked as if they saw the least amount maybe a tenth of an inch and that may have been behind the strength in the KC/Chicago spreads.

State by state wheat condition ratings were out this afternoon. Overall expectations were for conditions to improves slightly week over week. Winter wheat conditions came in unchanged from a week ago at 31% G&E and 37% P&VP. Spring wheat planting came in at 3% complete vs 3% last week as Minnesota, Montana and North Dakota have still yet to plant any wheat. Ohio conditions improved to 72% G&E and 3% P&VP vs last week’s 70% G&E and 4% P&VP. The data showed 16% of the crop jointed vs 5% last week, 37% last year and the long-term avg of 27%. Wheat headed is 0% vs 0% last week, 1% last year and the long-term avg of 0%.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday April 20th, 2018

May 17 corn closed down 5 ½ at $3.76 ½ and July 18 closed down 5 ½ at $3.85 ½. May soybeans closed down 8 ½ at $10.28 ¾ and July closed down 8 ¾ at $10.40 ¼. May wheat closed down 13 ½ at $4.63 ¼ and July 18 closed down 13 ½ at $4.77 ¼. Crude oil closed up $.10 at $68.18.

FOR THE WEEK ENDED 4-20-18

CORN – A very slow week on the board and grower sales this week.  Without a continual food stream for the bull, prices closed lower in four out of the five trading sessions.  Both old and new crop contracts traded to their lowest levels since April 4th.  While corn planting was only 3% complete as of April 15th versus the 5% average, US planting weather is forecasted to improve during the last full week of the month.  The average planting progress for April 22nd is 13% complete.  A University of Illinois study found, with good conditions, the US farmer can plant the corn crop in about 14 days when conditions warrant.  The study used Illinois, Indiana, and Iowa data as a baseline for total US planting progress.  Since 1986, the average date US corn planting reaches 50% complete is May 6th.  The biggest one-week corn planting progress was note in the week ended May 19, 2013 with 43% of the crop planted.

A surprise this week came from China announcing a temporary anti-dumping deposit requirement on US sorghum imports of 178.6%, effective April 18th.  This essentially cuts off the US as a sorghum supplier to China.  This is a result of their anti-dumping investigation.  The US supplies over 95% of China’s sorghum imports.  Last year, we shipped 80% of sorghum exports to China, but we didn’t sell any to them from 2010 to 2013.  For the boats already headed to China, there were reports of some changing destinations to Southeast Asia or the Philippines, and Spain.  The March Prospective Planting report indicated US sorghum acres would increase by 306,000 acres this year.  We planted 5.6 million sorghum acres in 2017.  Will this push those acres to something else?  The sorghum that was going to be exported will need to find a home, likely at the expense of corn.

Weekly export sales neutral at 43 million bushels for old crop and 4.4 million bushels for new crop.  Old crop total commitments are only 2% behind last year.  The USDA is expecting a 3% decline in year on year exports.   New crop commitments aren’t that far behind last year at 80.2 million bushels versus 91.5 million bushels last year by this date.  We need to average 13.9 million bushels of sales per week to hit the USDA’s 2.225-billion-bushel export target.   Weekly ethanol production dropped 25,000 bpd to 1.009 million barrels, its lowest since early January.

OUTLOOK: US weather and planting concerns are fading on better forecasts through the end of the month.  The popular school of thought on this summer’s Corn Belt weather is “favorable.”  La Nina is fading and neutral conditions are forming. The only area of concern in South America is the southern third of Brazil’s safrinha crop, where it has been dry.  Demand for US corn has been good, but without new sales announcements this week, it became a non-factor.  We are competitive on the world scene for corn, but are no longer the cheapest source.  For the week, May corn fell 9 ¾ cents to $3.76 ½, July was down 9 cents at $3.85 ½, and December tumbled 8 ¼ cents to $4.02 ½ per bushel.  While there may be more downside in corn, losses should be limited on demand and planting weather. The next WASDE report will be released May 10th.

SOYBEANS – Funds were unable to find a reason to buy this week and prices slipped lower as a result.  A blizzard over the northern Midwest over the weekend put planting on the back burner.  Any delay in corn planting will be perceived as pushing more acres to soybeans.  As in corn, soybean prices closed lower four out of the last five trading days and to their lowest levels since April 6th.  China was a huge buyer of South American soybeans, while ignoring US origins.  In the end, we may end up trading customers with Brazil, but those smaller customers were content to wait to add to purchases.  There were no export sales announcements from the USDA in their morning reports this week.  While the forecasts for the Midwest look better for planting, there is still chatter that soybean acres will be higher than the 89 million acre estimate on the March 29th USDA report.

On the possible trade war front, a Purdue University study estimates US soybean exports to China could fall 65% if China goes ahead with their 25% import tariff.  US soybean sales to China could fall as much as 37% over the next five years.  Despite increased subsidies for soybeans, China’s ag ministry is predicting their soybean production would be up 2% to 15.2 mmt this year and their corn production up 1% at 218 mmt.

Weekly export sales were at the high end of expectations at 38.2 million bushels for old crop and 40 million bushels for new crop.  Old crop commitments are 3% behind last year, which is now better than the 5% decline in year/year exports the USDA is anticipating.  The bright spot is new crop sales, which total 162 million bushels versus 98.6 million bushels last year at this date. New crop sales were the highest of the marketing year.  We only need to average 5.2 million bushels of sales per week to attain the USDA’s export projection of 2.065 billion bushels.  NOPA’s March soybean crush was a record 171.9 million bushels!  Based on recent crush numbers, we could expect a small increase on the May balance sheet.  Soyoil stocks were slightly below the pre-report estimate at 1.954 billion pounds. Argentina’s Ag Ministry cut their soybean production number to 37.6 mmt.  The USDA is carrying Argentine production at 40 mmt, but most traders have already factored in a 38-40 mmt crop.  Safras & Mercado pushed Brazil’s soybean production estimate to a record 119.2 mmt.

OUTLOOK: Talk of additional acres going to soybeans has increased, but the lack of new export business was the major driver to the downside throughout the week.  Trade war talk continues to loom in the background as a negative factor.  We were unable to muster any lasting strength from the record NOPA crush.  Until we know more about China’s tariff intentions, or other end users turn buyers again, beans will have a difficult time establishing a bullish story.  For the week, May soybeans plunged 25 ½ cents lower to $10.28 ¾, July fell 24 ¾ to $10.40 ¼, and November was 14 ½ cents lower at $10.35 per bushel.  May soymeal was down $8.70 to $374.10 per ton and May soyoil was down 18 ticks at $.3130 per pound.  China’s threat of soybean tariffs, fund length, and a possible increase in soybean acres could keep soybeans on the defensive. The new daily trading limit for soybeans, effective May 1st, will be $.75 per bushel.  This is a $.10 increase.  The daily limit for corn will remain at $.25 per bushel.  For SRW and HRW, the limit will increase a nickel to $.35 per bushel.

Wheat

Crop conditions did improve by 1% to 31% good/excellent this week.  However, this is the lowest rating for this point in the season in over 20 years. Because of the poor conditions, the wheat market has been reacting to each and every change in the weather. Poor ratings and no rain rallied wheat early in the week but late week rains and more events in the forecast caused wheat to fall off to close the week.  Despite a $.30 run up in the past two weeks due to bad spring condition ratings, the rains have prices right back to the $4.80 level.

Anna Kaverman

anna@mercerlandmark.com

A link to CHS morning and afternoon commentary can always be found under the grain tab, comments section at mercerlandmark.com as well.

https://www.chshedging.com/newsstory.aspx?StoryID=16848

Any questions, please contact one of the grain originators.

Market Report

Tuesday April 17th, 2018

May 17 corn closed down 2 ¼ at $3.80 ¼ and July 18 closed down 1 ¾ at $3.89 ¼. May soybeans closed up 4 at $10.46 and July closed up 4 at $10.57 ¼. May wheat closed up 4 at $4.66 ¼ and July 18 closed up 2 ½ at $4.81 ½. Crude oil closed up $.31 at $66.51.

Corn extended its losing streak to three and five out of the last six sessions. Futures tried to bounce back a little overnight, but failed to carry into the day amid a chronic lack of news. Fund traders pared back their net length again today, and will head into tonight net long an estimated 170,000 futures and options.

Those not occupied with their taxes saw a little back and forth between China and the U.S. China announced they were requiring a large deposit on all imports of U.S. sorghum. Given tariffs have been “built in” to the sorghum export scenario for most of 2018, the impact was not substantial on our futures markets, but sent Chinese feed ingredient markets soaring. At least today, the markets appeared to be comfortable with ideas of improved weather over the next couple of weeks stimulating some U.S. planting progress.  Northern parts will still need plenty of time to “thaw out”, but some of the southern reaches of the Belt could be itching to get into the field next week. Farmers will certainly have some catch up work to do, and the markets will want to see every bit of those 88 million acres get planted. To date, Brazil safrinha growing weather has been pretty good, but there appears to be a growing concern over the dry spot in the south. An area stretching from Mato Grosso do Sul through Sao Paulo, Parana, and neighboring areas have been drier biased since the beginning of April. The next two weeks may stay that way, implying the need for some rain into May to help pollination along.

The Soybean action was two sided today giving up small overnight gains following an absence of fresh export confirmations for a third day but firming back to close higher with support coming from meal. Fear that the larger than expected duties that were announced on sorghum overnight would ultimately flow through to the proposed soybean tariffs and this firmed the local Chinese meal market. Trade uncertainty continues to factor into our price action and that is also reflected in the low trade volumes. Weather is a key input going forward where a drier outlook for the corn belt evolves starting next week and temps warm up for the second week which will be more conducive to field work, planting progress and mindsets for the corn belt.  The more positive weather outlook factored into the weakness in corn and the strength in beans today.  The bean to corn ratio widened out to 2.57%.

For much of the session, wheat slowly gave back its gains made during the opening. Trade would not stay lower for very long, however. Prices rebounded during the final hour of the session and the markets would settle a little better across the board. The higher trade was sparked by the condition reports Monday afternoon that showed conditions across almost every important HRW wheat state deteriorating. Most northern white wheat states along with many of the SRW states saw conditions improve slightly. KC traded as much as seven cents higher overnight, but the rally may have been tempered some by the weather forecast that show rains expected into the dry areas of the HRW wheat belt Thursday through Sunday. The rains should help some of the crops in those areas, but the question going forward is how much.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Monday April 16th, 2018

May 17 corn closed down 3 ¾ at $3.82 ½ and July 18 closed down 3 ½ at $3.91. May soybeans closed down 12 ¼ at $10.42 and July closed down 11 ¾ at $10.53 ¼. May wheat closed down 10 ¼ at $4.62 ¼ and July 18 closed down 10 ¼ at $4.79. Crude oil closed down $1.13 at $66.20.

The corn market picked up right where we left off Friday, finishing lower. Markets were weak overnight and maintained a defensive tone throughout the day, no doubt heavily influenced by double-digit declines in wheat. Futures have now corrected a $.10 off the most recent April 9th high. Managed Money traders were viewed net sellers of 15,000 corn today, which would leave them net long 180,000 futures and options. Grain inspections remained a bullish highlight in an otherwise quiet day for corn news. For the week ended 4/12, U.S. exporters shipped 1.5 mmt of corn, which was down from last week’s dominant 1.94 mmt tally, but above the year ago week’s 1.34 mmt.  This takes total YTD corn shipments for 17/18 to 28.0 mmt (1.1 BB) vs. 35.9 mmt (1.4 BB) at this period in 16/17.

The USDA told us what we already knew after the close. There was very little corn planting progress achieved last week. National corn planting progress was pegged at just 3% complete, which compares to 6% average and 2% last week. Only three states, Texas, North Carolina, and Tennessee registered progress above 10%. This did not seem to excite the markets too much today, likely because better weather is in the forecast beginning this weekend. There is less precip in the mix Fri-Sun, and temps are expected to warm although stay slightly below normal. In South America, harvest disruptions could occur in Argentina given a rainier outlook. Brazil could use more rain in southern growing areas, and this could be a bigger deal as we get into pollination next month. Argentina’s first crop corn is over 25% harvested, Brazil first crop corn is closing in on 80% harvested, and second crop corn has been completely planted.

The Soybean market traded slightly better in the overnight but for a second consecutive session, in the absence of fresh export sales confirmations, we were unable to hold strength and reversed lower. Weather is far from ideal but the forecasts suggest an improving trend as we head into the second half of April. Price relationships do support additional bean acres but don’t fall for the almost annual ‘we won’t get corn in the ground’ hype. Weekly soybean inspections totaled 445 mt slightly above the 430 mt trade estimate. Total shipments to date stand at 42.350 mmt vs. 48.296 mmt this time last year representing a 218 mb deficit to last year’s pace. Keep in mind the recent export activity will increase shipments over the coming months and help to narrow that gap some. In the breakdown, China was the destination for only 33 tmt. Elsewhere in the news, Argentina’s national food health and quality service is looking at regulatory requirements including genetics and sanitary protocals to help open up imports of US soybeans.

The wheat complex started the evening around a nickel lower and trade never really looked back. The funds did not seem to have any intentions on waiting to see what the condition reports this afternoon were going to say. They seemed to have just looked at the rains forecast into the dry areas of the HRW wheat belt later this week and looked at the gap lower start and said it was a time to alleviate some of its long position. Condition reports this afternoon had almost every important HRW wheat state falling. Almost all of the northern white wheat states along with most SRW states saw conditions improve slightly. It will be an important day for the wheat complex Tuesday. State by state wheat condition ratings were out this afternoon. Expectations were for conditions to be mainly unchanged from the week prior and they were. Winter wheat conditions came in at 31% G&E and 37% P&VP vs last week’s data of 30% G&E and 35% P&VP. Every HRW wheat state saw conditions fall. Spring wheat planting came in at 3% complete vs 2% last week.

Anna Kaverman

anna@mercerlandmark.com

Market Report

Friday April 13th, 2018

May 17 corn closed down 2 ½ at $3.86 ¼ and July 18 closed down 2 ¾ at $3.94 ½. May soybeans closed down 6 ½ at $10.54 ¼ and July closed down 6 ¾ at $10.65. May wheat closed down 8 ½ at $4.72 ½ and July 18 closed down 9 at $4.89 ¼. Crude oil closed up $.38 at $67.33.

FOR THE WEEK ENDED 4-13-18

CORN – Another report week, this time the release of the monthly WASDE.  The day before the report, May corn matched the previous week’s high at $3.92 ½ per bushel.  The neutral report didn’t provide a lot of price direction, but prices faded the balance of the week.  Corn was caught between a rallying soybean market and weakening wheat markets.

Results of the March WASDE report included a 50 million bushel cut to feed/residual and a 5-million-bushel reduction in FSI.  Exports were unchanged at 2.225 billion bushels as was corn for ethanol at 5.575 billion bushels.  Ending stocks for 2017/208 rose 55 million bushels to 2.182 billion bushels.  The average trade estimate was 2.196 billion bushels.  World ending stocks fell 1.39 mmt to 197.78 mmt, the smallest since 2013/2014.   The average estimate was 197 mmt. Argentina’s corn crop was estimated at 33 mmt, down 3 mmt from last month.  Brazil’s crop was cut 2.5 mmt to 92 mmt.  The BAGE and the Rosario Grain Exchange are carrying Argentina’s corn crop at 32 mmt.  Argentina’s corn harvest was estimated at 31% complete versus 21% on average.  Conab is pegging Brazil’s corn crop at 88.6 mmt. Brazil’s first corn harvest was pegged at 66% complete versus 64% last year.  The US attaché in Brazil is forecasting their corn crop at 89 mmt, well below the USDA’s 92 mmt outlook.

Weekly export sales were below the pre-report estimates at just 33.1 million bushels for old crop and 2.2 million bushels for new crop.  The sales were above the 15.3 million needed per week to hit the USDA’s 2.225-billion-bushel target.  We are just 2% behind last year’s total commitments when the USDA is projecting a 3% year on year decline in exports.  Weekly ethanol production was down 4,000 bpd to 1.034 million bpd.  Stocks were 600,000 barrels lower at 21.8 million barrels.  Margins improved 4 cents per gallon to 12 cents per gallon.

It may be safe to say we won’t have an earlier than normal planting season this year, but it’s probably too early to say we’ll have a late planting season.  The average corn planting progress for April 15th is 15% complete.  The average planting progress is 25% by April 22nd.  As of April 8th, corn planting in the US was 2% complete, spot on with the average.

OUTLOOK: Uncertain planting weather and underlying good demand likely prevented further losses in the corn market this week.  For the week, May corn fell 2 ¼ cents to $3.86 ¼, July was down 2 ½ cents at $3.94 ½, and December dropped 1 ¾ cents to $4.10 ¾ per bushel.  US planting weather will attract more attention in the coming weeks.  If we continue to be delayed, prices should stay in the upper end of the recent trading ranges. The next WASDE report will be released May 10th.

SOYBEANS – Unlike corn, soybeans shot higher to begin the week.  Gains were cut going into the weekend on profit taking and a lack of fund buying.  Strength was derived from good demand for US soybeans, fading fears of a trade war with China, and a slightly bullish WASDE report.  We have now rebounded back to pre-tariff talk price levels.  The tariff threats pushed Brazilian soybean premiums higher and ultimately made them uncompetitive.  Enter US beans as the cheapest in the world.  Argentina bought 240 tmt of new crop 2018/2019 US soybeans during the week, the first such sale since 2008/2009.  There was reportedly interest even from Brazil.  However, as the concerns eased, so did Brazilian values.

The March WASDE report showed few changes: crush was increased 10 million bushels to 1.97 billion bushels, seed and residual were each reduced 3 million bushels.  Exports were left alone at 2.065 billion bushels.  Ending stocks were up 5 million bushels to 550 million bushels.  The average trade estimate was for a 20-million-bushel increase to 575 million bushels. World ending stocks decreased 3.6 mmt to 90.8 mmt.  The average trade estimate was 90.8 mmt. Argentina’s soybean crop estimate was slashed 7 mmt to 40 mmt and Brazil’s was pumped up 2 mmt to 115 mmt.  The average trade estimates were 42.1 mmt and 115.6 mmt, respectively.

China imported 5.66 mmt of soybeans in March, up slightly from 5.42 mmt imported in February.  In the first quarter of 2018, China has imported 19.57 mmt of soybeans, up just 0.2% from the previous year.  In the first six months of the marketing year, China has imported 43.6 mmt of soybeans.  The USDA is anticipating them to import 97 mmt this year.  For them to reach that target, their monthly imports will need to be at record levels from here on out.

Weekly export sales were record large for this week at 55.5 million bushels for old crop and an impressive 35.1 million bushels for new crop.  The new crop sales were the largest for the year so far.  Old crop total commitments are only 4% behind last year when the USDA is expecting a 5% decline in year on year exports.  We need weekly sales of 6.8 million bushels to achieve the USDA’s 2.065-billion-bushel forecast.  New crop commitments are 122 million bushels versus 98 million bushels on the books last year at this point.

OUTLOOK:  Support from Argentina’s purchases of US soybeans this week helped propel prices higher.  Good demand in general was also supportive.  If we see exports begin to fade, it will weigh on prices, so continue to monitor demand. Nearby soybeans hit new highs for the recent rally this week, before pulling back slightly into the weekend.  For the week, May soybeans rallied 20 ½ cents to $10.54 ¼, July was up 20 ¼ cents at $10.65, and November gained 16 ¼ cents at $10.49 ½ per bushel.  May meal fell $3.50 to $382.80 per ton and May soyoil was down a fraction at $.3148 per pound.  Weather and demand will be the drivers next week.

Winter wheat crop conditions declined again. In the second full rating of the spring, the good+excellent category fell from 32% to 30%. This is the lowest the rating has been for this week since 1996. The wheat market is more concerned with the forecast for rains then the damage inflicted from dry and cold temps. Upcoming rain events took the wheat market down by 20 cents from the highs set on Tuesday. Only one change for the US wheat balance sheet on the WASDE report and that was a cut of 30 million bushels to the feed/residual category. World stocks were 3 million tons above the average guess, adding to a very bearish world supply scenario.

Anna Kaverman

anna@mercerlandmark.com

By~Adam Farmer
Who among us has looked at the weather forecast over the past month and thought “yuck!”?
As we get later into this spring, it can be tempting to look at the calendar and get the itch to get seed into the ground, but the calendar should not be the only tool we use in determining the best time to plant.
The ideal soil temperature for planting corn is at around 50, and Soybeans 54 – below that and you risk injury and disease to the seed. On March 10th in the Van Wert area I measured soil temperature between 40 to 43 degrees, and on March 13th (after some beautiful 70+ degree weather) soil temperatures in the same fields were in the 46 to 48 degrees range. Temperatures are trending in the right direction – great right?
Let’s look at the weather forecast for the next week:

Focus on the temperatures – we may have a high of 77 today, but next Monday we are looking at a high of 40 after a weekend of rain – which is a recipe for cool, damp soil.
At Mercer Landmark – we keep an eye of both the weather and soil temperatures so that we can better advise you as to the best time to plant. Have a question about conditions in your area – contact your local Mercer Landmark Agronomist for advice from your local, trusted advisor!