Blogging by the Bushel
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Market Report

Monday March 5th, 2018

May 17 corn closed up 2 at $3.87 ¼ and July 18 closed up 2 at $3.94 ½. May soybeans closed up 6 ½ at $10.77 ½ and July closed up 6 ½ at $10.85 ¾. May wheat closed up 9 ¼ at $5.09 ¼ and July 18 closed up 8 ¾ at $5.23 ¼. Crude oil closed up $1.30 at $62.39.

The corn market stayed true to recent trends, starting the week out with two cent gains. Futures spent most of the day near unchanged, but found some late buying to perk things up a little.  Managed Money traders continued to add to length, picking up another 10,000 corn today, which would leave them net long over 160,000 tonight. The familiar Sunday night theme of “continued Argentine crop deterioration” helped all the markets to a firm open.  There was some rain around this weekend, but it was likely too erratic and light to do a lot of good for long-suffering Argy. Additional hot/dry is likely in more areas than not, which will keep the pressure on yields. Ahead of Thursday’s report, analysts forecast Argentine corn production at 36.3 mmt, which compares to the Feb USDA report at 39 mmt.  Most are also expecting “some” reduction from the USDA’s “optimistic” 95 mmt Brazil crop projection from Feb. Conditions and crop potentials are much less dire in Brazil, though it remains to be seen if Mother Nature prevented farmers from getting all the intended second crop in the ground.  The U.S. will buckle down for 2-3 days of storms. Elsewhere, ethanol was “quietly firm” to start the week, managing to keep up with the corn rally for the first time in a couple weeks.

The soybean market shrugged off a mixed overnight trade to establish a new high close for both old and new crop beans. Weather and production uncertainty in Argentina continue to underpin the market with crops slipping and no sign of relief in the near term outlooks. The trade has an eye on Thursday’s USDA crop report where the average estimate on Brazil corn is 91.8 mmt vs. 95.0 mmt last, Brazil beans 114.0 vs. 112.0 last, Argy corn 36.3 vs. 39.0 last, Argy beans 48.1 vs. 54.0 last.  World ending stocks are estimated at 198.9 mmt for corn vs. 203.1 in Feb and 229.8 in 2017, beans 95.5 vs. 98.1 in Feb and 96.1 in 2017. Weekly soybean export inspections totaled 990 mt which was bigger than the 800 mt trade estimate. Of this total just 291 mt or 29% was destined for China which is a marketing year low (they had generally been in the 70-85% range most of the year but seasonally declining the past 60 days).

Trade actually started the day on the defensive a little, with futures giving back their overnight gains and briefly trading a little lower, but the market responded with a $.07 rally that took futures up near their overnight highs. The rest of the day saw higher price action, with KC taking over the leadership role during the midday rally. The HRW wheat contract would reach almost $.13 higher late in the day before weakening a bit into the close and settling a penny off its highs. The SRW wheat contract briefly traded double digits higher late in the session before also weakening a bit into the close and settling a penny off its highs. Mpls continues to not be an interested participant in rally or sell-off days. Mpls continues to distance itself from the other two markets, ending the night slightly lower. Weather will continue to be the big driving force for US wheat. The drought area in hard wheat country has trade starting to downgrade US HRW wheat production to at the max 600 mil bu vs 750 last year and 1080 the year prior to that. Some have it as low as 550 mil bu. Ending stocks are certainly going to be drawn down by 100 mil bu or more.

A couple state by state wheat condition ratings came out this afternoon. Most states begin their weekly condition reports in April. Of the three states reporting this week, Texas improved the most with G&E moving up 6% to 10%. P&VP saw a 9% decline, but it is still at an unimpressive 64%. Kansas wheat conditions fell slightly from last week. It was unchanged in G&E at 13%, but P&VP moved up 1% to 50%. Oklahoma wheat conditions improved slightly (could not get much worse). G&E moved up 2% to 6% (but still 0 excellent). P&VP improved 1%, but it is still at an alarming 78%.

Anna Kaverman

anna@mercerlandmark.com

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