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Market Report

Monday March 12th, 2018

May 17 corn closed up ¼ at $3.90 ¾ and July 18 closed up ½ at $3.98 ½. May soybeans closed up 1 ¾ at $10.41 and July closed up 2 ¾ at $10.51. May wheat closed up 1 ½ at $4.90 ¾ and July 18 closed up 2 at $5.07 ½.  Crude oil closed down $.59 at $61.33.

The corn market opened under a little pressure Sunday night.  The market maintained a weaker tone for most of the day, but flipped to “fractionally-better” midday. The market was unable to extend the rally back much. Funds were viewed close to net even on the day. They were sellers early and buyers late perhaps to defend their position. They are net long an estimated 215,000 corn futures and options.

Export business remains the story in the US corn market. Under daily reporting Monday, the USDA said Japan bought 107,752 MT and “unknown” 254,800 MT. This joins other announced business last week, along with a private South Korean buying spree.  Another strong weekly sales report Thursday is almost assuredly in the works. The mid-day grain inspections report found the expected increase in US corn shipments. Year to date, corn shipments stand 20.3 mmt versus 28.9 mmt on the books this time last year.

As per usual on the Sunday night open, South American weather was the prime motivator. Though spotty weekend precip in Argentina did not do much good, it was the promise of much better rain a week plus away that prompted a weaker open. There is concern that this rain may once again fall just outside of the major growing areas, but time will tell as the forecast evolves. Either way, traders are not sure how much improvement a good soaker would have at this late juncture. It would likely do the most good for beans, who are still in a key development stage, but most of the corn in Argentina is likely “made” or “toast” at this point. Brazil’s outlook is much better. Important second crop corn planting in Brazil is believed to have caught up with normal, and the trade will be eager for reports on just how much got planted.

Soybeans shrugged off a weaker overnight trade to reverse higher as the market looks to stabilize its slide of $.50 off the recent contract highs. Uncertainty about Argentina’s final production persists which is a good reason for beans to trade cautiously here. The trade is generally plugging in a 42-44 mmt type of crop for Argentina and assuming we get the forecasted rains over the next couple weeks it should solidify those production ideas. With the help of Brazil’s record or near record crop and very healthy old crop supplies globally, there would be no reason for those highs to be seriously challenged.  Look for more of a two-sided trade to develop near term with an increasing focus on US acreage heading into the report at the end of the month. The GFS mid-day is promoting 1-3 inch rains for late this week on the dry eastern production areas of Argentina which will still be helpful for the later planted crops but probably too late for others.

Chinese trade retaliation remains a wild card but it would be surprising for China to cut off US soybean imports despite threats to ‘target’ them. China has already shifted much of their buying away from the US and to Brazil this year but this was easy because of the higher protein Brazilian crop which happened to be a record in size. China also imposed a 1% FM requirement on US supply but not South America which certainly counts as a first strike in the trade war in some estimation.  Their recent return to US imports in recent weeks however tells you their priority is keeping their population fed no matter what, even in the midst a trade dispute/negotiation.

The wheat complex ended the day a little better across the board. Overnight, trade started a few cents lower across the board. There was not a lot of fresh news over the weekend. Iraq passed on their tender. Algeria snap tendered, but they will most likely scoop up some French wheat. Taiwan will pick up some US on Tuesday, but that is basically it on the export front. Conditions this afternoon saw some improvement across the HRW wheat belt – not a lot, but the numbers were so bad at the end of Feb they could not have gotten much worse.

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, Texas improved the most with G&E moving up 3% to 13%. P&VP saw an 11% improvement, but over half the crop still falls into this category as it came in at 53%. Oklahoma wheat conditions improved slightly. G&E moved up 1% to 7% (but still 0 excellent). P&VP improved 6%, but it is still at an alarming 72%.

Anna Kaverman

anna@mercerlandmark.com

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