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Market Report

Monday April 2nd, 2018

May 17 corn closed down ½ at $3.87 ¼ and July 18 closed down ½ at $3.95 ¾. May soybeans closed down 9 ¼ at $10.35 ½ and July closed down 9 ¼ at $10.46 ¼. May wheat closed down 5 at $4.46 ¼ and July 18 closed up 5 ¾ at $4.63 ½. Crude oil closed down $1.88 at $62.99.

It was another “night and day” type trade in corn. Futures were off to the races Sunday night, extending report day gains another notch. Corn would ultimately finish fractionally lower up-front and steady/better in the back. Funds were viewed small sellers today; when taking into account the CFTC surprise from Friday, they will likely head into tonight net long 145,000 corn futures and options. It was all about the Thursday reports early. Other, less exciting factors came into play during the day, which tempered the market’s overall enthusiasm. One feature that played out in a number of related markets was the implementation of threatened Chinese retaliatory tariffs on a handful of ag-related goods. Of those that traded actively in futures, hogs finished limit down and ethanol traded to new recent lows. Cattle have also been caught in the undertow of late, but we did not see them on the initial list of tariff targets. This and technical regulation jitters also weighed on the stock market of the day. The Dow traded almost 800 points lower at one juncture, finishing down almost 600.

On the weather front, Brazil safrinha crop weather remains in good shape for development, though some net drying is expected to occur in the south over time and bears watching.  Rains in Argentina are mostly “too little too late”, particularly given the fact farmers there are believed nearly 20% harvested. The next issue will likely be the cool/wet outlook for much of the Midwest, which will raise the near-yearly specter of planting delays.  China early planting weather is expected to be favorable, while Europe and the CIS could use a warm/dry spell to get moving.

The soybean market was unable to sustain its overnight gains as the post-USDA report rally faltered with November beans closing $.20 off its highs. This should give us more of a two-sided market for the near term with market support coming from the USDA acreage estimate and strong crush demand while poor export demand, trade war fears and bloated stocks limit upside potential. Funds are estimated long around 150,000 beans and 120,000 meal. Soybean export inspections totaled 542 mt down from 710 mt a week ago and compares to 628 mt this week last year. Elsewhere in the news, Brazilian trade data showed March soybean exports at 8.81 mmt vs. 2.86 mmt in Feb and compares to 8.98 mmt in March 17, oil exports were 106 mt vs. 125 in Feb and 102 in March 17, meal exports were 1.32 mmt vs. 1.35 mmt in Feb and 1.16 in March 17.

The overnight strength in wheat was unable to carry into the day, and prices steadily fell through the morning. The weakness continued throughout the final hour and the entire wheat complex settled right off their lows. Minneapolis continues to struggle with the huge acreage number from Thursday’s report despite trade prior to the report already moving into new contract lows. Also, the one-month outlook maps do show some relief for Kansas, but not so much for Oklahoma or Texas. Those were the influences behind the rally across the wheat complex overnight. As expected, overall wheat conditions compared to last year are not very good, coming in at 32% G&E and 30% P&VP vs this time last year when they came in at 51% G&E and 14% P&VP. For HRW, Texas improved a little, but that Kansas number is what is going to garner the most attention. It was a mixed bag for SRW wheat conditions, but overall there was some deterioration. This, along with the 6 to 10 day and 8 to 14 day weather maps should be more than enough to give us a higher start to the evening.  Ohio conditions saw no change, coming in at 75% G&E and 3% P&VP versus back at the end of March when they were 75% G&E and 3% P&VP.

Anna Kaverman

anna@mercerlandmark.com

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