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Market Report

Tuesday April 3rd, 2018

May 17 corn closed up 1 ¼ at $3.88 ½ and July 18 closed up 1 ½ at $3.97 ¼. May soybeans closed up 2 ½ at $10.38 and July closed up 3 at $10.49 ¼. May wheat closed up 11 ¼ at $4.57 ½ and July 18 closed up 10 ½ at $4.74. Crude oil closed up $.47 at $63.46.

In many respects, Tuesday’s price action in corn played out like a condensed version of Sunday-Monday. Mid-day, the markets were quite firm, similar to the Sunday night spike and much like Monday, these gains struggled to hang in there. Managed Money traders were viewed net buyers of 5,000 corn today. They will head into tonight long just over 150,000 contracts. The first national condition report (for wheat) proved to be the main catalyst for price action today. Corn data remains limited, available only on a state-by-state basis. TX 55% planted (42% avg), LA 84% planted (69% avg), MS 50% planted (34% avg), and Arkansas 24% planted (22% avg). The main Midwest states remain in neutral. Both the US Midwest and the FSU could use some warmer and dryer weather to get started on spring planting, which should offer some support to the market. China planting weather has been better, but it will be interesting to see how many corn acres they lose, as the gov’t subsidizes bean plantings more aggressively to limit corn supplies and wear away at their old and moldy national corn stocks.

The soybean market bounced back from yesterday’s reversal but struggled into the closing bell. Soybeans appear to be establishing more of a two-sided market for the near term with market support coming from the small USDA acreage estimate and strong crush demand while poor export demand, trade war fears and bloated stocks limit upside potential. The products also struggled to hold strength but did a better job than beans did. Elsewhere in the news, Informa raised their Brazil soy production estimate by 2 mmt to a new record 116 mmt while they lowered their Argentine crop by 5 mmt to 39 mmt. They lowered Chinese soy production by 500 tmt to 15 mmt on reduced acreage. USDA crop report and WASDE on the 10th. Trade estimates will be streaming out but look for stronger crush demand to possibly be offset by another reduction in exports while increases in Brazil’s soy production only partially offset Argentine losses.  New crop acreage will not addressed in this report.

The first weekly condition report and continued dry conditions in the heart of the hard wheat production were the catalyst to the price action. It looked as if trade was going to make a run at that gap left from March 19, but over the latter half of the day the entire grain complex started to give up their gains. The HRW wheat contract would finish the day off highs, but still managed to post $.17 gains. Chicago wheat prices were able to muster gains at one point, but like much of the grain floor weakened a bit over the latter half of the session. Prices still finished higher, a big accomplishment considering the SRW wheat market does not have a story. Many in the trade are thinking back to a sub 600 MB hard wheat crop requiring rationing while soft wheat stocks are already bigger than domestic consumption and wondering where the export trade went.

Anna Kaverman

anna@mercerlandmark.com

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