Blogging by the Bushel
With numerous challenges over the past several years for producers, we at Mercer Landmark understand the need for a comprehensive risk management solution. We seek to provide our customers with unparalleled service to ensure maximum results.

Market Report

Monday April 9th, 2018

May 17 corn closed up 2 ¼ at $3.90 ¾ and July 18 closed up 2 at $3.99. May soybeans closed up 13 ¼ at $10.47 and July closed up 12 ¾ at $10.57 ½. May wheat closed up 18 ½ at $4.90 ¾ and July 18 closed up 17 ½ at $5.06. Crude oil closed up $1.33 at $63.43.

Corn was nothing if not consistent today, maintaining modest gains throughout. Managed Money traders were viewed net buyers of 12,000 corn today, which would leave them net long 190,000 combined futures and options. The stand-out statistic in corn today was export loadings. The USDA inspections report found a whopping 1.937 MMT of corn were loaded for export in the week ending April 5th. This was the largest single week of corn export loadings seen in at least three years, possibly longer.  It compares to an upwardly adjusted 1.445 mmt last week and 1.212 mmt in the year ago week. This takes YTD corn shipments to 26.5 mmt versus 34.6 mmt on the books this time last year, as they play catch-up after a sluggish start to the 17/18 marketing year.

The first national crop progress report of the year was as unremarkable as expected, finding just 2% of the U.S. corn crop had been planted, which is in-line with average but slightly behind last year’s 3%. Texas carried the load at 58% complete, with North Carolina bringing up the rear at 13%. No other state topped 2% planted. The Midwest remains extremely chilly, though a temporary warm-up is expected into the weekend. 6-10 and 8-14 day maps are still below average for temp; the 6-10 day dried out, while the 8-14 day remained wet for most of the Midwest.  No doubt the markets remain somewhat concerned about a slow start to planting.  Another threat to one of the Plains wheat crop’s nine lives helped boost markets overnight.

Nothing new out of the latest “biofuel policy” meeting at the White House. The mantra “no news is good news” likely applies here, and looking at the ethanol market of the day. Tomorrow is “report day”, believe it or not. The April S&D is usually not a big market-mover. It will get some attention given potential bullish world changes, along with generally bearish quarterly stocks data which could impact domestic carryout projections.  On the world scene, AgRural projected that 60% of Brazil’s first crop corn is harvested, which was up 9% wk/wk. The more important second (safrinha) crop is in mostly good shape, though southern growing areas could get a little dry in the short run.  They left production estimates unchanged, raising first crop a touch and lowering second crop a like amount.

Soybeans gapped higher to follow through on Friday’s outside day higher as media-stoked fears of trade wars give way to the reality of increased trade.  US soybean basis at the Gulf continues to firm across the curve suggesting our newfound export interest remains in place. The USDA flashed an additional 233 mt of old crop beans sold to unknown. This takes the total over the past two sessions to 625 mt old crop and 196 mt new crop beans sold. The market sees cheap US beans relative to Brazil thanks to the trade dispute with China and this has led to value buying in the export market and providing welcomed demand where there wasn’t much just a week ago.  This doesn’t suggest we should welcome a trade war where the threatened tariffs are actually enacted but this is all part of a larger negotiation and for now at least, farmers are benefiting with stronger demand and prices for a commodity that the world needs to feed its populations even if the origin changes.

Weekly soybean inspections highlight the state of our export trade heading into the escalating trade dispute. Bean shipments fell short of modest expectations at just 374 mt compared to 579tmt last week and 858 mt this week a year ago. Year to date shipments stand at 41.893 mmt compared to 47.842 mmt this time last year. This represents a 219 MB deficit to last year’s export shipment pace. The USDA last estimated total exports trailing last year by 111 MB. This export deficit was due to a low protein US crop which is the downside of big yields and this sent China to Brazil for a greater share of purchases and who just happened to grow a then record 114 mmt crop last year.  Don’t forget that China also imposed a 1% FM requirement on US soybeans that did not apply to Brazil which can be construed as the opening shot in penalizing US beans.

It is only April the 9th so difficult to get overly concerned about planting conditions but there is a sense of growing anxiety with forecasts suggesting cold/wet conditions will keep many farmers out of the field for a while longer. If planting delays persist, it would benefit beans with additional acres at the expense of corn – but it is only April the 9th so cool your jets.

Buoyed by a strong start the night the wheat complex was able to extend its rally today. The Spring wheat market still finished the strongest, but Chicago was right behind. It was the third consecutive double digit higher close in Minneapolis and seventh consecutive higher close in Kansas City. Weather played a big role in today’s price action. The extreme cold temps across much of the HRW wheat belt came to fruition over the weekend, with readings in the upper teens as far south as the Texas panhandle. Keep in mind, in last Monday’s crop condition report, wheat progress was said to be 46% in the jointing stage in Oklahoma (with some of that wheat said to be already starting to head out) and was 11% headed in Texas. It might be too soon for the USDA to access the damage from this past weekend into the condition reports this afternoon, and therefore it may be difficult for the USDA to show deteriorating conditions across the HRW belt week over week as they were already in very poor shape. Another market mover tomorrow will be the monthly USDA supply/demand crop report. It is not a very big Crop Report for wheat, but it potentially can be for corn and soy. Analysts are forecasting 2017/18 US wheat ending stocks at 1.035 BB vs the 1.034 BB in the March report. Global 2017/18 wheat ending stocks are seen by analysts to be around 268.2 MMT vs the March report figure of 268.89 MMT.

Anna Kaverman

Leave a Reply

Your email address will not be published. Required fields are marked *


* Copy this password:

* Type or paste password here:

39,157 Spam Comments Blocked so far by Spam Free Wordpress

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>