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Market Report

Thursday April 12th, 2018

May 17 corn closed up 1 ¾ at $3.88 ¾ and July 18 closed up 1 ½ at $3.97 ¼. May soybeans closed up 13 at $10.60 ¾ and July closed up 13 at $10.71 ¾. May wheat closed down 6 ¼ at $4.81 and July 18 closed down 6 at $4.98 ¼. Crude oil closed up $.21 at $66.95.

The corn market continued its recent “bob and weave” trade, ultimately finishing a couple cents higher on the day. Overall interest was relatively light, though the final day of the Goldman Roll did plump up the volume numbers a little. Managed Money were viewed net buyers of about 5,000 corn today, which would leave them net long 160,000 combined futures and options. Export sales were slightly disappointing for a second week, though the market did not seem to care. Net new sales of 839,900 MT were very close to the prior week, but down 46% from recent weekly averages. Destinations were Japan, Vietnam, Mexico, Egypt and Saudis. Total sold and shipped now for 17/18 stands 48.2 mmt vs. 49.2 mmt in the year ago week (and USDA estimates of 56.5 mmt).

News wires were humming with Trump’s comments about year-round E-15, which in our interpretation likely refers to his administration finally revisiting the issue of an RVP waiver.  This would allow E-15 to be sold year-round and nationwide without condition. Exxon and Chevron, apparently, are the latest refiners to apply for “hardship waivers”, exempting their smallest refineries from the RFS program. At any rate, an RVP waiver merely opens the E-15 door another inch. Retailers still need to adopt it and deploy the appropriate infrastructure to dispense it.

The Soybean market extended its gains to a new 5-week high in the May contract and established a new contract high close for the November new crop. The weekly export sales report was the driver today as the USDA confirmed 2.464 mmt in combined bean sales which was well above the trade estimates. There were no daily sales announced today but the market is anticipating more sales are coming due to the recent surge in Brazilian export values making us very attractive to world buyers. How long this export interest lasts will be up to China and the US negotiators. For now, at least, this renewed trade has taken some of the downside risk away from the soybean market as the hefty 550 mb US carryout now has an outlet for better export trade.  Fund and spec length is growing.

The wheat complex has tried to fend off negative data the past couple of days, but overnight price action looked as if trade had thrown in the towel. Trade did try to bounce back once we moved into the day session, but around an hour into the day the markets started to unravel. It looked as if Chicago was going to fill in its downside gap, but as prices traded to within a couple cents of filling that gap, trade stabilized. There was nothing friendly in Tuesday morning’s crop report, and now the 6 to 10-day weather maps are showing rains for much of the HRW wheat belt. When you combine that with condition reports Monday afternoon that showed Kansas with a 3% uptick in its ratings (even though they are still the worst on record for this time of year), and a weaker Russian Ruble that hit a 15 year low Wednesday (a weaker Ruble only helps Russian wheat prices become more competitive to the rest of the World. The drought monitor this week showed no change in the areas most affected by the lack of rains across the HRW wheat belt, but that had little effect on price action today as there were just too many negative vibes around the marketplace. Yesterday, trade was able to rebound from a poor start to the day. Did not expect to see a repeat performance of that price action today.

Anna Kaverman

Anna@mercerlandmark.com

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