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Market Report

Monday May 7th, 2018

July corn closed down 5 ½ at $4.00 ¾ and December closed down 4 ½ at $4.16 ½. July soybeans closed down 25 ¼ at $10.11 ½ and November closed down 19 ¼ at $10.18. July wheat closed down 14 ¾ at $5.11 ½ and September closed down 13 at $5.28 ¾. Crude oil closed up $1.04 at $70.62.

The corn market struggled for a second day on ideas of strong northern planting progress and a potentially favorable turn in South American weather. Futures opened lower Sunday night and maintained weakness throughout the day. Fund traders were viewed net sellers of 15,000 corn today, which would pare their net length in the market back to roughly 210,000 combined futures and options.

USDA Crop Progress data after the close found the expected corn planting rate. U.S. farmers were viewed 39% planted on corn, which was close to 45% planted last year and 44% in the five year average. Emergence moved up to 8% from 14% average.  Planting likely continued to advance in much of the Midwest during the weekend into today before another round of storms blow through early-mid week. 6-10 & 8-14 day maps continue to hint at very good planting conditions mid-month for those who do not hustle in front of the current system?  There are reasons to be friendly on corn, but this sure doesn’t seem to be one of them!

Weekend weather maps brought a potential change in South American weather into clearer focus. The outlook now suggests more rain for Brazil’s safrinha crop and less rain disruptions for Argentina’s harvest. Topsoil moisture has been largely depleted in Brazil, so rain in coming weeks will be extremely important, particularly heading into pollination.  Interestingly, Agrural early Monday downgraded their outlook of Brazil second crop corn, reducing it 4.5% from April estimates to 57.2 mmt. This would take the full year crop to 83.9 mmt versus the latest USDA projection above 90 mmt. There is a very good chance the USDA may be forced to address this in Thursday’s WASDE report. Corn export inspections returned to form today. According to the USDA, exporters shipped 1.92 MMT of corn for the week ended.  This compares to 1.48 mmt last week and just 0.86 mmt shipped out the prior year week. This takes total corn shipments to date to 33.2 mmt versus 39.4 mmt this time last year.

Soybean prices took a bearish turn Friday and doubled down on it Monday, shedding another 2.2% on slim exports with bleak prospects from China a real threat moving forward until the current U.S.-China trade spat is resolved. Analysts estimate 13% of the soybean crop has been planted as of May 6, versus 5% a week ago and 14% a year ago. Soybean export inspections reached 19.6 million bushels, which by some accounts could be seen as relatively positive – moderately higher than this week a year ago (13.6 million bushels) and on the high end of the average trade guess between 13 million and 23 million bushels. It did not meet the weekly rate needed to reach USDA forecasts, however. Germany was the No. 1 destination for U.S. soybean export inspections, with 3.1 million bushels. Brazilian advisory AgRural estimates the country’s 2017/18 soybean production is up fractionally (around 0.17%) from April to May, for a total of 4.380 billion bushels.

There was not a lot going on for the wheat complex heading into the day today, and price action reacted accordingly. Trade struggled throughout the session. First and fore-most the tenders and business that closed over the weekend showed us that the US is nowhere close to being competitive to the rest of the World. Combine that with a US Dollar that continues to gradually firm, Russian weather that is said to be better than what is being reported. With a condition report this afternoon that was expected to show maybe an uptick in conditions and a spring wheat planting number of somewhere north of 30%, it makes it difficult for trade to muster any type of rally. It is very easy to look at all the negatives around the marketplace and join in, but be careful. We have already seen a 25+ cent break over the past two sessions, and the recent trend has been to avoid buying strength and/or selling weakness. We do have a crop report Thursday morning, and conditions this afternoon were pretty much in line with expectations.

Anna Kaverman

anna@mercerlandmark.com

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