** More questions than answers……How does NASS measure yield in the snow covered fields of W KS? How many corn acres will need to be replanted due to cold/wet weather? Can “OK” wheat production in E Kansas help offset some of the acute losses of the west? And how does one balance expanding seeding progress in the N Plains and W Midwest against the near historical flooding across MO, the southern half of IL, and IN?
Traders are asking for quantified loss estimates in terms of what recent cold/wet weather means for US grain production. However, no one will be able to respond for a few additional weeks with any confidence. Everyone can (and often can) guess at the impact of 2 weeks of adverse weather, but like other cold/wet springs, clarity on the impact on production does not occur until weeks later. All we know today is that yield and seeded acres has been lost and that this is not the kind of spring that producers wanted.
Amid the more questions than answers, prices at the CBOT will continue to gyrate without a trend unless the Central US weather forecast turns more adverse and new supply concerns arise.
Our advice to clients is to not chase rallies or breaks. We doubt that seasonal highs have been set which are not expected until mid to late May.
** CBOT brokers report that funds have been net buyers of 4,300 contracts of corn, 2,800 contracts of wheat and 3,400 contracts of soybeans. Funds have bought 4,500 contracts of soymeal and are flat in soyoil. The opening of the day session traded 3,600K of meal which has so far set the range for the day
** Informa estimated 2017 US all wheat produciton at 1,923 Mil Bu, down 387 Mil Bu from last year, but well above trade expectations. Informa used a yield of 48.4 BPA on harvested acres of 39.75 Mil acres. This would be a harvest percentage of 86% compared to 87% last year. Of course, Informa did not account for the weekend losses of HRW wheat which will likely cause abandoment rates of HRW to soar with lower yields. The CBOT sold off on the Informa estimate and have since recovered a large share of the losses.
** Informa also adjusted upwards their estimate of the Brazilian corn crop to 96 MMTs and their soybean crop to 113 MMTs. The corn increase was 1 MMTs while soybean production was raised 2 MMTs. Argentina’s soybean crop was lowered 800,000 MTs to 56.8 MMTs while corn was reduced 200,000 MTs to 38 MMTs.
** Informa also estimated the 2017 Russian wheat crop at 70 MMTs while Ukraine wheat production was lowered 1 MMTs to 25 MMTs.
** The Kansas Crop Tour has moved west and finding disappointing yield results. But, the Tour is having trouble defining the degree of frost damage.
** Heavy rains are falling across MO and IL which is exacerbating flooding woes. The midday GFS is little changed from the overnight run. An additional 1-3.00” of rain will drop from MO into OH with locally heavier amounts. Cold temps will pour southward following the storm system with upper 20’s and lower 30’s expected as far south as the S OH Valley including much of IN and E IL this weekend. This will produce a frost risk for SRW wheat that is reproducing or in the late boot stage. Planting progress is possible across the N Plains and the NW Midwest where mostly dry weather will prevail. Cool to cold temps will prevail east of the Miss River while above normal warmth will reside across the western US including the Plains and the NW Midwest. Plains highs could reach near 90 degrees which is not wanted by HRW that is trying to recover from the weekend freeze. Crop conditions will decline sharply on Monday.
** ARC Midday Market Comment; More unknowns that knows is causing fund traders to reduce their net short position heading into the May WASDE report. CBOT Rallies nor breaks will be expected to have any follow thru until the damage can be better assessed.
**10 Day GFS Rainfall Estimate and Low Temps Sunday AM: