** It’s been a mostly green morning at the CBOT as funds turn buyers and corn fully reverses yesterday’s losses. The volume of trade has been active and the entire commodity spectrum appears to have a more bullish mindset this AM.
China’s change in bank lending regulation has sparked sharp drops in crude oil, industrial metals which seemed to impact the CBOT on Thursday.
ARC notes that the world economy outside of China is in a more rapid growth phase and there is no evidence of deflationary price trends developing. China needs to be closely watched for slowing demand, but it’s important to point out that globally, GDP rates in improving.
A higher CBOT close is expected as fund managers appear more willing to cover their large net short positions. US nor South American farmers are selling cash grain, and in Europe, wheat stocks are historically low and prices look to be at worst – stable. ARC research maintains a view of CBOT choppiness unless something dramatically changes in US or world weather.
** CBOT brokers estimate that funds have bought 8,000 contracts of corn, 3,000 contracts of soybeans, and 3,300 contracts of wheat. In soy products, funds have bought 4,100 contracts of soyoil and 700 contracts of soymeal.
** FAS reported the sale of 132,000 MTs of US soybeans for the 2016/17 crop year. The US is competitive with Brazil for July/August and world importers are taking note.
** The US International Trade Commission has voted (5-0) in favor of imposing anti- dumping duties on Argentina and Indonesia biodiesel. However, the ITC and US Commerce Dept does not need to announce or place duties right away. That can take several months, but amid the ITC investigation and potential for duties to be retroactive, US imports of Argentine and Indonesian biodiesel are already sharply curtailed. The tug on domestic US soyoil supply to meet the EPA mandate for biodiesel has already started. The loss of 2 MMTs of Argentine B100 biodiesel imports could produce another 4 Bil pounds of US soyoil demand (for domestic biodiesel) – nearly twice the available US 2016/17 end stocks. US soyoil prices will have to rise sharply to encourage vegoil imports from others to meet the EPA mandate.
** Producers in IL, MO, and IN report that this is one of the coldest and wettest springs so far since 1993 – and that crops are suffering. Its not only the excessive rain, but the extreme cold that has caused crop plants to whither and in some cases perish. Some seed has been sitting in cold/wet soils for weeks. Friday’s rally in corn is realizing that the 2017 US corn crop is off to an unfavorable start and the early June crop ratings could be well under recent years. Ground temps are too cool for corn to show much growth.
** Midday GFS Weather Update: The midday forecast is cool too cold for the next 10-14 days with any warmth to be isolated to the N Plains and the W Midwest. There remains a chance of a frost/freeze Sunday/Monday/Tuesday AM as lows look to reach the lower 30’s with a few upper 20’s are expected across N IN and N OH. The cold could catch 20-30% of the SRW wheat crop in the reproductive stage. The only good news on E Midwest weather is that the heavy rains look to have ended. The sheer cold is not the big crop need.
The W Midwest and Plains is dry with warming temperatures. 70’s, 80’s and even a few 90’s will be seen. The warmth is brief with cold temps to return by late next week. A storm system pulls across the southern half of the Midwest on late next week with rains of .25-1.00”. The rains further slow seeding.
** ARC Midday Market Comment; Fund managers are waking up the need for warm temps to speed crop growth. ARC pegs US corn seeding at 42-44% on Monday with US winter wheat conditions to decline. Canada stocks were smaller than expected in canola/wheat. ARC maintains that wheat has scored seasonal lows and that summer row crop prices will continue in broad range.
** Midday GFS 10 Day Rainfall Estimate:
