** It has been another mixed morning at the CBOT with corn mostly lower, while wheat and soy trade either side of unchanged. Summer row crop weakness is related to the improved weather projected for Central Midwest this weekend and early next week (sunshine/warmth/dryness) which should help some of the hardest hit wet/flooded areas of Central IL, IN and N MO firm soils to allow for planting on their best drained land.
Whether the window to plant is long enough to get large amounts of corn seeded or reseeded or substantially advance soybean seeding is being debated? The weather forecast beyond the middle of next week looks wet, but through Sunday ARC research argues that 64-68% of the US corn crop and as much as 26-29% of the soybeans will be planted. Both are only slightly behind their respective 5 year averages. It’s the replant of corn and soybeans in the wettest area that will have to be monitored and the amounts and locations of the rain late next week.
Corn and soybeans could sag a little more, but this is not a market to be selling breaks or buying rallies unless a threatening and real weather event is in the offing. Traders always have trouble with a wet weather market until the last half of May, when wet weather starts to have more bite to production.
** USDA/WASDE new crop demand estimates do not historically change very much from May into August unless there is big drop in the US crop due to drought. Thus, we can all debate the correctness of US corn, soybean and wheat export estimates for 2017/18, but WASDE tends to move slowly on making any adjustment until after the August Crop report (when NASS gets involved on US corn and soybean crops). Thus, it will not take much of a yield decline to reduce 2017/18 US major grain end stocks and add some spice to CBOT valuations.
** The recent cold weather across N and W Europe appears to have caused yield loss to the winter crops of wheat and canola. Like W Kansas, it will take weeks to assess the losses, but temps were well below freezing in much of Poland, Germany and portions of N Ukraine in recent days. The UK and France are still suffering from drought with the forecast offering additional dry weather beyond the weekend. EU winter grain crop sizes are in decline, the question mark is trying to gauge the freeze amount at this early date.
** Weekly US export sales for the week ending May 4th were a disappointing 9.1 Mil Bu of wheat (both crop years combined), 10.9 Mil Bu of old crop corn and 14.0 Mil Bu of old crop soybeans. US old crop wheat sales stand at 1,027 Mil Bu, with 2016/17 corn sales at 2,051 Mil Bu and bean sales at a record large 2,096 Mil Bu. End users did not want to chase rallies and add to coverage.
** CONAB estimated their 2017 corn crop at 92.5 MMTs and soybeans at 113 MMTs. The corn estimate was seen as too low, with soybeans in line with WASDE.
** CBOT traders estimate that funds have sold; 1,000 contracts of wheat, 6,000 contracts of corn, and 5,000 contracts of soybeans. In soy products, funds have sold 3,000 contracts of soymeal while being flat in soyoil.
** The midday GFS weather model has shifted the heaviest of the rains slightly farther north (from PM model) over the next 10 days to the E Plains HRW wheat areas. Heavy rains will also occur over the N Plains and NW Midwest. The E Midwest will be able to dry out, but it will take at least 6 days of warm/dry weather before soils firm enough to support large machinery. Thankfully, temps will be warming to near to above normal levels to help evaporation.
** AgResource Market Comment: Our advice is not much different that it has been since late March – Don’t sell breaks and don’t chase rallies! The location/amount of rain across the Central US will become more important in coming weeks. Wheat fungal diseases are exploding according to cash connected sources which could impact quality and yield. July corn should bottom between $3.61-3.66. Look to buy the break.
** 10 Day GFS Weather Model Rainfall Forecast:
