AgResource Daily Farm Marketing Advice for Wednesday: 1/ Corn Producers: Forward sell/hedge an estimated 30% of your estimated 2018 corn crop if Dec’18 corn futures reach $4.14.
6:30 AM CST CBOT Prices: July soybeans are up 3.25 cents at $9.795, July corn is up 1.0 cent at $3.6875 while July wheat is up 2.25 cents at $4.265.
Good Morning! CBOT values are a bit stronger this AM on further weakness in the US dollar, which posted a new 6-month low overnight, and as the US forecast continues to add moderate to heavy rainfall to the Southern Plains in late May/early June. So far, chart pattern –based support has held in spot corn & wheat futures; short covering continues in beans amid rising South American basis.
Brazilian soybean fob premiums are up slightly again today. Brazilian beans for Jul-Aug are offered at $.67-.69/Bu over CBOT futures, vs. Gulf basis of $.44-.50, and through the pace of Brazilian shipments is record large, a snapshot of the global market this morning suggests the US is competitive for new demand. This is in large part what’s behind China’s return to the US market this week. It’s tough to be overly bullish soybeans above $9.80, basis Nov, but enlarged demand does indicate that the trade must first know US yield potential before any bearish pattern resumes.
South American corn basis, however, remains weak and Argentine corn is the world’s cheapest feedgrain for Jun-Sep delivery. Taiwan overnight secured a cargo of Brazilian corn for late August delivery. Brazil will also begin auctioning financial instruments to aid corn farmers far away from ports (Mato Grosso) to encourage better farmer sales.
The early morning run of the GFS is little changed through the next 10 days, but has added yet more rainfall to TX, OK, KS and CO May 28-June 1. Should the model verify, cumulative rainfall across the Southern and Western Plains through the next 14 days will reach upwards of 4-5”, and this wet pattern will begin to slow early harvest and further affect quality, which already is a concern amid lingering cold.
Otherwise the forecast maintains warm/wet weather through the weekend, followed by drier but much cooler conditions across Midwest next week. Overnight low temps in the upper 40s & 50s will be widespread.
This morning’s EIA update should reveal another boost in weekly ethanol production, and perhaps more important will be whether US crude and gasoline inventories continue to erode. Recall last week’s data included a larger than expected draw in US crude stocks, which now rest just 3% above last year.
Spot crude is up $.20/barrel, with gasoline following. Malaysian palm oil rallied 33 ringgits/MT. Dalian corn and soymeal futures in China ended 14-35 yuan/MT higher. EU milling wheat is trading up €.50-.75/MT after trading near contract lows on Tuesday.
AgResource maintains a neutral outlook amid fund short positions, weather uncertainty, and now a modest shift in currency relationships. Should the dollar weaken further, rampant acreage expansion will be tempered in Brazil & the Black Sea, which in turn supports the USDA’s idea that global grain/soy stocks will be declining in 17/18.
