** A stronger Brazilian Real and the worry of fund managers that they may be too short ahead of the heart of the growing season has lifted CBOT corn, soy and wheat futures at midday. The volume of trade has been sizable with over 140,000 contracts of July corn and 75,000 contracts of July corn changing hands. The market has a bullish tone as traders argue that the worst may be over in terms of immediate headline event for the Presidents of the US and Brazil.
** Brazilian farmers have shut down new cash soybean and corn sales today as the Brazilian real has rallied 2.7% to 3.28:1. As many as 3 MMTs were sold yesterday as the Brazilian real plummeted 8%, but the sales pace is sharply lower and is not expected to rise again unless there is a new fall in the real that would push cash bids above their March highs.
** CBOT floor brokers report that funds have bought 3,600 contracts of wheat, 7,000 contracts of corn, and 4,300 contracts of soybeans. In soy products, funds have sold 2,300 contracts of soymeal and upwards 5,000 contracts of soyoil.
** US farmers have planted 83-86% of their corn and 55-57% of their soy crop for the week ending Sunday. ARC looks for another 1-2% decline in US winter wheat crop conditions to 50-51% in the GD/EX category.
** Plains wheat producers report that the overnight rains/wind flattened HRW in the central and eastern portions of KS. Weather has been far too wet (and cool), with disease pressures mounting. Stripe rust and common rust are noted in most KS/OK counties that is expected to worsen as the crop matures. The rain needs to stop across the Plains or crop quality will be compromised as wheat starts to turn color. Unfortunately, the forecast calls for additional cool/wet weather for the next 2 weeks. Clients need to pay close attention to Plains weather as the harvest tries to gain speed.
** Midwest producers report ragged looking corn with cool/wet and windy weather slowing growth and germination rates. Additional States will report their crop conditions on Monday and the comparisons to recent years will prove ugly. The start of the 2017 growing season is unlike recent years, and most agronomists doubt that the US can achieve better than trendline yields – even with good pollination weather. Improved weather conditions is demanded in June for the crop to grow out some of its small/ragged appearance.
** China heat/dryness is starting to grab some headlines with extreme heat endured in recent days. The forecast offers heat/dryness to persist into June. The wheat crop in China is in the heading stage while corn is being seeded.
** Midday GFS Weather Update: The forecast is slightly cooler/wetter for the W Midwest over the next 7 days with a warm up indicated in the last few days of next week. Any warmth across the E Midwest will be fleeting, but the forecast is also slightly drier. The 11-15 day period returns cool/wet weather to the Plains with moderate to heavy rainfall returning to the Midwest. The big difference in the midday GFS is that its warmer in the 7-10 day period than either the EU or overnight models were offering. Our confidence in this warmer Midwest profile is low, and confirmation will be needed by other model solutions. The map below offers GFS rainfall totals over the next 10 days.
** AgResource Market Comment: It’s a green day with the focus on the strength of Brazilian real and that the US dollar could strengthen with President Trump on his 1st international trip. The downside price risk in CBOT wheat/corn is limited to 10-20 cents with funds holding a heavy net short position. If there is a weather event that surfaces, the market risk is to the upside. China weather should be closely watched for continued heat/dryness with there being headline risk next week. Its been long time since China has been a grain weather factor.
** GFS Midday 10 Day Forecast:
