** Low volume and little changed is the CBOT this AM. Corn, soybeans and wheat have all traded either side of unchanged with traders unable to decipher a trend. Most in the industry are waiting for June weather to better delineate where prices are heading?
Crops look rough in the E Midwest as they struggle with too much rain and cool temps. Conditions are far better in the W Midwest, and N Plains and Delta.
Tuesday’s US corn condition ratings will be below the past few years, but such ratings have little correlation to the final yeild. Thus, it’s the June weather trend that will be key.
Internationally, Black Sea, Canadian and European weather forecasts are alright with a mixture of too much rain and too little in some regions. Like the US, crops will be made in June and the 1st half of July. Today, conditions look ok, but one has to keep a close eye on the forecasts.
AgResource has been constantly telling clients not to sell breaks or buy rallies. Outside of the $1.00/Bu late February to March break in soybeans (record large Brazilian crop), it’s not been an easy time to trade. The cool/wet spring has likely taken the top end off US corn/soybean yields – and the downside potential at harvest.
** CBOT floor brokers report that funds have bought 2,500 contracts of corn, 1,200 contracts of soybeans and 800 contracts of wheat. In soy products, funds are flat in soyoil while being buyers of 1,500 contracts of soymeal.
** US weekly export sales for the week ending May 18th are estimated in a range of; 425-500,000 MTs of wheat (old and new crop years), 600-700,000 MTs of corn, and 400-500,000 MTs of old crop soybeans. Soy product sales are estimated in a range of 130-170,000 MTs of soymeal and 5-15,000 MTs of soyoil. China continues to take a few extra cargoes of US soybeans.
** Chinese soymeal prices and soy crush margins have fallen apart in the past few weeks as domestic demand has slowed. There are rumors that several Chinese crushers have taken downtime for plant maintenance a tad early on the demand drop. It’s uncertain that this will have any impact on annual Chinese soy import demand? The low meal values and poor crush margins would have to last more than a few weeks to be structural to the marketplace.
** US weekly ethanol production was 1,010,000 barrels/day vs 1,027,000 last week. This produced 297 Mil gallons vs 301.9 Mil gallons. US weekly ethanol stocks declined to 953 Mil gallons vs 983 Mil gallons last year. This is up 8% and a record for the date. US ethanol production margins have declined to just $.34/Bu, the lowest in 11 months. US weekly crude oil inventories were 516.3 Mil barrels vs 516.3 Mil barrels last week. US gasoline stocks are roughly the same as last year at 239.9 Mil barrels
** Midday GFS Weather Update: The forecast is similar to the overnight run in that the W Midwest and Plains will enjoy a drier weather profile for the next 10 days. The rainfall intensity is increased across the E Midwest and Delta were totals of 1-2.00” will fall. Any warmth across the E Midwest will be fleeting. A new round of cool air drops southward into the Central US early next week with a new chance of rain across the E Lake States.
The 11-15 day period offers a return of cool/wet weather with a new potent storm system for the Plains, Delta and Midwest.Our confidnce is stronger in the 11-15 day forecast than the 6-10 day where differences exist.
** AgResource Market Comment: Range bound/choppy will likely to be the CBOT trend heading into the weekend. The forecast offers continued wet and cool weather across the E Midwest and variable but drier weather across the Plains and the W Midwest. WASDE is not expected to alter their 2017/18 wheat, corn and soybean exports anytime soon (the current estimates are too high), which leaves the marketplace to flounder with prices pinned against their lowest levels in June in 6 years. The passion for new trades is low.
