** A firmer CBOT start could not be sustained amid an improved Central US weather forecast. The GFS/EU models both offered reduced rainfall and warming temperatures in the extended range which has sparked some modest selling this AM. The weakness in crude oil has also spurred macro selling as the bulls bank profits following long anticipated news that OPEC was going to maintain their existing production cuts for another 9 months.
Soybeans have been the downside price leader as domestic Chines meal demand slows which could worsen their already negative crush rates. July soy futures have fallen below last week’s low with the next downside price target being $9.30, the April lows. Spot CBOT soybeans have held above $9.20-9.30 support going back to March of 2016, and we do not expect this level to break prior to July – when more will be known on US seeding and yield potential.
July corn appears heading to fill an open chart gap at $3.605 while the wheat market has tried to stage a rally without much heart. Other than Central US weather, limited other fundamental news is available this AM.
ARC looks for a mostly lower close on Thursday as Midwest weather conditions improve. However, few traders will have their “heart” into selling the market with waterlogged fields in E IL, IN and MO and long holiday weekend ahead.
** CBOT floor brokers report that funds have sold 4,500 contracts of corn, and 3,200 contracts of soybeans, while buying 900 contracts of wheat. In soy products, funds are sellers of 1,900 contracts of oil and 3,000 soymeal.
** US weekly export sales for the week ending May 18th were; 20.0 Mil Bu of wheat (both crop years combined), 18.0 Mil Bu of corn, and 17.4 Mil Bu of soybeans. Soybean and wheat sales were both above trade expectations.
** For their respective crop years to date; the US has sold 1,044 Mil Bu of wheat, 2,097 Mil Bu of corn, and 2,125 Mil Bu of soybeans. The soybean and wheat sales are above the WASDE annual forecasts. The US expects to carry over some 80-85 Mil Bu of US old crop wheat sales into the 2017/18 crop year which is close to the average. This would boost 2017/18 US all wheat sales to 210-220 Mil Bu by the start of the crop year, slightly less than the 10 year average.
** ARC would note that US soybean sales are projecting a 2017/18 export pace of 2,075-2,085 Mil Bu – some 25-35 Mil Bu above the WASDE annual forecast. ARC maintains that softening US soy crush rates will be countered with rising US soybean export demand which will push US 2016/17 stocks to 423-430 Mil Bu.
** Saskatchewan Canada estimated their total row crop seeding advanced to 60% completed as of May 22nd, compared to 81% last year and a 5 year average of 64%. All crops were said to be behind on development with warmer temperatures needed. 90% of the soils had adequate to surplus soil moisture!
** Midday GFS Weather Update: The 12z forecast is farther north and slightly wetter than the overnight forecast with; MO, S IL and S IN back in the crosshairs for more heavy rain this weekend. The remainder of the Midwest will enjoy near to below normal rainfall with warming temperatures. A cool shot pushes southward early which holds a cooler than normal flow into next Wednesday. Near normal temps follow thereafter. The 11-15 day period offers a return of cool/wet weather with a new potent storm system for the Plains, Delta and Midwest. The overnight solution offered warmer/drier weather in the 11-15 day period, so there is great uncertainty beyond the end of next week.
** AgResource Market Comment: Range bound/choppy will likely to be the CBOT trend heading into the weekend. The midday forecast offers a cooler/wetter solution that what was offered overnight which has helped take the CBOT off its lows. ARC maintains that the odds of heat/dryness this summer is low and that our biggest worry is too much water for the Central US as the jet stream holds in a southerly position. Our advice is the same since late March – don’t sell breaks and don’t buy rallies in this range trade.
** 10 Day GFS Projected Rainfall:
