** CBOT grain and soy values are weaker in continued slow volume. Monday’s buyers are Tuesday’s sellers as market choppiness prevails. The AM bearishness is tied to the ability of US farmers to seed around frequent heavy rains and keep up with the 5 year average planting dates. The ’17 seeding progress has been surprisingly good, one has to wonder how fast US farmers could seed a crop with a normal spring weather? Agronomists and commercial elevator contacts both argue that a considerable amount of corn will need to be replanted, but that data will not be caught within any NASS weekly state report.
It will be June weather that determines the next lasting trend at the CBOT. Continued cool/wet or extreme hot/dry weather conditions are not wanted. Normal rainfall and near to above normal temps would be just right. Until the trade can make a bet on the June Central US weather pattern it’s up one day and down the next. This persists into the
** CBOT floor brokers report that funds have sold 5,500 contracts of corn, 2,200 contracts of soybeans and 1,800 contracts of wheat. In soy products, funds have sold 2,300 contracts of soyoil while being flat in soymeal.
** The CBOT confirmed that KC wheat has moved to a variable storage rate and amending the contract’s delivery instrument from a warehouse receipt to a shipping certificate. The amendment has long been expected and is not a surprise. However, trader’s wonder if funds will now sit in large net short position in KC wheat to take advantage of the storage rate – just like they have done in Chicago wheat futures? Funds know that selling the premium in back end of wheat futures is almost like an annuity – regardless of the market outlook the funds want to be short of wheat to collect the premium – which is starting to cause some farmers wonder if the VSR is not having a bearish distortion on flat price.
** The USDA reported the sale of 165,000 MTs of US soybeans to an unknown destination for the 2016/17 crop year. US soybeans remain competitive vs Brazilian offers by late summer. Argentine farmers have been active sellers of soybeans on Monday, but one has to wonder why Argentine farmers will sell large amounts of supply going forward with the forward Peso rate showing weakness and tax rates expected to drop 1% starting in 2018.
** Canadian farmers are expected to score solid planting progress in the next week as fields dry and temperatures warm up in the western provinces heading into the weekend. In fact, some areas like N Dakota and the far southern Canadian Prairies are expressing worry over continued dryness and drought. The overall outlook for Canadian crops is improving.
** Midday GFS Weather Update: The forecast is warmer/drier over the Plains and the W Midwest on Friday and the weekend. The rainfall intensity is increased across the E Midwest and Delta were totals of 1.5-4.00” will fall in the next 10 days. Any warmth across the E Midwest will be fleeting. A new round of cool air drops southward into the Central US early next week.
The 11-15 day period is drier across the Plains with cool temps returning. Our confidence in the drier 11-15 day forecsat is low with other models offering a potent storm system and additonal below normal temps. The map below offers the 10 day GFS rainfall outlook for North America.
** AgResource Market Comment: Range bound and choppy is likely to be the CBOT trend heading into the weekend.The wheat market is correcting its recent gains while corn/soy are trying to better understand the June weather pattern. Corn rejected the top end of its recent range with W Midwest farmer selling noted. ARC doubts that corn, soy or wheat can sustain a break with a recovery to start from midday Wednesday. Next week’s trade will be totally focused on Central US weather into mid June.
