All Members: Mid-day

Markets Rally on World Weather Issues

Apr 5, 12:05 pm | Mid-day Commentary

CBOT markets are higher at midday, driven by a more favorable macro landscape (crude is up $.30, the DOW up 300), and ongoing weather concerns in both hemispheres. There’s a better understanding by the trade that proposed tariffs from both the US & China won’t be implemented for some time. The GFS overnight trended cooler, and the midday so far maintains a lack of needed warmth across the N Plains & bulk of the Midwest. And some 95% of the Upper Midwest is blanketed by several inches of snow, which is unusual on this date. Soil temps in IA, MN & the Dakotas rest in the 20s & low 30s; a year ago soil temps there were in the 40s & 50s.  

This week’s US Drought Monitor also showed a slight expansion in exceptional drought conditions across OK & CO, and still little to no rain is offered to the Western Plains into April 20th. HRW yield concern has been well documented, but ARC reminds clients that producers in TX, KS, OK and CO intend to plant just over 9 Mil Acres (11% of total) of corn there in 2018, as well as 5.6 Mil Acres soybeans.

Old & new crop US wheat export sales were disappointing at just 4 and 7 Mil Bu, respectively. Sales of other ag production were in line with to above trade guesses, and world soy complex demand does appear to be shifting to the US and away from South America.

Corn sales through the week ending last Thursday totaled 35 Mil, down from the prior week but still some 15 Mil above the pace needed to meet the USDA’s target. Total corn export commitments stand at 1,865 Mil, or a near record 84% of the USDA’s forecast. A 50-75 Mil Bu hike in US corn exports is nearly certain. Bean sales through the week totaled 42 Mil Bu, a record for this particular week (sales in late March typically range from 5-20 Mil). Total US bean commitments are now much better in line with the USDA’s forecast, and so perhaps no downward revision will occur in next Tuesday’s WASDE? Meal sales were a 9-week high 414,000 MTs, and meal commitments also rest a near record high 81% of the USDA’s forecast – with half the crop year remaining.

World wheat prices continue to move upwards, albeit slowly. An ongoing rail workers’ strike in France has pushed fob offers in France & Germany to new seasonal highs at $210-220/MT, still well below Gulf HRW offers but fundamental support is being raised to $4.80-4.90, basis July KC.

S America’s forecast remains much drier than normal across the southern half of Brazil’s safrinha corn belt through late Apr. It’s not too concerning at present, but whether the wet season has ended there needs close watching.

There’s still a few weeks before the bulk of Brazil’s 2nd corn crop begins pollinating, and a boost in soil moisture is needed in Mato Grosso do Sul & Parana, which typically produce some 45% of Brazil’s total safrinha crop. 

Midday GFS Weather Model Update: The midday GFS is little changed from the morning run. A few brief periods of warmer temps will occur across the Midwest beyond the next 6-7 days, but a needed lasting period of seasonal temps is not included into April 20th. Several more rounds of lite/moderate snow are offered to the Dakotas, MN, WI and IA over the next 10 days. Moderate rain is also forecast every few days in areas east of the MS River into late month.  

midday 4-5

AgResource Market Comment: Attention has shifted from global trade issues to less than ideal weather in the US & Brazil – and more rain is needed in Argentina and Australia over the next 30 days ahead of wheat planting. A choppy marketplace will persist, and we maintain sales should only be made on strong rallies.

CBOT Stabilizes As Traders Understand Actual US Tariffs On China Won’t Become Active Until Late May

Apr 4, 12:06 pm | Mid-day Commentary

** CBOT corn and soybean futures have traded sharply lower in opening trade with fund liquidation being featured. However, end user scale down buying has been noted in wheat, soymeal and corn on the AM break. The volume of CBOT has been huge as everyone hopes that US/China negotiations can avoid a trade war.

 ** President Trump tweeted this AM that the US can’t lose with a Chinese trade deficit of $500 Bil dollars! US/China negotiations on trade have already started. ARC notes that the Chinese proposed tariffs won’t be put into place until the US implements/activates the $50 Bil of proposed trade tariffs. For those tariffs to be implemented is a process. The US Gov’t 30 day public comment period will end on May 4th, with USTR holding a public hearing May 15th with the US Treasury deadline for China investment restrictions being May 21st. Final comments are due to the USTR on May 22nd, with the Trump Administration likely to wait 1-3 weeks before actually announcing an activation of the tariffs. Thus, it’s US tariffs against Chinese goods can’t become active until the closing days of May or June.

The understanding and hope that Chinese tariffs won’t become active until early summer has provided some calm to US ag futures market. And the hog market is rallying as traders understand that US pork processor and exporter – Smithfield Foods – won’t be impacted as its owned by a Chinese company. China is nationalistic and they won’t tax their own operations.

 ** ARC would also note that Kong Hong does not appear to be involved in the US or Chinese retaliatory tariffs. US beef exports are mostly to Hong Kong in recent months, with US beef trade to the mainland as minimal at around 10 Mil pounds. There is speculative selling in cattle futures this AM, but we see little tonnage impact from the Chinese tariffs. 

  ** Brazilian soybean basis has soared and is currently trading at $1.25-1.30/Bu over, which compares to the US Gulf at 76 cents over. The 70 cent premium for Brazilian soybeans to the US Gulf is pushing non-Chinese soybean demand back to the US. However, it’s also possible that China could secure US soybeans off the PNW for quick shipment to China that would arrive in early to mid-May. The odds are low that these beans would be hit with tariffs. Now announced, the US has 6 months to actually enact its proposed tariffs.

 ** The US International Trade Commission has locked into place anti-dumping duties of Argentine and Malaysian biodiesel into the US. Total duties of up to 159% on Argentine and 341% on Indonesian biodiesel makes it almost certain that the imports of these biofuels will not occur.

** US weekly ethanol production was confirmed by the EIA at 1,038 thou barrels/ day vs 1,039 last week. US ethanol stocks fell to 942 Mil gallons, down 5% from last year on improved blender demand. The data was supportive to corn.   

 ** Midday GFS Weather Model Update: The forecast is little changed with additional cold and occasionally wet weather for crop areas east of the Mississippi River. The rain will be focused on the Delta. Warmer temps try to work northward from the S Plains around April 12-15th. However, the Midwest stays cool to cold with additional snows across the Dakotas.

** Central US Cold and Wet for At Least Another 10-15 Days:

1-15 day South American

15 day US rainfall

 ** AgResource Market Comment: Funds are paring their net CBOT long positions to reduce risk as the US/China trade war builds. However, the actual implementation of US tariffs won’t happen until late May and June, which means that US and Northern Hemisphere weather will become more important with time. WASDE can’t and won’t include any of this trade saber rattling in their April report. WASDE can’t incorporate US/China trade rhetoric until there is statistical proof that its impacting US exports. Our bet is that the overnight CBOT lows are seasonal lows, and that prices whip in a wide range as the market shifts back and forth from politics to weather.

 

KC Wheat Leads Rally Following Crop Rating

Apr 3, 11:54 am | Mid-day Commentary

KC wheat has been the upside CBOT leader with double digit gains tied to historically low crop ratings and ongoing forecasts of dry S Plains weather. Corn and soybeans have followed with volume in retreat at midday.

Funds have returned to the buy side of the CBOT with trade worries lessened this AM as the Trump Administration is calling for an early settlement of NAFTA. Most ARC sources have no knowledge of how NAFTA can be completed in just 2 weeks and why the rumored location of the talks would be in Peru?

There is still a lot of ground to cover on NAFTA and although hope is high that a deal can be cut, the political antics of involving the US President in negotiations could prove risky.

ARC continues to be concerned about the US’s more protectionist trade policy and the retaliatory impact on US agriculture. China has yet to announce retaliatory measures for the proposed $50 Bil of US trade tariffs (tied to China’s theft of US intellectual property). ARC notes that China has a history of making US retaliatory trade announcements on the weekend. The US is expected to release its Chinese product tariff list on the weekend.

CBOT brokers report that funds have brought 4,000 contracts of corn, 6,000 contracts of soybeans, and 4,000 contracts of wheat. In KC wheat, funds have added to a record long position by 4,000 contracts. ARC notes that KC wheat has blown above its 50 and 200 day moving average which triggered the strong fund buying. Also, funds have bought 3,400 contracts of soyoil and 2,200 contracts of meal. May soyoil has pushed above its 50 day moving average.

The South American midday forecast offers soaking rains to portions of the Argentine ag areas that have been besieged by drought for months. Rains of .5-2.50” are offered over the next 10 days, which is likely the start to a return of a wetter pattern going forward. The rain comes too late to help summer row crops, but it would help re-moisten soils ahead of winter wheat seeding.

There is much discussion on delays in Midwest corn seeding due to cold/wet weather. However, it’s too early to make any broad calls on either a reduction of US corn yield or planted area. Such a call for either can’t be made until early May. ARC would remind clients that US farmers have been able to plant as much as 40% of the US corn crop in a single week. One should closely watch Central US weather, but it’s far too early to discuss a cut in 2018 US corn production on weather.

Black Sea wheat traders are wondering what is up in Chicago as their prices seasonally slide. The US Plains drought is back in focus and the AM rally is more about fund demand as key technical resistance has been exceeded.

Midday GFS Weather Model Update: The forecast is little changed from the overnight run with cold fronts passing through the Central US with regularity producing moderate rains for the Delta and the Tennessee Valley, and below normal temperatures. The midday GFS is slightly farther north with rain when compared to the EU model, and cooler in the 11-15 day period. There could be a few days of warmer temperatures during mid April, but the overall trend one of below normal temps with a NW upper air flow. Any spring seeding effort will be delayed due to the chill and frequent rains east of the Miss River. It’s too early for any undue concern for US corn and soybean seeding, but the trend of cold temps and dry west and wet east (Central US) is worrisome.

 midday 4-3

AgResource Market Comment: It’s a wheat day with futures sharply higher on chart buying. Trade concerns will cap CBOT rallies later in the week while Central US weather supports breaks. Our view is to look to buy the break in soymeal, corn and KC wheat. There is no meaningful rainfall offered to the Western Plains wheat over the next 2 weeks.

CBOT Pulls Back On US Trade Worries for Agriculture

Apr 2, 12:15 pm | Mid-day Commentary

** Trade fears have weighed on the AM CBOT rally with fund buying subsiding and prices weakening from their strong overnight gains. Corn values are trading near unchanged with soybeans/wheat lower as hedge related selling and profit taking emerged. The volume of trade has been huge with more than 140,000 contracts of May corn, more than 75,000 contracts of May soybeans, and more than 50,000 contracts of May Chi wheat changing hands. The tone of the CBOT is bullish, but there is pause in price action as traders try to better understand the US NAFTA/China trade stance in the new quarter? As ARC stated in our AM wire, we continue to expect a two-sided trade with few willing to push their bearish or bullish CBOT stance too far.

 ** US weekly export inspections for the week ending March 29th were; 53.1 Mil Bu of corn, 19.9 Mil Bu of soybeans, and 13.3 Mil Bu of wheat. The wheat and soybean export estimates were below trade expectations.   For their respective crop years to date, the US has shipped out 957 Mil Bu of corn or down 349 Mil Bu (26%) & 730 Mil Bu of wheat (down 72 Mil Bu or 9%) . US 2017/18 soybean exports rest at 1,524 Mil Bu, down 198 Mil Bu or 11%. US wheat/soybean exports continue to slide, but US corn demand remains stout.

 ** There remains great uncertainty regarding NAFTA and China trade policy? President Trump tied NAFTA to US/Mexico immigration is a new twist on the holiday weekend with the US working on the list that will impose $50 Bil of tariffs against Chinese goods (April 6th). Most commercials expect that China will retaliate with new tariffs of their own that would include US grain and soybeans. Note that China already taxes US soybean imports at 13%, but the question is how much could the tax rise to help China make its point with the Trump Administration? The surprise is that China is trying to call for new trade talks which is being ignored by the US? The market understands that US ag trade issues are starting to “boil”. Political decisions in the next 2-6 weeks will be an important consideration for CBOT prices.

 ** The 1St US official wheat crop condition ratings will be out this afternoon. The trade is looking for just 33-37% of the US wheat crop to be rated GD/EX vs 59% last year. ARC notes that a year ago, 28% of the US oat crop, 13% of the sorghum, and 3% of the cotton crop was planted. Plains wheat conditions should be historically low amid the ongoing drought and limited rain since November.

 ** Better rain chances exist across Argentina over the next 10 days with totals of .4-1.50”. The rain comes too late to do much good for corn/soybeans, but they could help winter wheat that will be seeded in late April/May.

** Midday GFS Weather Model Update: The forecast is little changed from the overnight run with cold fronts passing through the Central US with regularity producing moderate rains for the Delta and the Tennessee Valley, and below normal temperatures. The midday GFS is slightly farther north with rain when compared to the EU model, and cooler in the 11-15 day period. There could be a few days of warmer temperatures during mid April, but the overall trend one of below normal temps with a NW upper air flow. Any spring seeding effort will be delayed due to the chill and frequent rains east of the Miss River. It’s too early for any undue concern for US corn and soybean seeding, but the trend of cold temps and dry west and wet east (Central US) is worrisome.

** 10 Day GFS Rainfall Forecast: Too Much Rain for E Midwest: 

 1-15 day South American

** AgResource Market Comment: It’s a sort of a “ying and yang” outlook for CBOT values depending on your outlook for spring Central US weather and US trade tariffs? Trade concerns are capping CBOT rallies while Central US weather and the NASS Seeding Report is supporting breaks. Our view is to look to buy the break in soymeal, corn and KC wheat. There is no meaningful rainfall offered for HRW wheat over the next 2 weeks. Our stance is to buy breaks.

CBOT Soars on Bullish Corn/Soy Acreage Estimates; Stocks to Weight on Basis

Mar 29, 12:36 pm | Mid-day Commentary

** The NASS USDA March Stocks & Seeding report is considered bullish based on the Seeding Intentions survey results. US corn and soybean stocks were larger than expected, but the acreage declines trump the larger than expected March corn/soy stocks. In the case of wheat, US stocks were smaller, but US spring wheat seedings were larger. The US wheat market is a laggard.  The volume of trade post the report has been huge as corn, soybeans & wheat rally sharply.

 ** US corn seeded acres was forecast by NASS at 88.0 Mil acres, down 1.3 Mil acres from trade expectations and down 2.2 Mil acres from last year. Using a trend yield of 174 BPA and abandonment of 8.3% would produce US corn production total of 14.041 Bil Bu, down 560 Mil Bu from last year. Note that its now key that the Mid South and Plains see improved weather to boost spring seedings and elevate US corn production.

 ** The decline in US 2018 soybean seeding was down across the Plains and W Midwest with a decline here of 1.035 Mil acres. North Dakota held steady on soy seeding at 7.1 Mil acres. The increase occurred in IN where soy seedings grew 150,000 acres to 6.1 Mil acres. Amid the ongoing drought in the W Plains and snows across the Dakotas, there is the risk of a shift of more corn acres to soybeans. The NASS forecast would forecast a 18 US soy crop of 4,275 Mil Bu

 ** US spring wheat acres were forecast at 12.6 Mil acres, up just over 1.1 Mil acres in the Dakotas and 440,000 acres in Minnesota. The other spring acres forecast was up 1.5 Mil acres from last year and right at trade expectations. The US looks to produce a 2018 all wheat crop of 1,870 Mil Bu, up 130 Mil Bu from last year (assuming trendline all wheat yield of 47 BPA).  

 ** Total US principle crops intended to be planted in ’18 were 318 Mil acres, down 1.2 Mil acres from last year. The drop is likely related to declining margins and adverse weather conditions. Moreover, US farmers are less enthused about their future following years of revenue shortfalls. 

 ** US March 1st corn stocks were up 2% above trade expectations at 8,888 Mil Bu. The stocks were record large and were at the high end of trade expectations. The average trade estimate was 8,713 Mil Bu, so the NASS stocks total was up 175 Mil Bu. WASDE could shave off 100-125 Mil Bu from its current US 2017/18 stocks estimate of 5,550 Mil Bu. This would push up US corn old crop stocks to 2,274-2,300 Mil Bu with no change in US corn exports.

** US March 1st soybean stocks were a record large 2,107 Mil Bu. The total was up 65 Mil Bu from the average of analysts, and up 368 Mil Bu from last year. The stocks total argues for a residual total of -69 Mil Bu on the quarterly balance sheet, which compares to -53 Mil Bu last year. The residual points to NASS maybe underestimating last year’s US soybean production. The abundance of old crop US soybean stocks are likely to keep pressure on US cash basis bids.

 ** US March 1st wheat stocks were 1,494 Mil Bu, which was just 8 Mil Bu above the average trade forecast. Such stocks are down 165 Mil Bu from last year. The calculated Dec-February US wheat feeding rate is forecast at -25 Mil Bu vs -22 Mil Bu in the same quarter last year. US wheat stocks are still large, but the trend of lower US wheat stocks totals is supportive. US HRW wheat stocks will be the biggest question in 2018/19 amid the smaller new crop potential.

 ** AgResource sees the CBOT grain and soy markets caught between an abundance of old crop corn and soybean stocks, but falling new crop production potential amid a big shortfall in Argentine corn and soybean production. ARC maintains that it will take adverse Central US weather to spur a lasting recovery above the recent highs $3.95 May corn and $10.85 May soybeans).

  However, the downside price risk is limited by adverse Central US weather and the strong likelihood that WASDE will further drop Argentine soybean and corn production. WASDE is likely too low with its 2018/19 US corn and soybean export forecasts. Our view is that spot corn will hold support at $3.60-3.70, spot soybeans $10-10.20 and spot CBOT wheat at $4.40-4.50. 

** GFS 15 Day Rainfall Forecast into April 14th: 

 

North American Precip

Funds Trim CBOT Length Awaiting USDA Report and End of Quarter on Thursday

Mar 28, 12:15 pm | Mid-day Commentary

** CBOT futures have been weaker this AM as corn, soybeans and wheat sag on fund positioning ahead of tomorrow’s USDA Stocks and Seeding report. Many in the trade (including AgResource) see the grain fundamentals as bullish, but the charts have rolled over as funds are reducing their net long position ahead of the end of the month and quarter. It’s the fund liquidation that has ruled in the CBOT marketplace in recent trading sessions.

 ** The CBOT going forward is really a battle of the charts vs the fundamentals with the USDA March Stocks & Seeding report deciding on where the CBOT will close the month? All futures markets are closed on Friday for the Easter/Good Friday Holiday. ARC notes that on the recent CBOT decline that farmers in South America and the US has slammed shut their bin doors.   Cash basis levels are rising amid the CBOT decline. Plain and simple, this break in the CBOT is about funds reducing their net bullish market exposure ahead of the report/end of month. When the fund liquidation subsides, the CBOT will recover. This is no place to turn bearish in our research view.

** CBOT brokers report that funds have sold; 4,300 contracts of corn, 2,100 contracts of wheat, and 3,200 contracts of soybeans. In soy products, funds have sold 3,100 contracts of soymeal while buying 2,900 contracts of soymeal. There has been active meal/oil spread unwinding this AM.

 ** There were no new FAS daily sales reports this AM.

 ** The EIA weekly ethanol report showed that the US produced 1,039 thou barrels of ethanol per day vs 1,049 thou barrels last week. US ethanol stocks fell 2% to 957 Mil gallons. US crude oil stocks were 430 Mil barrels, up 2 Mil barrels from last week, but down a hefty 19% from last year. The ethanol report was deemed as positive corn as blender margins rest at their best levels in 2.5 years. ARC note that US ethanol into Brazil remains extremely profitable with demand ongoing.

 ** US export sales for the week ending Mar 22 are estimated in a range of; 250-350,000 MTs of wheat, 900,000-1.2 MMTs of corn, and 750,000-1.0 MMTs of beans. US meal sales are estimated in a range of 220-280,000 MTs.     

 ** The midday Argentine weather forecast has reduced rain chances over the next 10 days. The midday forecast is more in line with prior day runs in offering a dry/warm pattern. Any rain that falls after mid-April will be of no help to summer crops. However, soil moisture is needed for new wheat seeding.

South American precip

** Midday Central US Weather Update: Limited precipitation will be offered across the HRW Belt over the next 10-14 days. The best rains will be across E OK and TX. Several strong storm systems impact the Midwest/Delta with heavy rain totals (upwards of 5-7”) with the first system already across the area. A second storm system is noted for the last half of next week. Temps will be winter like across the Central US into April 10th. Lows near or below freezing will prevent any early fieldwork/seeding.

  The Midwest farmer is going to be slow to plant any spring seed into mid-April. And Delta farmers are likely to start switching some of their intended corn ground to cotton/soy amid ongoing cold/wet weather. There is no indication of needed warm/dry Delta weather pattern looking forward into mid-April.   

** Central US Rainfall Forecast into April 8th:

 North American Precip

** Midday Market Comment: The funds have been cutting their market length since early last week. That net long position reduction has pressured CBOT futures. Cash basis bids have strengthened in the US and South America on the CBOT decline. CBOT futures are now down to key support at; $3.66-3.72 May corn, $10-10.20 May soybeans and $4.40-4.50 May Chi wheat. This is no place to turn bearish with a new Northern Hemisphere growing season ahead.

 

CBOT Mixed in Thin Volume Ahead of USDA Thursday

Mar 27, 12:31 pm | Mid-day Commentary

** Low volume and mixed has been the AM CBOT trade as corn, soybean and wheat futures trade either side of unchanged. The market is waiting for the USDA March Crop Reports on Thursday AM, and traders are adjusting their positions accordingly. Market breaks nor rallies can carry through as neither the bulls or bears want to push their stance too hard. ARC looks for a mixed CBOT close with everyone waiting for the data. If there is a market bias heading into the report, it’s to position long corn and short the soy complex.

 ** It’s the NASS March Seeding Report that will likely provide all of the fireworks, with traders well aware that US soybean stocks will be record large with only a modest decline in US grain stocks. Traders are assuming that US farmers will raise their total 2018 US crop seeded area, which is doubtful looking back at prior years and the NASS acreage intention’s dataset that is used. Our bet is that total 2018 US acres will fall short of trade expectations and that combined US corn/soybean acres will be lower than ‘17.  US spring wheat, cotton, sorghum and other minor crop acres should expand.

** CBOT brokers report that funds have bought a net; 2,100 contracts of corn, 1,100 contracts of wheat, while being flat in soybeans. In soy products, funds have bought 700 contracts of soymeal while selling 300 contracts of soyoil.  

 ** There were no new FAS daily sales reports this AM.

 ** As of March 1st, Russian grain stocks totaled 38 MMTs, an increase of 6 MMTs from the same date last year. Russian wheat stocks were up 25% vs a year ago at 13.6 MMTs. Amid strong export demand, the Russian grain pile is falling which implies a growing need for another large harvest in 2018. Other than a late spring, the outlook appears favorable for Russian crops/yields amid reduced winterkill for the 3rd year in a row.

 ** Crude oil prices have surged to their best levels since 2017 with values reaching above $66/barrel. The market is coming close to long held ARC upside price targets of $68-70.00. ARC advises clients to come away from bullish energy ideas as the cold winter across the Eastern US comes to a seasonal end.  

 ** Limited rains are offered for Argentine crop areas for the next week. A few showers are possible across La Pampa, but otherwise the outlook is dry with near to above normal temperatures. The chances of rain are being pushed back into April 4-6th which comes too late to really offer much help for crops. The USDA is likely to cut their crop estimate dramatically in the April WASDE.

** Midday Central US Weather Update: The midday GFS offers just a few lite showers across the HRW Belt over the next 10-14 days. The best rains will be across E OK and the TX Panhandle. A strong storm system impacts the Midwest/Delta with heavy rainfall totals (upwards of 5-7”). A second storm system is noted for early next week. Temps stay at/below normal across much of the Corn Belt with winter type temps to persist into April 10th.

  The Midwest farmer is going to be slow to plant any spring seed into mid-April. And Delta farmers are likely to start switching some of their intended corn ground to cotton/soy amid ongoing cold/wet weather. There is no indication of needed warm/dry Delta weather pattern looking forward into mid-April.   

 North American Precip

** Midday Market Comment: It’s a slow trading session amid back and forth activity. Everyone is waiting for the long 3-day holiday weekend and the USDA report on Thursday. It’s the USDA report that will return fund managers to placing a market bet as the Northern Hemisphere growing season commences. WASDE is likely to make additional sharp cuts in Argentine corn and soybean production in their April report. We doubt that any break can be sustained.

Corn should be the favored upside leader

 

 

CBOT Eases as Funds Curtail Their Market Length

Mar 26, 12:12 pm | Mid-day Commentary

   ** The morning has been mixed AM CBOT trade with the grains trading weaker, while the soy complex pushes higher on the discussion of a further decline in the ‘18 Argentine soybean crop. A sub 38 MMTs Argy soy crop would be near catastrophic for world meal consumers as their just would not be enough supply for all. The world would have to see China import more soybeans to process for SE Asia. The world is starting to better understand the impact on the Argentine drought and a sustained price decline appears to be unlikely until the Northern Hemisphere confirms another record or near record large harvest. However, fund managers are reducing their net long CBOT exposure heading into Thursday’s report which is producing some pressure this AM. Some additional long liquidation is possible before a rally into Thursday.

 ** CBOT brokers report that funds have sold 6,000 contracts of corn and 3,600 contracts of wheat, while buying 1,900 contracts of soyoil, 1,200 contracts of soymeal, and 2,500 contracts of soybeans. Funds have been early buyers of soybeans and soymeal, but have turned sellers at midday.

** US export inspections for the week ending March 22nd were; 45.4 Mil Bu of corn, 21.5 Mil Bu of soybeans, and 10.2 Mil Bu of wheat. The wheat inspection total was below the lowest end of trade expectations while corn was less than expected. For their respective crop years to date, the US has exported 902.1 Mil Bu of corn (down 351 Mil Bu or 28% from last year), 1,499 Mil Bu of soybeans (down 204 Mil Bu or 12%), and 714 Mil Bu of wheat (down 9% or 67 Mil Bu). The export pace argues that USDA is about right on corn/soybeans, but still 15-20 Mil Bu too high on wheat.

 ** FAS announced that 132,000 MTs of US soybeans were sold to an unknown destination and 120,000 MTs of soymeal to Spain. The Spain soymeal sale confirms that world demand is pushing back the US amid the Argentine shortfall

 ** Another 10 days of near complete dryness lies ahead across Argentina’s primary crop belt with just a few lite showers. The best chance of rain is now between April 5-7th, which is getting too late to offer much crop assistance. Cash connected Argentine crop watchers are now pegging their soy crop at  36-38 MMTs with corn under 28-30 MMTs.

South American precip

** Midday Central US Weather Update: The midday GFS is dry across the HRW Belt over the next 10-14 days and our research maintains that a complete pattern shift there will be difficult to establish in the next 30 days. Moderate rain/snow impacts the Midwest midweek with heavy totals (upwards of 5-7”) across the Delta/S Midwest. Temps stay at/below normal across much of the Corn Belt with winter type temps to persist into April 10th. The Midwest farmer is going to be slow to plant any spring seed into mid-April. And Delta farmers are likely to start switching some of their intended corn ground to cotton/soy amid ongoing cold/wet weather. There is no indication of needed warm/dry weather for the Delta looking forward into mid-April.   

 ** Midday Market Comment: It’s all about positioning for the NASS reports due out on Thursday AM as funds liquidate corn length. A further fall in Argentine soy/corn production will tighten the world balance sheets, while China trade tensions cap CBOT rallies. US farmers are not showing any willingness to alter planting intentions on Chinese trade threats. We see May corn futures as “too cheap” below $3.75 and look for a late week rally. And the Plains drought underpins US wheat. May soybeans should hold $10-10.20 support.