** 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:
** 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.
