** 6:30 AM CST CBOT Prices: May soybeans are up 4.5 cents at $10.455, May corn is up .75 of a cent at $3.915, and May Chi wheat is up 3.75 cents at $4.945.
** AgResource AM Grain & Oilseed Comment: Good Morning! Firmer has been the overnight CBOT trade as the market follows through on the late day recovery that occurred on Monday. However, we doubt that the rally can be sustained with Argentine weather forecast adding rain and the market laden with speculative length. Our bet is that in typical Tuesday fashion, there will be a turnaround with CBOT prices to soften heading home.
And with key USDA Stocks/Seeding reports just weeks away, the CBOT outlook is more mixed with end users supporting sharp CBOT breaks, while rallies are capped as much of the Argentine drought has already been digested with funds holding a record net long position in the soy complex.
The Australian Weather Bureau has confirmed that La Nina has ended with neutral conditions forecast for the equatorial Pacific in coming quarters. The warming of the Pacific has been pronounced in recent weeks, which led to La Nina’s demise. The ending of La Nina reduces the chance of a dire Midwest drought this summer, but it has yet to increase the rain chances for the drought stricken Western Plains. It will be interesting to watch if the algo-headline reading trade systems take note and are sellers today?
Monday’s CBOT Preliminary open interest report showed a 14,803 contract increase in corn, a 7,166 contract gain in soybeans, and a 9,993 contract gain in soft red wheat. It’s likely that funds used Monday’s break to expand their already large net long position.
Kansas reported a further deterioration of their wheat crop last week with just 12% of the crop rated GD/EX (down 2%) and 53% rated as poor or very poor (up 3%). The need for rain is immediate with the crop now starting to green.
The overnight Argentine weather forecast has pushed rain chances farther south and increased amounts on the weekend. The EU model is the wettest of the major forecast models with .5-2.50” of rain for Central and Northern Argentine crop areas on Saturday/Sunday. Rainfall across Buenos Aires is estimated in a range of .25-1.25” with La Pampa and portions of W Cordoba short changed.
Additional Argentine shower opportunities are offered during the 11-15 day forecast as the overall Argentine weather pattern becomes more active.
The Brazilian weather forecast features a needed soaking rain for RGDS in S. Brazil on the weekend and near normal rains across the north. No extreme heat is projected and weather for the winter corn crop is viewed as favorable.
May Malaysian palmoil futures closed 32 ringgits higher at 2,410 RM/MT, while May Paris wheat futures are up 1.00 euros/MT to $164.25. China’s Dalian corn and soymeal futures closed mixed in active volume.
China has announced plans overnight to create a new powerful regulator to oversee its scandal plagued banking/insurance industries as the Gov’t tries to reduce economic risks. The new regulator could tighten shadow market lending activities that produces a period of economic deleveraging.
ARC looks for a two-sided CBOT trade as rallies or breaks can’t garner momentum and much of the Argentine drought losses are known.
** EU Weather Model 10 Day Rainfall Forecast: Still Dry in SW Plains
