AgResource Daily Farm Marketing Advice for Friday: 1/ No new advice.
6:30 AM CST CBOT Prices: May soybeans are down 10.5 cents at $10.535, May corn is down .75 of a cent at $3.9275, and May Chi wheat is down 4.75 cents at $4.945.
Good Morning! It was an overnight session of weaker trade, and this morning US import tariffs on steel and aluminum and a wetter pattern in Argentina are offering weight to the market.
For the first time in 2018 rainfall projected in the extended period in Argentina has been pulled into the nearby time frame. The EU & GFS models are in agreement that moderate rainfall will impact N/NE Argentina during the middle part of next week. Coverage will include parts of Sante Fe & Entre Rios, which are decently sized producing regions, and totals there next week are estimated in a range of .50-1.25”. The GFS model maintains the potential for widespread soaking rain in Argentina March 19-22. This may salvage the yield of later developing soybeans, but otherwise won’t have much effect on row crop production. It will, however, provide a needed boost in soil moisture ahead of wheat planting in May. And psychologically the confirmation of a pattern shift in Argentina leans a bit negative.
President Trump has slapped tariffs on steel and aluminum worth 25 and 10%, respectively, which of course was widely expected.
Certain allies will be excluded from the tariff, including Mexico & Canada currently, and there does seem to be some flexibility as to who will be targeted in the end. But retaliation measures are unknown, and have the ag trade on edge. US Ag is one of the more positive features of the US trade balance and what’s most feared is some kind of policy implemented in China on US soybeans. Recall just weeks after tariffs were slapped on washing machines and solar panels, China ceased buying US sorghum, and sorghum basis across the Plains fell a quick 20-50 cents. Trade uncertainly will at the least ramp up volatility, and also sustains our strategy of selling strong rallies.
It also remains that Argentina is offering both beans and meal for nearby delivery (drawing from old crop stocks?) at prices near parity with the US Gulf. Brazil’s soybean harvest looks to be completed in the next few weeks.
The Central US forecast is wetter in NE and SD in late March, but is little changed across the driest areas of the HRW Belt. Still no meaningful rainfall is offered to TX, OK, KS and CO through the final days of March, and it’s becoming increasingly unlikely that yields there will be well below trend. Spring rainfall is always possible, but historically current drought & crop conditions don’t bode well for production there.
ARC estimates that as of Tuesday managed funds were long a net 110,000 contracts of corn (+51,000 on the week), 175,000 contracts of beans (+28,000) and 109,000 of meal (+3,000 and a new record), and were short a net 40,000 contracts in Chicago wheat.
Rallies will be more labored moving forward, but ARC cautions against turning bearish on breaks, as corn has a real bull story in the near/medium term and as crop conditions continue to erode in Argentina.
