AgResource Daily Farm Marketing Advice for Wednesday: 2/ Livestock Producers: Cover 75% of your summer soymeal needs at $353.60, basis May soymeal futures. Do this in the cash soymeal market.
Row crops are steady, while wheat has extended its weekly losses as Russian & European fob offers retreat very modestly and as the market debates the potential for rainfall across the W Plains during the final days of March. ARC does mention that managed funds in KC are nearing a net flat position, and the US market’s premium to other origins is narrowing rather quickly.. Exporters this AM sold two cargoes of corn to S Korea for old crop delivery.
Spot soy oil futures up nearly $.50/Lb as the market suspects Trump is less willing to cap RIN values, thus leaving the RFS mandate unchanged. Soy oil stocks have risen sharply in recent months, but as the mandate in 2018 calls for incrementally higher biodiesel blending, some pressure will persist with respect to keeping US biodiesel production elevated. Crude is also up another $1.50/barrel, basis spot, and at midday sits at new 6-week highs. Gasoline future have found new 32-month highs when casting aside Hurricane Harvey’s brief influence on energy prices late last summer.
The EIA’s weekly energy report is also viewed as supportive. Crude stocks (less reserves) fell 2.6 Mil barrels, which is counter-seasonal as energy inventories in the US tend to increase noticeably into middle part of April. US crude inventories on Friday totaled 428.3 Mil barrels, down 2% from a year. Motor gas stocks totaled 243 Mil barrels, down 1.7 Mil on the prior week and unchanged from last year. Tension between Iran & the US is noted, and new sanctions are possible in early May.
US ethanol production through the week ending March 16th totaled 308 Mil Gallons, up 7 Mil on the week. Ethanol stocks fell 22 Mil Gal despite the boost in production, and it’s likely some measure of export demand has returned. Futures-based ethanol blend & production margins have rallied further.
The South American forecast includes just a few lite/scattered showers in Cordoba & Santa Fe over the next 10 days, and should the forecast verify precip there during the second half of March will rest at just 8-60% of normal, with a large swath of Argentina’s crop belt seeing just 8-15% of normal. The USDA is not yet done lowering Argentine production and exports.
There’s also some attention being paid to ongoing snowfall in Russia, and abnormally cold temps across the whole of Europe & the Black Sea. Early N Hemisphere corn planting is unlikely in 2018.
Midday Central US Weather Update: The midday GFS is wetter in the Western Plains March 30-31, and features widespread rainfall of .50-1.25” across OK, KS and CO in the 8-10 day period. This will be a blessing if the forecast verifies, but ARC awaits this evening’s run of the EU model before placing much confidence in the GFS’s solution. All models include some kind of westward expansion in Central US precip in late March/early April, but exact locations and amounts will be important with respect to adjusting HRW yield potential. Notice that heavy showers will remain a feature across the Southern Corn Belt, and there’s potential for heavy snowfall in IA, IL, IN and OH on the weekend.
Midday Market Comment: Wheat futures continue to extract weather premium, and the move has been exacerbated by the lack of US wheat export demand. Otherwise, we caution against turning bearish ahead of a growing season, and as some 65,000 contracts of corn length has been shed since last Tuesday
