May corn closed up 1 1/4 cents per bushel and December corn was up 1 1/4 cents. May soybeans closed down 1 1/4 cents and November soybeans were down 3/4 cent. May K.C. wheat closed up 3 1/2 cents, May Chicago wheat was up 7 cents and May Minneapolis wheat was down 7 cents. The June U.S. dollar index is trading down 0.293 at 96.630. The Dow Jones Industrial Average is up 13.25 points at 26,192.38. June gold is down $0.50 at $1,294.90, May silver is up $0.03 at $15.10 and May copper is up $0.0385 at $2.9440. May crude oil is down $0.21 at $62.37, May heating oil is down $0.0026, May RBOB is up $0.0202 and May natural gas is down $0.010.
Spot May and new-crop December corn futures, in quiet trade, have now recovered about one third of the losses suffered on Friday. The bearish tone from the stocks as of March 1, which were about 7 mmt (276 million bushels) higher than the trade had guessed, and seeding intentions of 3.7 million acres above last year, will be difficult to overcome in the absence of a China trade deal. Planting intentions can surely change a lot in coming weeks, but it seems clear USDA may be overstating both exports and ethanol demand for corn. Ethanol production for the week ended March 29 rose nearly 2.5% and stocks fell nearly 2%, but corn used for ethanol still lagged the weekly amount needed to reach 5.55 billion bushels. The weekly usage of 103.2 million bushels versus the 107 million required suggests USDA may be forced to lower ethanol usage in future reports. While demand for corn remains active on breaks, with South Korea continuing to buy, much of the optional-origin corn could come from cheaper South American new crop, and China has not yet returned following the 300,000 mt purchase of a week ago. Managed funds continue to hold a bearish net-futures position, thought to be still about 240,000 contracts. Southern states for the most part are ahead of the 5-year average planting pace, but with a wet outlook for the next several weeks, we are sure to see planters challenged. South American corn crops continue to flourish under mostly favorable weather, and it appears increasingly likely that Argentina and Brazil could have from 27 mmt to 29 mmt (1.62 billion to 1.41 billion bushels) more than last year. DTN's National Corn Index closed at 3.36 on Wednesday and reflects an average basis of 25 under May. Outside markets were mixed with the U.S. dollar index down, crude oil lower, and equities little changed, providing little direction.
May soybeans are a bit weaker, struggling with old support, which is now new resistance at $9.00 to $9.02. Despite a very positive article by the Financial Times suggesting a U.S.-China trade deal is very close at hand, this is a market that demands action rather than more rhetoric. Trade representatives are meeting again on Wednesday in Washington and are reportedly working on implementation and enforcement. A weaker Gulf barge bid and still no bids for soybeans for April and May at the PNW are signs that China is not actively looking to buy more. The wet extended forecast in the U.S. bodes well for soybean acres well above the 84.6 million USDA projected on the planting intentions survey. South American crops are progressing well and Argentine soy values are called 50 to 60 cents per bushel cheaper than U.S. soybeans delivered to China. China appears to be taking some safeguards to prevent the spread of African swine fever with the May 1 deadline for all pork processors to test for ASF likely to help prevent the spread of the disease. Due to Chinese pork demand falling by an estimated 10% to 20% as a result of swine fever, China consumers are eating more chicken, beef and seafood. As a result, the U.S. Ag Attache has pegged China soy demand at 91.5 mmt in 2019-2020 compared to 88 mmt this year. As in corn, funds have chosen to sit with their net-short soybean position. On a rally above $9.00 again, look for the next level of resistance to be $9.10 to $9.15 on spot May futures. DTN's National Soybean Index closed at $8.14 on Wednesday and is 86 cents below the May futures contract.
Wheat was certainly a mixed bag Wednesday with Chicago wheat very firm and Minneapolis wheat setting a new contract low for the second consecutive day, down 7 1/4 cents. The Minneapolis weakness is a mystery unless it is spread unwinding with Chicago. The wetter forecast bodes well for some spring wheat planting issues with too much of a delay potentially subtracting spring wheat acres. U.S. soft red winter is one of the world's cheapest on a FOB basis, and roughly $13 per mt under French wheat, and yet France was able to sell 120,000 mt to Algeria on the freight advantage. There is a better wheat tender line-up, with Algeria back in again, along with Bangladesh, and Japan for U.S. or Canadian wheat. Part of Chicago's strength may have emanated from Monday's crop condition report, which detailed one of the worst ratings for SRW in quite a while. A report from the Ukraine shows just how much competition the U.S. has endured from the Black Sea region, with Ukraine reporting 38.3 mmt of grains exported so far, versus 31 mmt last year. The Ukraine ag minister expects through June their exports will reach 49 mmt; 13.5 mmt has been exported thus far. Kansas City May closed right on the 20-day moving average, while Chicago is well above the 20-day. DTN's National HRW Index closed at $4.19 on Wednesday and that is an average basis of 14 under Kansas City May futures.
Dana Mantini can be reached at firstname.lastname@example.org
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