May corn is down 1 3/4 cents per bushel, May soybeans are down 5 1/4 cents, and May K.C. wheat is down 6 1/4 cents.CME Globex Recap:
Positive comments out of trade talks in Washington on Thursday, although President Trump tried to dampen expectations for a deal saying "we have a ways to go. We are rounding the turn." In China, President Xi said substantial progress has been made in the talks. Financial markets will avert their attention to the March payroll report later Friday morning with +175,000 jobs expected last month, bouncing from February's dismal performance. Grain futures are weaker Friday morning led by K.C. wheat which is down close to 1.5%. Markets feel as though they are pricing in rising carryout levels for all major commodities on the April WASDE next week as demand disappointed during the Dec-Mar quarter. Weather remains a front-burner issue as additional moisture and below normal temperatures are being forecast through mid-month.OUTSIDE MARKETS:
Previous closes on Thursday showed the Dow Jones Industrial Average up 166.50 at 26,384.63 and the S&P 500 up 5.99 at 2,873.40 while the 10-Year Treasury yield ended at 2.512%. Early Friday, the June DJIA futures are up 26 points. Asian markets are higher with Japan's Nikkei 225 up 82.55 (0.38%) and China's Shanghai Composite up 30.28 points (0.94%). European markets are higher with London's FTSE 100 up 8.78 points (0.12%), Germany's DAX down 12.59 points (-0.11%) and France's CAC 40 up 3.65 points (0.07%). The June Euro is up 0.001 at 1.130 and the June U.S. dollar index is down 0.060 at 96.865. The June 30-Year T-Bond is down 13/32nds, while June gold is down $0.40 at $1,293.90 and May crude oil is down $0.03 at $62.07. Soybeans on China's Dalian Exchange were down -0.03% while soybean meal was down -0.12%.
|1)||Wheat and soybean export sales last week were more than five times larger than the levels needed to achieve their respective USDA forecasts.||1)||The USDA Ag Attache to India raised his estimate of the 2019/20 wheat crop to 100 mmt, the third consecutive record crop.|
|2)||Morning GFS models are pointing toward another round of significant moisture in the central plains and western Corn Belt next week.||2)||Corn export sales missed the level needed to achieve the USDA forecast with year-to-date sales now running 9% behind a year ago.|
|3)||Favorable comments emerged from Thursday's trade talks in Washington with some suggesting a deal could take place in the next four weeks.||3)||Minneapolis wheat futures have closed lower for six consecutive sessions, the longest losing streak since June of 2018.|
CORN Corn futures are weaker Friday morning, back-and-filling from Thursday's gains and consolidating as we head into the weekend. Corn received no help from last week's export sales report which showed commitments missing the level needed for the second week in the last four. Total commitments of 1.700 billion bushels (bb) are down 9% from a year ago while the USDA is looking for a just a 2.0% decline from a year ago. The average level of sales needed through the end of the year at 30.7 million bushels (mb) would actually be the largest export program from here forward since 2006, highlighting the impressive level of sales still needed. We do not feel the USDA will reduce their export forecast on the April WASDE but it has definitely been put on notice with the performance of sales the last few weeks. The cheap offers out of Argentina, Brazil and Ukraine have been a feature for several weeks and will remain so into the fall. Weather should remain a supportive influence to the corn market as several rounds of moisture will hit the Corn Belt between now and mid-month. Extended maps from the Climate Prediction Center suggest below normal temperatures and above normal precipitation through April 19. Couple the weather with the lack of nitrogen availability due to the awful logistics on water and rail and plenty of concerns exist about final planted acreage.
SOYBEANS Soybeans are weaker following Thursday's impressive session which had May futures knocking on the 200-day moving average for the first time since 3/22. A solid round of soybean export sales combined with favorable comments from the U.S.-China trade negotiations were enough to extend the solid week of gains. Export sales of 72.4 mb were sharply better than the 12.3 mb needed each week to hit the USDA forecast. Total commitments of 1.603 bb are down 15% from a year ago while the USDA is looking for an 11.9% decline. Far more concerning to us is the shipment pace which shows total soybean exports accounting for 58.7% of the USDA's current export forecast. This is the lowest percentage on record going back to 1991 and requires 35.1 mb of weekly shipments through the end of the marketing year which is close to eight million bushels larger than the previous record from last year. We aren't sure if the USDA will make the move to cut exports on next week's WASDE, but there would seem to be ample evidence to justify a cut. A Bloomberg article suggested Argentine farmers have almost three quarters of their soybeans sold to crushers and exporters sitting on delayed price as they await the outcome of the U.S.-China trade talks and the devaluation of the Argentine Peso. That is a huge amount of pricing which still needs to take place and is betting on a rising market.
WHEAT Wheat markets are lower Friday morning, following the lead of row crops and shaking off the stellar export sales report posted Thursday. Exporters sold 25.9 mb last week which was five times the level needed to hit the USDA forecast. Total commitments of 893.7 mb are up 6% from a year ago although the USDA is calling for a 7% increase. Like soybeans, the real problem with wheat are the shipments. Wheat exports to-date account for 69.3% of the current USDA forecast which is the lowest on record going back to 1991. This requires 29.5 mb of exports through the end of the marketing year to achieve the forecast which would be the largest pace of shipments since 2011 in a year in which rail and barge traffic is still trying to catch up. While the sales pace is impressive, it is unlikely all of these sales will be executed in 2018/19, pushing a larger than normal portion of sales into Q1-2019/20. With that in mind, USDA is likely to make another reduction to their export forecast on the April WASDE. Minneapolis wheat continues to lead weakness as Canadian acreage ideas are on the rise and the Northern Plains are unlikely to shave enough acres to make a constructive HRS balance sheet in 2019/20. That said, the forecast looks less than ideal for the next 15-days in the Northern Plains which could have additional acres making the switch to other crops. The last plant date on spring wheat in southern South Dakota is May 5 while the northern half is May 15. Plenty of time, but sub-$5.00 cash prices will do little to incentivize farmers pushing the envelope.
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Tregg Cronin can be reached at firstname.lastname@example.org
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