DTN Early Word Grains

Row Crops, Spring Wheat Higher on Lack of Fieldwork

6:00 a.m. CME Globex:

May corn is up 1 3/4 cents per bushel, May soybeans are up 3 1/4 cents, and May K.C. wheat is down 3 cents.

CME Globex Recap:

Mixed equities around the globe Monday morning as import and export data out of China show a mixed bag in the world's second largest economy. Chinese exports in March grew by 14.2% from a year earlier and up sharply from February's 20.8% contraction. Imports fell 7.6% from a year ago, however, the fourth consecutive month of contraction. The U.S. has also agreed to face repercussions if it fails to live up to its side of the U.S.-China trade deal as both sides have now agreed to a dual enforcement mechanism. This should keep the deal moving forward and a larger agreement likely in coming weeks. Grains are mostly higher except for winter wheat as early season conditions remain strong in the southern plains. Still no planting progress expected this week across the Midwest as wet weather and below normal temperatures persist.

OUTSIDE MARKETS:

Previous closes on Friday showed the Dow Jones Industrial Average up 269.25 at 26,412.30 and the S&P 500 up 19.09 at 2,888.32 while the 10-Year Treasury yield ended at 2.56%. Early Monday, the June DJIA futures are up 46 points. Asian markets are mixed with Japan's Nikkei 225 up 298.55 (1.37%) and China's Shanghai Composite down 10.84 points (-0.34%). European markets are lower with London's FTSE 100 down 3.08 points (-0.04%), Germany's DAX down 8.07 points (-0.07%) and France's CAC 40 up 2.62 points (0.05%). The June Euro is up 0.002 at 1.140 and the June U.S. dollar index is down 0.133 at 96.465. The June 30-Year T-Bond is down 1/32nds, while June gold is down $5.20 at $1,290.00 and May crude oil is down $0.57 at $63.32. Soybeans on China's Dalian Exchange were up 0.36% while soybean meal was up 0.52%.

BULL BEAR
1) Large spec traders further increased their already record net-short position in corn to 294,352 contracts in the week ended April 9. 1) Despite FOB offers being $1 per metric ton (mt) less than the last tender, U.S. SRW missed out on any business in Friday's GASC tender.
2) Managed funds re-established their largest net-short position in Minneapolis wheat since January 22 just ahead of the major blizzard which pounded the Northern Plains last week. 2) Soybean and wheat export shipments need to set new records through the end of their respective marketing years to achieve USDA's current forecasts.
3) The Midwest will see an active storm track the next 7-10 days with GFS models indicating broad swaths of 0.50-2.00" possible. 3) Soybeans under loan as of April 11 remained over 150 million bushels (mb) which is easily the largest of the last decade.

MORE COMMODITY-SPECIFIC COMMENTS

CORN Corn futures are higher Monday morning, supported by the new record short position held by managed funds. Friday's Commitments of Traders report showed funds selling an additional 24,525 contracts last week to bump their net-short to 294,352 contracts. This marks 86,804 contracts added over the last two weeks, providing a potentially explosive situation should price move above the $3.65 level basis May futures. While the market structure is supportive, the fundamental side of the equation is less than stellar. Ethanol run-rates continue to underwhelm, corn export sales need to average the largest weekly commitments in over a decade to meet the USDA forecast and feed/residual demand has underperformed the first two quarters of the year. Late planting concerns remain front-burner across the Midwest, but Monday's crop progress report is likely to show national corn planting progress near the 5% average. Of most concern are the acres under snow in the Dakotas and Minnesota which represent some of the largest projected increases from 2018/19. Extended maps from the Climate Prediction Center on Sunday afternoon are turning above normal on temperatures which would be welcome for all producers.

SOYBEANS Soybean futures are leading nominal gains along with Minneapolis wheat Monday morning. Soybean futures are higher despite increasing production ideas out of South America and no movement on the trade front with China. The Buenos Aires Grain Exchange raised their estimate of the Argentine soybean crop to 55 million metric tons (mmt) from 53 mmt previously. This would be in-line with the USDA's most recent estimate as well as the USDA Attaché to Argentina. In the last reporting week, large spec traders bought 6,767 contracts of soybeans to pare their net-short to 84,961 contracts. The overall downtrend in soybeans remains in place, and based on volatility readings, does not appear to be in jeopardy of ending anytime soon. Volatility of 10.11% is among the lowest readings since the spring of 2018. Of concern to us is the record shipment pace which is needed each week through the end of August to achieve the current USDA export forecast. Not only does the shipment pace need to be a record, it needs to be 26% larger than the previous record shipment pace from a year ago. Unlike last year, the U.S. does not have the captive market from reduced crops in South America or a lack of a trade conflict with China. The longer planting delays persist, the higher the likelihood of additional soybean acres across the Upper-Midwest.

WHEAT Wheat markets are mixed Monday morning with Chicago and Kansas City lower while Minneapolis continues to add to last week's gains. It is up for debate whether the bounce in Minneapolis is strictly related to last week's blizzard, or whether the market structure has simply lent itself to a dead-cat-bounce. Managed funds sold 7,279 contracts of Minneapolis wheat last week, which was the single largest week of selling on record going back to 2006. The current net-short position held by funds at 9,457 contracts is the largest since September. 57% of the upper Midwest is covered by snow at an average depth of 3.9" while nearly 100% of South Dakota and Minnesota are covered by at least some measure of snow. This will result in planting delays, but it is impossible to know what kind of actual acreage changes could result. Based on our reading of the spring wheat balance sheet, up to a million acres could be lost to other crops before carryout would drop below 2018/19 levels. U.S. SRW missed out on any of the Egyptian GASC business Friday despite having cheaper FOB levels than the previous tender.

DTN Cash Change From National Contract Change from
Commodity Index Prev Day Avg. Basis Month Prev Day
Corn: $3.38 $0.01 -$0.23 May $0.001
Soybeans: $8.11 $0.00 -$0.84 May $0.001
SRW Wheat: $4.40 $0.04 -$0.25 May -$0.001
HRW Wheat: $4.22 $0.04 -$0.13 May $0.004
HRS Wheat: $4.97 -$0.02 -$0.35 May $0.003

Tregg Cronin can be reached at tmcronin31@gmail.com

Tregg can be followed throughout the day on Twitter @5thWave_tcronin

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