DTN Early Word Grains
Grains Weaker as Planting Progress, Trade Remain Focus
May corn is down 1 1/2 cents per bushel, May soybeans are down 1 1/4 cents, and July K.C. wheat is down 3 3/4 cents.
CME Globex Recap:Equity markets are mixed to weakerMonday morning with parts of the world still on holiday for Easter Monday. Lots of focus on trade this week with U.S.-Japan trade talks resuming as well as investors awaiting confirmation U.S.-China trade talks will take place next week as scheduled. With spring planting progress finally taking place, there are lots of cross currents for agriculture markets after an incredibly long winter. Grains are weaker across the board this morning as growing managed fund shorts can only provide so much support while planting progress is moves forward and demand remains a concern for multiple end users. Producers will be dodging rain in parts of the Midwest this week, but for the most part, conditions are favorable for seeding and early germination.
OUTSIDE MARKETS:Previous closes on Thursday showed the Dow Jones Industrial Average up 110.00 at 26,559.54 and the S&P 500 up 4.58 at 2,900.45 while the 10-Year Treasury yield ended at 2.56%. Early Monday, the June DJIA futures are down 70 points. Asian markets are mixed with Japan's Nikkei 225 up 127.78 (0.58%) and China's Shanghai Composite down 35.16 points (-1.08%). European markets are mixed with London's FTSE 100 down 11.44 points (-0.15%), Germany's DAX up 69.32 points (0.57%) and France's CAC 40 up 17.29 points (0.31%). The June Euro is up 0.002 at 1.130 and the June U.S. dollar index is down 0.131 at 97.020. The June 30-Year T-Bond is down 8/32nds, while June gold is up $4.70 at $1,280.70 and May crude oil is up $1.51 at $65.51. Soybeans on China's Dalian Exchange were down -0.48% while soybean meal was down -0.16%.
P[L1] D[0x0] M[300x250] OOP[F] ADUNIT[] T[]
| BULL | BEAR | ||
| 1) | Large spec traders pushed their net-short position to a further record of 323,665 contracts, 9.9% above last week's record. | 1) | Corn planting broke loose in parts of Iowa and Nebraska over the weekend with national progress expected to be 7-8% complete vs. 12% average. |
| 2) | U.S. SRW FOB offers on Friday were indicated at $198 per metric ton (mt), making it the cheapest milling wheat in the world by a wide margin. | 2) | Weekend GFS models are indicating widespread rains across Oklahoma and Texas in the coming week with coverage close to 100% in wheat areas. |
| 3) | Cattle-on-feed as of April 1 were 102.0% of year ago levels vs. pre-report estimate of 101.7% with the most cattle on feed since December 2011. | 3) | There were 429 grain barges which moved through the Mississippi River system in the week ended 4/13 according to the Army Corps of Engineers, down from 618 during the same week a year ago. |
CORN Corn futures are slightly lower to open post-Easter trade as the weather turns favorable for seeding a crop. Social media was abuzz with farmers posting planting pictures over the holiday weekend with progress being made in rapid fashion. Conditions are not ideal everywhere, with soil still wet and cold further north, but the massive delays being feared a few weeks ago are unlikely to be realized. In addition, soil moisture levels are among the highest on record for late April, adding a substantial buffer against any early season dryness. Adding some level of support to this market are funds insistence on building new record-short positions. In the week ended April 16, large spec traders had amassed a net-short position of 323,665 contracts which was 9.9% larger than the previous record from the week before. The gross commercial long position rose to 734,529 contracts which is the largest position for that group since July 24. On its own, the record net-short position held by the funds is not bullish until they are given a reason to cover. Otherwise, they have ample equity in these contracts and are much more likely to defend their position if pressed than to cover. With sluggish ethanol demand, disappointing first half feed demand, larger than expected March 1 stocks, a cutthroat export market and planting progress which will pick up speed in coming weeks, their position is not exactly being threatened.
SOYBEANS Soybeans are a bit higher Monday morning, bouncing from Thursday's fresh four-month lows. Weekend chatter suggests the U.S. trade team will head to China the week of April 29 for the seventh round of face-to-face meetings. These will be followed by the Chinese delegation heading to Washington the week of May 6 with hopes still high a trade deal can be inked in late May or early June. As if this wasn't enough, the United States and Japan began trade negotiations this week while the European Council approved mandates for the EU to begin negotiations with the United States soon. In all three situations, U.S. agriculture has a great deal to gain if made a priority. Short of a breakthrough in trade with any one of these partners, the soybean market continues to grasp at straws for something bullish. The planting focus is squarely on corn and spring wheat at the moment, with soybeans taking center stage once the calendar flips to May. It still feels as though we will get more acres of soybeans than the USDA indicated on the March Prospective Plantings report. From a technical perspective, soybeans have a mountain of upside resistance from moving averages to prior corrective highs to deal with on any rally attempt. Large spec traders moved their net-short position back up to 108,362 contracts of soybeans in the week ended 4/16, the largest since mid-March.
WHEAT Wheat markets are weaker across the board Monday morning, picking up where we left off Thursday. With the snow melting rapidly last week, spring wheat planting is finally taking place in South Dakota while progress was being made in North Dakota and Montana last week. Many areas remain saturated with potholes and low-lying areas likely to go unseeded this year. Still, confidence is high spring wheat acres will still get close to the USDA's ideas at the end of March even if some acreage is lost in South Dakota. Conditions remain solid in the southern plains with GFS models indicating a widespread 0.75"-2.00" across all of Oklahoma and much of Texas by next weekend. 30-day percent of normal precipitation maps do show developing dryness in Kansas which will need to be monitored as that crop matures. The global wheat market will once again come down to production and exportable surplus in the European Union and the Black Sea. Without a threat to either of those areas, it is difficult to see a sustainable rally given U.S. and global supplies. Several analysts continue to cut their 2018/19 U.S. wheat export forecast as inspection and shipment data continue to disappoint. The poor state of logistics in the United States created a hole that will prove too difficult to dig out of by the end of May. Large spec traders sold 4,171 contracts of HRW last week to leave them net short 49,818 contracts which is the largest net-short since March of 2016.
| DTN Cash | Change From | National | Contract | Change from | |
| Commodity | Index | Prev Day | Avg. Basis | Month | Prev Day |
| Corn: | $3.37 | $0.00 | -$0.21 | May | $0.002 |
| Soybeans: | $7.98 | $0.02 | -$0.83 | May | $0.002 |
| SRW Wheat: | $4.21 | -$0.02 | -$0.23 | May | $0.009 |
| HRW Wheat: | $4.08 | $0.00 | -$0.12 | May | $0.001 |
| HRS Wheat: | $4.88 | -$0.05 | -$0.36 | May | -$0.007 |
Tregg Cronin can be reached at tmcronin31@gmail.com
Tregg can be followed throughout the day on Twitter @5thWave_tcronin
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