6:00 a.m. CME Globex: July corn is up 3 cents per bushel, July soybeans are unchanged, and July K.C. wheat is up 3 cents.
CME Globex Recap: Mostly quiet financial markets overnight as investors await the decision from the latest FOMC meeting. Expectations are almost unanimous the Fed will leave their interest rate policy unchanged this month. According to financial media, one of the major hang-ups to the trade agreement between the U.S. and China is post-agreement tariffs and the U.S.'s insistence on the ability to keep tariffs in place until the compliance mechanism can verify China is adhering to the agreement. This coupled with news about the Administration readying potential farm aid has raised fresh concerns about an agreement thought to be close at hand. Grain markets are mostly higher as weather and trade remain the primary drivers with planting progress all but stopped across the Midwest this week.
OUTSIDE MARKETS: Previous closes Tuesday showed the Dow Jones Industrial Average up 38.52 at 26,592.91 and the S&P 500 up 2.80 at 2,943.03 while the 10-Year Treasury yield ended at 2.509%. Early Wednesday, the June DJIA futures are up 68 points. Asian markets are mixed with Japan's Nikkei 225 down 48.85 (-0.22%) and China's Shanghai Composite up 15.84 points (0.52%). European markets are mixed with London's FTSE 100 down 9.16 points (-0.12%), Germany's DAX up 16.06 points (0.13%) and France's CAC 40 up 5.43 points (0.1%). The June Euro is up 0.002 at 1.130 and the June U.S. dollar index is down 0.111 at 97.090. The June 30-Year T-Bond is up 7/32nds, while June gold is down $1.50 at $1,284.20 and June crude oil is down $0.22 at $63.69. Soybeans on China's Dalian Exchange were down -0.49% while soybean meal was down -0.8%.
|1)||The spot spread between Paris Wheat Futures and Kansas City wheat futures hit over $63.00 per metric ton (mt) overnight, the highest since 2007.||1)||The Wheat Quality Council (WQC) Tour Day 1 yield estimate was 46.9 bushels per acre (bpa) vs. 38.2 bpa in 2018 and the highest since 2016.|
|2)||Maps for the 6-10 and 8-14 day outlooks from the Climate Prediction Center see above normal precipitation and below normal temperatures for the entire Midwest.||2)||In a sign the trade war could drag on longer than expected, a White House advisor said the Trump Administration has allocated another $12 billion in farm assistance should it be deemed necessary in 2019.|
|3)||Deliverable stocks of SRW fell another 2.723 million bushels (mb) last week to 40.180 mb, 38.5% below year ago levels.||3)||Spot FOB offers of 11.0% protein HRW at the Gulf were indicated below $200/mt for this first time this calendar year.|
CORN Corn futures are posting gains Wednesday morning, working on a fifth session in a row with a higher close. As we noted earlier in the week, a lot of the recently added fund short positions were put on around $3.67 basis July futures which could place them in jeopardy with any continued price strength. Planting delays and the massive fund short are all anyone wants to discuss at the moment, which is causing a fair amount of fatigue by participants. The forecast looks far less than ideal, although as long as the corn is in the ground by May 10, then crisis should be averted. Otherwise, we continue to focus on the 2018/19 demand situation with plenty of concerns to monitor. On the export front, USDA sees Argentine/Ukrainian/Brazilian corn production at 178.8 million metric tons (mmt) at the end of 2018/19. This would push total supplies up 20% from a year ago and be the largest on record by a wide margin. This competition should last all summer, and without a deal on trade which results in China buying a massive amount of U.S. Ag products, the corn export forecast looks a bit rich. The U.S. farmer feels undersold on both ends of the curve and the funds know it. The farmer pitching length at this market should limit any intermediate term reversal or correction higher.
SOYBEANS Soybeans are near unchanged on most contracts Wednesday morning trying desperately to put a foot in the ground and lay the framework for a basing reversal process. Fresh contract lows were set Tuesday as spot month prices fell to the lowest level since November. Soybean prices did not like the news the Trump Administration was readying another $12 billion in assistance for the nation's farmers and commodity groups in case the trade war drags on longer than expected. If the disbursement actually happens, it would directly contradict statements from this Administration saying no aid would be made available in 2019. Producers would much rather have free and open markets than another "bailout" payment, although in this price environment, there aren't likely to be many martyrs who refuse either. November new crop soybeans are trading at 8.74 3/4 which is the lowest new crop bean price for late April since 2007. That trend is the same across the board as the fund sell pressure remains relentless. With weather likely to keep farmers out of the field for another 5-7 days, acreage shifting toward soybeans is undoubtedly still occurring.
WHEAT Wheat contracts are higher Wednesday morning after most contracts got to enjoy a fresh round of contract lows Tuesday. Whether a person wants to look at July, September or December, hard wheat contracts are at their lowest levels for late April since 2007. Farm marketing has ground to a halt, although the ability of the farmer to hold grain off the market will get increasingly difficult with harvest 4-6 weeks away in the southern plains. The WQC tour headed out across Kansas Tuesday morning, finding a day one crop of 46.9 bpa which would be the highest since 2016. Social media was abuzz with reports of excellent wheat all day although the crop is being called a month late from a development standpoint. The WQC tour also had information from Oklahoma and Nebraska. The tour sees the Oklahoma wheat crop at 121.35 mb with an average yield of 35.1 bpa. The 121.35 mb were much higher than the 70.0 mb last year and would be the highest since 2016. Nebraska's crop is seen at 47.4 mb vs. 49.49 mb last year. Colorado was seen at 97.2 mb which was sharply higher than last year's 70.2 mb. Once again there were no deliveries against Kansas City, although the inter-market spread with Chicago is getting wide enough to warrant attention being paid about HRW being delivered in Chicago. There were 164 re-deliveries in Minneapolis and 826 re-deliveries in Chicago.
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Tregg Cronin can be reached at email@example.com
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