Corn and soy trade both sides following Monday sell off with more chatter on whether managed funds will maintain large shorts ahead of uncertain N. Hemisphere growing season., All three markets trading inside Monday’s trading ranges—indicating absence of any narrative changing overnight news.
Weather a mixed bag as needed Midwest dryness this week transitions into more wet weather for S Midwest/Delta next week thru 16-30 day. S American weather largely favorable—boosting CN/BN yield potential.
TX/OK winter wheat ratings improve while KS declines 2% in G/E category vs. last week. Southern SRW ratings mixed but uniformly below 5-year average.
Nothing new on trade front overnight except for Perdue statement that PRC over next 2-5 years may “triple” US ag purchases. On the negative side—SCMP article yesterday discussing possible June XI/Trump meeting refers to G-20 confab in Osaka, Japan that is not scheduled until June 28th .
Missouri Valley flooding in NE/IA/MN will undermine reliability of USDA’s March 29th acreage estimates.
Highlights of Brazil crop roundup:
* Peg Brazil soy crop at 115.5 mmt vs. Conab’s 113.5 mmt and USDA’s 116.5 mmt forecast. o Peg Brazil corn crop at 92-93 mmt vs. USDA’s 94.5 mmt and 82 mmt LY.
* Brazil soy harvest advancing (62% vs. 55% average) with average yields. Final soy crop size will be driven in part by yield returns in RGDS
* Brazil has loaded out nearly 2 mmt more beans since Jan 1 than LY despite estimates for 13 mmt cut in total 2019/20 soy exports vs. LY to 70 mmt.
* Soy crushers selling portion of whole soy ownership to exporters amid better margins.
* PRC last week sourced 20-25 Brazil soy cargoes.
* Safrina corn, with 77% planted vs. 81% average, will enter critical pollination stage late March/FH April. Note attached seasonal charts detailing spring/summer behavior of CZ/SX and WZ. Farmers that have not priced 2019 crops as yet should be on notice that in absence of prolonged planting delays— ag markets typically roll over sharply in June. Concerns over delayed 2019 US row crop planting will be mitigated by:
* Above average soil moisture reserves (see stark contrast between current US Drought Monitor vs. year ago) o Ample cushion of US & Global grain/soybean stocks
* Talk of delay in US/PRC trade deal until late June AM Grain Notes 3 19 19 Feltes Ag Report 222 S Riverside Plaza, Suite 900, Chicago, IL 60606 (800)621-0757 www.rjobrien.com 2 Special Report Special Report
* CWG long range forecasts call for another US summer of slightly above normal temps and ample precip (a winning combo that produced record US corn yields in 3 of last 5 years).
* Indications that 2019 Brazil/Argentine corn production prospects are improving (Cordonnier’s 24.8 mmt 5 nation gain in 2019 S American corn production may be light by at least 3 mmt or 0.68 BPA on the US national corn yield).
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This post was written by Louis Rose