Mixed tone with corn firm on further gains in record managed fund corn short while soy eases on
easing soy basis erosion by crushers who extended ownership last week. Wheat meandering
although charts on all three major ags look positive following weekly gains of 15-16 cents in wheat
and beans and 6 cents in corn as the latter frets about changing PRC feed grain policies, an
undersold farmer and more talk of higher 2016 US corn area.
Weather leans negative with dryer Delta tone the next 10 days. 16-30 day (attached) suggests
favorable weather for early planting in S Midwest. SW ¼ of US HRW stays dry although moisture
there not important until April. S African precip scaled back while Argentine basks in another week
of open weather. Brail rains shifting from north and south and vice-versa—perfect for safrina corn
and avoiding any prolonged soy harvest delays.
HRS switch from unknown to PRC today should be mildly supportive to strong MLS/KC and MLS/CGO
seasonals that extend from today through 6/13—winneres is 8 of last 10 years.
No change in soy complex dynamics—meal in ample supply domestically, crushers increasing
ownership on soy rally, oil share likely near high of 36.5-37.5% trading range and imminent ramp
up in S American soy product crush and exports.
Relative stability in capital/crude markets providing for favorable backdrop for ag rally which has at
least partially discounted Delta planting delays. Next leg higher will be more difficult if crude unable
to penetrate $40 barrel area which re-ignites shale. On balance—downside limited until large
managed fund short trimmed further although further gains will ignite more farmer selling.
Foreign Markets:
Palm market down 15 ringgits at 2593
• Paris milling wheat up 0.50 euros at 155.25
• Dalian beans up 1.25 cents/bu, meal up $3.00/ton, soy oil up 24 and corn down 0.5 cents/bu
• RJO KC commentator reports HRW in good shape despite recent dryness. Farmers more
concerned about warm temps pushing growth (and upping frost susceptibility) than sub-par
rains which typically pick up next month. 2016 plains corn area definetely higher following
stellar 2015 yields and better returns than milo or wheat. Don’t expect much change in
KC/CGO wheat spread near term while intra KC wheat spreads could widen as harvest
approaches given normal weather. Very little new crop CN/BN/WHT sold. Producer, who
intends to hold as much wheat as possilbe at harvest, may be forced to move wheat this fall
if row crop yields are trend or higher.
• CRB up 37 on the week to 327 on heels of gains in crude (+$2.00/barrel on the week and up
$12 from lows) and grains. Gold off $21 on the week. US dollar eases on aggressive EU
easing while S&P up 1.1% on the week.
• 36 soy delivered, 12 wheat, 8 meal and 37 soy oil.
• March contracts expire today.
• Cash meal Friday off $1-2.
• Board crush Friday March thru Oct up 2.0-3.5 cents to 59.50 cents-62 cents/bu
• Mato Grosso soy harvest at 76.6% vs. 76.1% average.
• (Bloomberg) – Russian Wheat Exports Rise to 19.24m Tons This Season to March 9- Russian
Agriculture Ministry comments on grain exports on website, citing data from Federal Customs
Service. Data show wheat exports gained 0.3% y/y.
• (DPA) — The possibility of more aid for struggling farmers was up for discussion by EU
agriculture minister Monday, even as Belgian agricultural producers took to the streets to
vent their anger about their deteriorating financial situation. “We are in overproduction today
in many agricultural sectors,” French Agriculture Minister Stephane Le Foll said ahead of the
EU talks in Brussels. ” Farmers have been hard-hit by a Russian ban on European food
imports, implemented amid political tensions linked to the crisis in Ukraine. Slumping world
prices and a summer drought in Europe last year also contributed to the pressure on farms,
where incomes have plunged.
• (CME Daily Livestock Report) Also, as it typical for hog futures, the contracts in the fourth
quarter of 2016 are well below those for this summer. Of course, that is because hog
slaughter will be largest in that quarter in typical years and will be so again in 2016. In fact,
the risk in 2016 is probably that a larger than normal summer to fall increase in slaughter
occurs. Importantly, for many producers the October and December futures contracts are
currently offering price levels above cost of production based on Iowa State University
estimates.
• Details on 2016 PRC corn support price expected t his week ahead of April planting.
• US oil rig cound down 6 to 386 vs. 2014 peak of 1609 taking US oil production to 9078K BPD
–on par from prior week but down from 9605K BPD peak last May.
• Both soy and wheat trading above respective 50 DMA’s for first time since Nov with former
deriving strength from firming S American currenciese while latter advances on too wet US
SRW and too dry US HRW.
• Wheat export sales down 3.8 mmt vs. YA (USDA off 2.15 mmt), corn sales off 7.2 mmt
(USDA off 5.35 mmt) and bean sales off 4.8 mmt (USDA off 4.16 mmt). US nneds to sell
131 tmt of beans to meet target vs. 86 tmt/week sold last year.
• Weekly Ag Scorecard: Managed funds trim combiend C/B/W/ML/Oil short 50K to -350 K—to
2nd largest in our data base. Corn short up another 25K to record -229K, soy short shrinks
38K to -43K while wheat short down 15K to –92K. Managed funds still long 39K soy oil—off
only 3K from last week.