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Funds Remain Short Corn

Corn futures nearly unchanged Thursday.

At the close Thursday, the May corn futures finished ¼¢ higher at $3.58½. July futures were also ¼¢ higher at $3.67¼¢.

May soybean futures ended 1½¢ higher at $8.80½. July soybean futures were up by 1¾¢ at $8.94¼.

May wheat futures were 2¾¢ lower at $4.44¼.
 
May soymeal futures were 70¢ a short ton lower at $303.20. May soy oil futures ended 34¢ higher at $28.80 per pound.
 
In the outside markets, the NYMEX crude oil market is $0.17 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 137 points higher.

Mike North, president of Commodity Risk Management Group, saw several reasons for little movement in ag commodity prices.

“We are attempting to balance the lingering effects of no deal with China and a growing story of the ASF [African swine fever] effect on soy demand with the technical support found as prices touch the bottom of the trend channel in soybeans,” North says.

“On corn, prices received slightly helpful ethanol grind numbers but have been on the defensive as the fund community has continued to add to their record short position,” he says. “Exports were a nonstarter by way of helping the markets on any run higher. However, corn, wheat, and soybean meal all exceeded the markets’ expectations.”

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At midsession Thursday, the May corn futures are 1¢ lower at $3.57¼. July futures are 1¢ lower at $3.66.

May soybean futures are ¾¢ lower at $8.79¾. July soybean futures are down by ¾¢ at $8.93¼.

May wheat futures are 5¾¢ lower at $4.41¼.
 
May soymeal futures are $0.70 a short ton lower at $303.20. May soy oil futures are 18¢ higher at $28.64 per pound.
 
In the outside markets, the NYMEX crude oil market is $0.10 lower, the U.S. dollar is higher, and the Dow Jones Industrials are 98 points higher.

So far today, lack of major economic news is leaving futures markets little changed.

According to grain analyst Jason Roose of U.S. Commodities, “Grains continue to trade in a sideways downtrend with position trading in a short holiday trade week. The strong U.S. dollar, routine exports, and no real concern with planting continues to be an anchor on any rallies.Trade talks between the U.S. and China the next few weeks will have to be the dominant news item.”

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In early trading Thursday, the May corn futures are ¼¢ higher at $3.58½. July futures are unchanged at $3.67.

May soybean futures are ¼¢ lower at $8.78¾. July soybean futures are down by ¼¢ at $8.92¼.

May wheat futures are 1¾¢ lower at $4.45¼.

May soymeal futures are 30¢ a short ton lower at $303.60. May soy oil futures are 4¢ lower at 28.50¢ per pound.
 
In the outside markets, the NYMEX crude oil market is $0.05 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 108 points higher.

Wheat opened lower on concerns about rising U.S. and global stockpiles, with few significant threats seen so far for developing Northern Hemisphere crops, according to Reuters.

The U.S. Department of Agriculture (USDA) reported export sales of U.S. wheat in the week ended April 11 at 545,500 metric tons (old- and new-crop years combined), in line with trade expectations.

U.S. Wheat Associates, a U.S. trade group, is eying an 80% chunk of Brazil’s 750,000-tonne tariff-free wheat import quota, the group’s president said.

USDA reported net corn sales of 947,600 MT for 2018/2019, up 73% from the previous week and 33% from the prior four-week average. New-crop sales were 18,400 metric tons, mainly to central America, for a total for both years of 966,000 tons.

For soybeans, USDA reported net sales of 382,100 MT for 2018/2019, up 41% from the previous week, but down 46% from the prior four-week average. New-crop net sales totaled 21,000 metric tons to Mexico and Indonesia. The total for both crop years is 403,100 tons.

Soybean meal export sales for both crop years totaled 298,100 metric tons.

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Wednesday’s Grain Market Review

At the close Wednesday, the May corn futures finished ¾¢ lower at $3.58¼. July futures were also ¾¢ lower at $3.67.

May soybean futures ended 9¢ lower at $8.79.  July soybean futures were down by 9¼¢ at $8.92½.

May wheat futures were 2¢ higher at $4.47.
 
May soymeal futures were $2.60 a short ton lower at $303.90. May soy oil futures ended 26¢ lower at $28.46 per pound.
 
In the outside markets, the NYMEX crude oil market is $0.28 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 13 points lower.

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At midsession Wednesday, the May corn futures are 1¼¢ lower at $3.57¾. July futures are 1½¢ lower at $3.66¼.

May soybean futures are 7½¢ lower at $8.80½. July soybean futures are down by 7¼¢ at $8.94½.

May wheat futures are 2¼¢ higher at $4.47¼.

May soymeal futures are $1.20 a short ton lower at $305.30. May soy oil futures are 15¢ lower at $28.57 per pound.

In the outside markets, the NYMEX crude oil market is $0.06 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 1.33 points lower.

“The funds are selling and this is for the second day in a row,” says Jack Scoville of PRICE Futures Group. “They are short and selling more. Not a lot of news out there, but the weather forecast overall remains wet; if this wet weather keeps up, there will be a time the funds will start to lose. That time might take a turn to May. Other than that, no one is talking about much – no news of China, and the EU apparently willing to play a bit of hardball on the U.S. in its trade negotiations, and Bloomberg TV talking about the EU going after the ag trade.”

Jason Ward, director of grains and energy for AgMotion, Inc., says that trading is “maybe a little different than producers might have thought given some rain systems moving across the Midwest late week.

“After holding supports last week, this week we have plunged to new lows for the month in the wheat, and new lows for the year in the soybeans, while corn has been pulled down to test key lows from Feb/March,” Ward says. “Continuation chart support for May corn is from the Feb low at $3.52¾ and the March low at $3.56, and thus far the $3.55¼ low from the April Monthly Supply/Demand has held, but not without a fight.”

“Funds have been very active in driving corn values lower adding to their already record short position with large open interest rises in corn over the last four trading sessions,” he says. “It is with almost reckless abandon that funds are selling corn ahead of a key U.S. growing season, but the factors that keep them adding are rising South American supplies, and continued ‘kick-the-can’ rhetoric regarding U.S./China. The trade is simply tired of hearing the administration say that “talks are going well” but “we’re just not there yet.”

“The trade is looking for actionable items and what I mean by that is PURCHASES of U.S. ag goods. We are seeing it in the pork sector, in record fashion last week, but in the grain side we are seeing higher supplies worldwide and poor exports. So, we are now left with a U.S. weather market until something develops with China, and traders are slow to bite on a planting delay as we saw how fast it can get planted in 2018,” Ward says.

“This week last year both Iowa and Illinois were 0% planted. On April 23, Illinois was 4% and Iowa was still 0%. I would say it will be similar or less this year. Then by April 30, Illinois moved to 32% planted and Iowa to 17% planted, and then by May 7, Illinois went to 74% and Iowa to 40%. By May 14, Illinois moved to 90% and Iowa to 65%.

“One point also worth mentioning is we had a RECORD COLD APRIL last year and RECORD WARM MAY, so later planting was not such a detriment because it resulted in very fast emergence, and particularly for the eastern Corn Belt, very good even stands,” he says.

“Funds are simply betting that way right now in the ag markets that U.S. producers will get it planted and get it planted timely. The other topic worth mentioning is the expectation for the Northern Plains to switch some of their ‘intended’ acres of corn over to soybeans and their ‘intended’ spring wheat acres over to soybeans as well,” he says.

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In early trading Wednesday, the May corn futures are ¾¢ lower at $3.58¼. July futures are ½¢ lower at $3.67¼.

May soybean futures are unchanged at $8.88. July soybean futures are down by ¼¢ at $9.101½.

May wheat futures are 1½¢ higher at $4.46½.

May soymeal futures are 10¢ a short ton higher at $306.60. May soy oil futures are 13¢ higher at 28.85¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.16 higher, the U.S. dollar is lower, and the Dow Jones Industrials are 37 points lower.

With little news, ag commodities are barely treading water today. As Al Kluis of Kluis Commodity Advisors explains:

“Spring wheat and Kansas City wheat contracts posted new contract lows on Tuesday. The selling pressure in wheat did not take long to spill over to corn and soybeans. Traders are still not showing signs of concern when it comes to planting pace this spring. Crude oil prices are knocking on the door of new multi-month highs. It would be nice to see a positive correlation develop between crude oil and the grain markets.”

On Monday, private exporters reported to the U.S. Department of Agriculture export sales of 140,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year.

The marketing year for soybeans began Sept. 1.

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Tuesday’s Grain Market Review

On Tuesday, the CME Group’s farm markets see red.

At the close, the May corn futures finished 3¾¢ lower at $3.59. July corn futures ended 3¾¢ lower at $3.67¾.
 
May soybean futures finished 10¾¢ lower at $8.88. July soybean futures closed 10¾¢ lower at $9.01¾.

July wheat futures finished 14¾¢ lower at $4.48½.

May soymeal futures closed $4.50 a short ton lower at $306.50. May soy oil futures finished 0.09¢ cents lower at 28.72¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.68 higher, the U.S. dollar is higher, and the Dow Jones Industrials are 73 points higher.

Jack Scoville, PRICE Futures Group, says that the markets are down because it looks like fund selling across the board today.

“So, the big reason for the selling is chart-related as investors see technical indicators to sell. The lack of hard news from China is a problem, as are some forecasts for improving weather, warmer and drier in the Midwest.”  

Scoville added, “Wheat is all fund selling, but the crop is in good condition too and the trade keeps talking about weak demand. Not much interest from producers for any of this so far, not here and not in Brazil,” Scoville says.

Al Kluis, Kluis Advisors, says that investors have ignored the winter storm.

“The USDA Crop Progress report will show corn and spring wheat planting falling further behind on next Monday. The report on Monday showed corn planting at 3% – that is 2% behind normal. Spring wheat planting was just 2%, vs. 13% in the five-year average,” Kluis told customers in a daily note.

Kluis added, “Watch the extended weather forecasts. The forecasts have now turned very wet into early May. If that proves to be right, then new-crop corn prices will likely continue higher.”

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Monday’s Grain Market Review

On Monday, the CME Group’s farm markets find strength, mostly from the soybean prices.

At the close, the May futures finished 1¾¢ higher at $3.62¾. July futures ended 2¢ higher at $3.71½.
 
May soybean futures closed 3½¢ higher at $8.98¾. July soybean futures ended 3¾¢ higher at $9.12½.

May wheat futures finished 5¢ lower at $4.59½.

May soymeal futures closed $3.10 short ton higher at $311.00. May soy oil futures closed 0.14¢ lower at 28.81¢ per pound.

In the outside markets, the NYMEX crude oil market is $0.45 lower, the U.S. dollar is lower, and the Dow Jones Industrials are 37 points lower.

Private exporters reported to the U.S. Department of Agriculture export sales of 140,000 metric tons of soybeans for delivery to unknown destinations during the 2018/2019 marketing year.

The marketing year for soybeans began Sept. 1.

Britt O’Connell, cash adviser for Commodity Risk Management Group, says that corn and soybeans continue to lack direction due to weighty balance sheets on both fronts and a lack of news.  

“While the weather has been less than cooperative as of late, it is still premature for the market to react.  The past few years has proven the producers’ ability to get the crop planted in a small window of opportunity. Should delays materialize late into April we could see some fireworks, particularly in corn, where the funds hold yet another new record short at nearly 300,000 contracts,” O’Connell says.

A swift exit from these positions and into a long position would certainly give the grain markets great pricing opportunities, he says.  

O’Connell added, “The market has resigned itself to viewing the U.S., China deal similar to a middle school relationship. On again, off again, never sure who is talking to who and alliances are short-lived.”

O’Connell says that it feels like, “Essentially, we will have a deal when we have a deal. My fear is how much market could bleed out between now and then.”

For soybeans, a 30¢ rally from $9.00 puts us right where we are today.  

“Moreover, we are seeing decreased demand for soymeal as China continues to raise losses due to African swine flu. Should planting get delayed, we now open the door for even more bean acres. There are not many good storylines for that market,” O’Connell says.

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