Good morning friends!
Corn (K17) 366’4 -2’0
Soybeans (K17) 954;6 -2’4
Chi Wheat (K17) 433’0 -1’6
KC Wheat (K17) 436’6 +3’0
Cotton (Z17) 74.35 -.10
Its the end of April, which means first notice day for May contracts at CBOT (cotton is past FND). If you find yourself long either in a futures account or in an elevator storage bin you are open for delivery. We are expecting some deliveries for wheat and beans. Markets are softer across the board except in KC wheat, if the trend in August (Sep delivery) and Nov (Dec delivery) would hold, the market is at a near term bottom. We did not see that action in March.
Export numbers yesterday were very solid for beans and corn, poor for cotton and abysmal for wheat. Old crop wheat exports are usually slow this time of year given the proximity to new crop, but that was just brutal. The US is moving very little wheat right now, which is concerning. The streak of monster cotton exports for old crop came to an end yesterday as well with only 100k and some change moved, vs 300 k, 400 k we have seen in recent weeks. .
July- Dec Cotton futures are seasonally soft this time of year, as are the flat price cotton contracts. The heavy export demand has been keeping everything elevated, including new crop December. December broke its 8 day MA yesterday and feels like a new crop high has been scored in the interim. It is wet in the delta, so acreage probably goes in slow down there but the boys and girls in West Texas are primed to plant into ideal conditions in a few weeks. Short term traders might want to take a shot on the short side and risk a close above those recent highs near 7510. Risk reward would be very low if you can catch a move to the 8 day and get in there.
The CBOT is all about weather right now, specifically wheat and corn. Moisture is plentiful, but the issue at hand is lack of normal temps. The story down in Kansas has been well documented, but up North we should start to see seeding pick up at this time of the year but we may be on hold as things are just too darn cold. Cool temps will persist across almost the entire US growing area through the next 10 days, and this will keep soil temps low, and also slow evaporation and emergence rates. A warmer/drier pattern is going to be needed by the middle part of next month. Be on the lookout for flash flooding this weekend in Eastern Missouri and Western Tennessee/Kentucky. The southern Ohio valley is delayed while Southern Il and Missouri along I-64 may be looking at replant if the rain totals are accurate.
It is quite timely the Kansas Wheat crop tours start next week. This tour, unlike the corn/bean tour in August, has been very correlated with yields. We should know a little next week about any crop damage over the weekend. WIthout damage, July KC wheat is probably due to pull back if the rest of the complex can’t hold up next week. As I mentiomed above, old crop wheat exports saw marketing year lows this week. EU cash markets are offered 190 MT, Russia at an average of 177 MT while US HRW offers are $180. Without a rally in Russia/EU offers, US wheat is stuck here barring a production problem. EU is having some production problems though, stay tuned there.
Beans feel like the lost cousin here, with little supply side update in the news. Demand is solid though, US exports were on fire yesterday as is the pace of export in Brasil. We have now committed 102% of the USDA expectations before the start f the year. The charts look bad in soybeans but I refuse to think the sales we made near 1030 are going to get off that easy. Demand being what it is, I still feel a run to 10.00 is in the cards. I would not be a seller here, be patient.
Lastly, Corn…exports were impressive but world cash markets remain weak. Weather is the driver here short term, with planting expected to see a catch up on Monday but should remain behind. There are too many problems right now to think we break the recent lows from last week but I would not be shocked to see a run back into the low 360 July today. I think we still have a move up into the low 4’s for Dec but i am not optimistic beyond those levels unless something would show up in the final stages of Brasil production. The trend of lows being made at delivery is a good one to follow in corn, but I am not going to go into the Sunday night open betting on some big jump. The last two weekends have shown poor weather and massive short positions (much like this weekend). Ive seen that movie and it doesn’t end well for the Bulls. Maybe this time given the cold temps in Kansas it is different, as we say in the analyst trade…”we’ll see”. Yes we will.
Before I go I do want to mention cattle. It is fantastic to see the livestock markets rally like this, it only helps the longer term cause for feed grain markets. Everyone seems to be trying to top pick this cattle market, I feel we have some more room to go. 150 May feeders and 125 June fats feel like a good place to me to roll up hedges.
ENJOY YOUR WEEKEND!
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