Wednesday Morning in Grain and Oilseeds 5/3

Corn (N17) 371’4  -‘6

Soybeans (N17) 965’0  +1’0

Chi Wheat (N17)  447’0  -7’0

KC Wheat  (N17) 458’0 -9’6

Cotton (Z17)   74.59  -.34

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KC wheat is rolling over this morning, foreign markets refuse to follow the US wheat markets higher.  It is important to remember that the US is a price taker when it comes to wheat, gone are the days where they are price makers like in corn and soybeans. In one week, US HRW went from the cheapest offered to the most expensive. Given offshore interest in KC wheat is nil anyway, any rallies need to be led from  The fund money givith and taketh away, as of this morning markets are off their highs from yesterday morning by about 13 cents. I am not throwing dirt on this rally by any means, I think prices have a very realistic shot at the February highs but we need some help from the Matif and Black Sea contracts. Right now NOLA HRW is offered at 190 per MT vs Black Sea in the 180 area.  Weather in the black sea is not threatening at this point.

HRW Crop tours will continue today, covering the harder hit areas of Western Kansas. Yields out in eastern/central Kansas sound like they are around 15% under the record from a year ago, closer to trend.  I assume that average falls today. Again, I am not turning bearish at these levels but would think about selling 470 July for producers with old crop in the bin.  Below is a chart from DT pro, the top red line is the 200 day MA of the top end of the bollinger band I have posted. If that line is approached, I like making some sales especially if you have remaining old crop to move before harvest.

 

Thoughts and prayers to the folks in SW Illinois, SE Missouri and NE Arkansas.  Everyone in the delta really.  Images are flowing in showing flooded fields and bridge closures.  I read one article saying that folks need to decide which side of the river they want to live on for the short term, given they probably wont have a chance to cross back once the floods start.  It sounds like the Southern Mississippi river is going to be closed to barge traffic, which has caused corn bids to drop on the river.  The worst part is that more rain is coming.  Prevent plant talk is going to begin. I think we see money begin to flow into corn ahead of this weekend so I prefer to be long right now.  If December corn would fall into the low 380’s consider making purchases.  Acreage is going to be an issue.

 

This could be a bean problem as well, although I think we can stand the acreage loss in beans more than corn.  Bean planting is going to begin to ramp up north given the window over the coming weeks.  So supply dominates the US story while demand is the global story.  Brazilian trade data showed exports above 10 MMT.  This is a record.  At this pace Brazil bean exports look to jump 20%. I doubt this data is much to rally the market in the short run but if US supplies falter mid summer, the 90+MMT China plans to import will stress S.AM supply and cause rallies. I would be cautious selling beans at these levels in the longer run.  Over the short term we probably see 950 Nov again given there is no real supply story in the US to follow.

Cotton markets remain super boring, trading between 74.50-75.00 in December futures.  The market has its eye on the delta weather, but the Texas outlook appears to be fantastic in coming weeks.  Continued US demand will need to be in the cards to keep the bulls interested, Thursday morning exports will be watched keenly.  Next week’s WASDE is expected to show increased exports and a carryout cut.  We could see more cotton acres in the months ahead but balance sheets will not show it for a while.  I remain patiently hedged in the 72-74 cent area.