COMMENTARY 4/3/18

With the passage of the omnibus spending bill, the 199A “Grain Glitch” was approved by Senate and signed by Pres Trump.  Producers can retroactively sell grain to private companies without a 20% reward to cooperatives.  THANKS for your support and positive attitudes as our elected officials sorted through the discourse!  

CORN

UP 1

Closed firm after peeling off the high with cold/wet weather in the US and discussions about what that could mean for the balance sheet next year. The Delta and Mid-South planting is not doing too terrible considering the heavy rains last week.  At 46% planted they are ahead of the 5 yr avg and 1-2% behind last year.  Using the USDA’s acres and a carryout below 1.3 bill bu, we NEED to plant corn in a timely fashion to keep from dropping the yield below trend line.  April/May last year was the fifth wettest in the last 120 years for the corn belt and we received record yields!  In SA, lowered his yc est to 32 mill, but left Brazil unchanged at 86.   Brazil rains will be below normal going forward for second-crop corn while heavy rains are in store for much of this next week.  Also, on the topic of tariffs, over the weekend China DID add a 15% tax to the existing 30% tariff for US ethanol and slapped a new 25% import tariff on our US pork.  Those guys!

Bloomberg Trade bias (pre-report):  Bullish 69% TW (44% LW), Bearish 6% (17%LW), Neutral 25% (39% LW)

 

BEANS              

UP 3

A thirteen cent range today, closing positive but away from the highs.  The NOPA crush was supportive early at 164.9 mill bu, some 1.6 mill above trade estimates.  So far, China has not put any tariffs on US beans and SHOULD be motivation for them not to with the recent drought in SA.  Even if they prefer Brazil beans, SOMEONE will likely be interested in ours. The Gulf needs more time to work through the dysfunction caused by winter, high water, low water, ice, lock closures and tow size limitations.  Local basis values in yc and ysb are not desirable and there is currently a month’s worth of loaded barges waiting in the Gulf to be off loaded and there IS an similar amount of vessels waiting there to be loaded.

Bloomberg  Trade bias (pre-report):  Bullish 25% TW (18% LW), Bearish 50% (35%LW), Neutral 25% (47% LW)
 

Wheat

UP 11

Sharply higher due to poor condition ratings yesterday and dry forecasts not offering relief for the W HRW areas. Yesterday’s combined hard/soft winter crop was at the lowest rating for this time of year since 2002 according to Reuters.  On top of that, the Dakota’s are going to struggle with single digit lows this week and into next.  Producers there will likely plant spring wheat up until the end of April, so there IS still time to get acres planted IF the weather changes.  They are most likely to lose spring wheat acres to that of yc and ysb.

Bloomberg Trade Bias (pre-report):  Bullish, 25% TW (18% LW); Bearish, 18% (35%); Neutral, 56% (47%)