COMMENTARY 4/6/18

How do YOU spell volatility??

Cold/wet weather in the Corn Belt and N Plains at least until we get into mid-next week. The W Plains still look dry. The Delta gets a chance to dry out next week while the Gulf continues to work through logistic issues from winter, high water, low water, ice, lock closures, and tow size limitations.  Current conditions and rains have river levels there high, adding to the congestion.  There are still a month’s worth of loaded barges waiting in the Gulf to be off loaded and there ARE vessels waiting there to be loaded.  Things ARE improving!  Freight/basis levels continue to respond favorably.  In SA, drying conditions in S Brazil’s double-crop corn areas.  Argentina, is expecting heavy accums over the next week that should end their drought and improve conditions for wheat sowing, but at the same time hamper yc and ysb harvest.

CORN

DOWN 1

An eight cent trading range today with weather uncertainty and and trade retaliation concerns. (Due to recent history), the trade is potentially expecting China to respond to the new set of tariffs Pres. Trump announced last night over the weekend into Monday am.  (China has been on holiday since Wed.) Monday could be exciting!  Next Tuesday we’ll get to see Conab’s corn/bean est at 7am and then at 11am April’s Wasde.  There was another sale announced today of 100K MT to Egypt. The EU has imported 50% more corn so far this year.  In SA,  the BA Exchange leaves their Argentine crop est unchanged at 32 MMT with harvest moving right along at 22% complete.  That compares to 18% last week and 15% last year. US eth exports to Brazil have doubled from Jan to Feb.  All exports for Feb were up to a record 828 mill liters (up from 334).

Bloomberg Trader Bias (post report):  Bullish 41% TW (69% LW), Bearish 29% (6% LW), Neutral 29% (25% LW)

 

BEANS              

UP 2

Down sharply overnight as another US tariff was potentially laid out for China.  Board was down 30 this am on its lows, BUT recovered into positive territory by afternoon!  China was reportedly able to buy 20-25 cargoes of Brazil beans this week, but the REST of the world came to the Gulf.  Another 65K MT was sold to Mexico for 17/18, 65K MT to Mexico for 18/19, 327K MT to Unknown for 17/18, and131K MT to Unknown for 18/19. While China DID buy some beans from SA, other GOOD folks in the world, like Asia, WILL be looking to buy our less expensive US beans according to Reuters.  Morgan Stanley too, agrees that Chinese tariffs placed on US beans should increase the cost of those in Latin America.  Furthermore, FAO has reduced its est of world year end bean stocks by 11%, down to 42 MMT predominately due  to the smaller, droughty Argentine crop.  The BA Exchange has lowered the Argentina by another 1½ MMT to 38.0. In the last report, the Usda had Argentina at 47.0, and pre-report est for this Tues’ report  has the avg guess spit-balled at 41.3 MMT.  Fear not!  Ag Sec Perdue, speaking in Lima OH yest, says that the President pledges to take care of the farmer.  This president may mean business.

From yest’s interesting note:  -> Even though bean meal is NOT included in China’s NEW reciprocal trade items, they ALREADY have a 30% import tariff on US meal and they consistently import less than 100 K MT/yr.  This has been going on since 2011, …..seven years!  Who was the US president then?

Bloomberg Trader Bias (post report):  Bullish, 6% TW (25% LW); Bearish, 59% (50%); Neutral, 35% (25%)

 

Wheat

UP 7

Planting delays for spring wheat and dry weather in the S Plains supported. France’s ratings for soft wheat are unchanged at 78% G/VG and FAO increased their 18/19 world Prod est 6 MMT to 750 mill.

Bloomberg Trader Bias (post report):  Bullish 41% TW (25% LW), Bearish 41% (19%LW), Neutral 18% (55%LW)