Written Commentary
MORNING AG OUTLOOK
Corn:
Lower crude prices again this morning have pushed corn to new lows for the month, weakening the technical outlook. Drier weather moving into the Midwest is seen as favorable for early crop conditions but how long the high-pressure ridge stays in place will be one of the keys to near-term price direction. Official NASS condition reports will begin next Monday, and conditions are likely to start off relatively strong, despite pockets of drought. US planting is 86% complete, slightly below the guesses of 89% but above the five-year average of 83. A heatwave across western Europe has been getting attention and EU production was cut 850,000 tonnes to 60.35 million tonnes. Safrinha corn harvest in Mato Grosso has just begun and Argentina’s exports so far in May are record high. China has decided to issue new export licenses for urea fertilizer after banning exports earlier this year. Weakness in wheat this morning is also weighing on corn and the current large fund net long position raises the risk of long liquidation if prices are unable to recover quickly from this morning’s 30-day low,
Soybean Complex:
A mostly steady start this morning for beans and the soy products are slightly higher, even though crude is down sharply. The bean market continued to drift lower yesterday amid generally favorable early-season weather conditions across the Midwest and a lack of any further news on China/US trade negotiations. Conditions across the Midwest will be drying down over the next 2 weeks under high pressure. China has continued to buy Brazilian beans since the Beijing summit and without the elimination of the 10% tariff, US prices are simply not competitive. China is issuing new export quotas for urea fertilizer after suspending exports in March. US planting hit 79% done, slightly below the average guess of 82% and well above the five-year average of 68%. 59% of US crop acres have adequate or better soil moisture, compared to 72% a year ago. India is typically a meal exporter but canceled some cargoes due to supply tightness after domestic prices reaching a four-year high and shifted to importing African meal. India’s bean imports could hit a record high of 800,000 tonnes this season. Other market moving news this shortened holiday week has been tough to find and bean prices are well inside the trading range seen this month.
Wheat:
Another selloff for wheat overnight marking the 5th straight session of lower lows and lower highs. Poor technical action over the last week and uncompetitive US export prices are near-term bearish factors, along with approaching harvest across the Plains. Improved precipitation across the southern Plains will continue and the northern half of the Plains will see warm/dry conditions. Heat in the western EU prompted production and ending stocks cuts for EU wheat yesterday. US crop conditions fell 1% to 26% G/E, the lowest on record since 1986 and compares to 50% this time last year. Kansas conditions were unchanged and HRS seeding is 86% complete. South Korea flour mills bought 50,000 tonnes each of US and Canadian wheat. Ukraine’s HRS crop has been seeded but the Deputy Economy Minister says farmers are using less fertilizer in spring sowing due to the high prices, which could negatively affect crop yields.
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