Outside Markets as of 5:30am: Dollar Index down 0.0210 at 79.8260; Euro is up 0.0020 at 1.38190; S&P’s up 1.75 at 1859.75; Dow futures up 17.00 at 16,360.00’ 10-yr is down 0.03%; The Nikkei closed down 0.03% at 14,512.38; The FTSE is up 0.62% at 6,625.25; The IBEX-35 is up 0.24% at 10,292.40; Gold is down $6.00 at 1,287.90; Copper is down $0.10 at $303.30; Crude Oil is down $0.19 at $104.13; Heating Oil is down $0.0140 at $2.9942; Paris Milling Wheat is still closed from the weekend.
Mixed to better financial markets overnight as the world slowly comes back from the Easter holiday. One of the biggest pieces of news over the weekend was obviously the tentative agreement reached between Ukraine and Russia which called on all parties to make sure groups are disarmed and free captured government buildings. It also included the call for constitutional reform that would engage representatives of all regions, but didn’t have any reference to Ukraine’s bloc-free statue. The agreement was vague at best, but was a step in the right direction. A shooting at a checkpoint over the weekend highlighted the fact tensions are still very high, and the conflict isn’t yet over. Barclays became the latest Wall Street bank to wind down it’s commodity trading arm with investment banks fleeing the space in droves. Q1 earnings season continues this week with 83 companies of the S&P 500 reporting. Next week 155 of the 500 will be releasing earnings data. The Bloomberg Economic Surprise Index hit a 3-month high Friday of -0.003, indicating recent US economic data has been strong relative to market expectations. The CRB-Food Index is now up 21.6% YTD.
Some decent rainfall amounts around over the weekend with two portions of TX receiving between 0.25-1.00” in total, although the N-TX plains didn’t see the same rain. W-KS and E-NE also saw scattered totals, and N-IA saw cumulative totals of 0.50-1.00”. the SE-US including AL/GA/SC/NC likely had fieldwork delayed as well with the heaviest totals hitting 2.5-3.0”. The forecast has several systems around this week which will impact the central and southern corn belt as well as the eastern portions of the southern plains. The 7-day forecasted precip map has some rather heavy totals for E-KS/E-NE/SW-IA/MO/AR/E-OK/E-TX. See map below. Few will ward off the rain, especially those in the southern plains. Some decent chances in the driest areas of HRW country. Not much guidance from the 6-10 and 8-14 days maps from NOAA, although warmer temps look to remain going forward.
The biggest mover overnight would be the wheat market with double digit losses occurring within the first five minutes of the overnight session on weekend rainfall, forecasts for this week and a slight easing in the Ukraine/Russia tensions. While 100% coverage didn’t occur, rains that did fall should help the battered wheat crop, and the forecasts are certainly promising like the ones shown below. Traders have pumped up wheat on fear of disruptions to exports out of the Black Sea due to the conflict there, but despite the events to date, no shipments have been compromised and exporters continue to mop up nearly every high profile wheat tender. Of growing concern also is the technical picture in the wheat market until prices can take out the March 20th highs. As long as those highs remain in place, the rally which stalled last Wednesday looks like a corrective rally and selling opportunity.
Row crops are also under pressure this morning as soybeans opened 10c better last night to find themselves down 3-7c this morning. Lots of questions remain about Chinese crush demand, and when/if US beans will see cancellations. Before the forecasted rains move in later this week, planting progress is expected to see a notable jump. Weekend weather was rather conducive to planting in many areas, while soil temperatures remain a bit cool north of I-80 for popping corn out of the ground. Tonight’s crop progress report will be a focus for traders with average corn planting progress for this week at 14%. The incredibly fast 2012 planting campaign, in which 25% of the crop was planted, certainly skews the numbers up a bit. On Friday while markets were closed, the USDA announced 128,000MT of corn sold to unknown destinations for the 13/14 marketing year. Corn exports continue to roll.
China released March import data overnight with total corn imports at 48,131MT, down 79% y/y. Wheat imports were pegged at 538,950MT, up 86% y/y with the top destination being Australia at 325,684MT. The US, France, Canada and Kazakhstan also sent wheat to China in March. Soybean imports totaled 4.623MMT, up 20.4% y/y with the US still comprising 3.692MMT of that total. Chinese imports of US soybeans YTD are up 11.67%, while Brazil at 929,709MT is up 121% from there terrible export performance in 2013. Malaysian Palm Oil exports from April 1-20 totaled 717,842MT, down 6.0% from a month ago as palm oil prices have rallied sharply the past several weeks.
Will have a more in-depth look at the Commitments of Traders Report tomorrow.
Bottom Line: Slow news overnight with the focus squarely on planting weather, rainfall in the southern plains and the global trade flows of soybeans. Crop progress reports this evening will be a feature, but the markets don’t seem too concerned about any planting delays just yet. At the end of the day, old crop corn demand is still better than expected, we need good yields in 14/15 to build carryout and acres are probably going to prove larger than current estimates provided farmers can get into the fields. The soybean market is tight and will remain tight no matter how many imports we pencil in. Still too many questions on the size of the HRW crop and too few answers. Mixed to weaker trade with midday maps eyed.
Good Luck Today.
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