Outside Markets as of 6:00am: Dollar Index down 0.0420 at 79.8000; Euro up 0.00080 at 1.38220; S&P’s up 6.50 at 1879.50; Dow futures are up 34.00 at 16,494.00; 10-yr Treasuries are down 0.13%; The Nikkei closed down 0.97% at 14,404.99; The DAX is up 0.84% at 9,624.61; Gold is down $0.90 at $1280.20; Copper is up $3.60 at $307.00; Crude Oil is up $0.34 at $101.77; Heating Oil is up $0.0020 at $2.9778; Paris Milling Wheat is unchanged at €214.75/MT.
Global equities are mostly higher this morning after a lower Asian close when President Obama and Japan’s Prime Minister failed to reach a trade agreement. Japan’s Prime Minister Shinzo Abe seemed more interested in re-affirming Japan and the US’s security ties in light of the building tension between China and Japan. Speaking of escalating tension, Ukraine and Russia are splashed back on the front-page this morning as the Ukrainian government has been setting up checkpoints to keep pro-Russian protestors out of Ukrainian cities. In the process, there are reports of 5 protestors being shot and killed by the Kiev backed forces. Russian President Vladimir Putin said any attack on its citizens in Ukraine would be considered an attack on Russia itself. This morning will see unemployment claims which are expected to show an increase of 11,000 to 315,000.
Lots of moisture working across the Mississippi River this morning with fieldwork being stalled in various stages. The 7-day forecasted precip map shows heavy rains to impact S-MN/IA/MO/AR/L/IN/PH/KY/TN during the next week and should keep planting progress subdued after decent headway was made this week. There are still relatively few who are overly concerned with delays to this point with May 5th being an unofficial line in the sand for concerns to increase. NOAA extended maps continue to point towards below normal temps and below normal precip for the majority of the Midwest. The temps almost seem more of a concern than the below normal precip being helpful as cool temperatures hamper even emergence. 4” soil temps below as of this morning.
Mostly firmer markets overnight in grains while soybeans continue to be the weak leg as has been the trend this week. The themes in our market haven’t changed a great deal with the exception of US corn back to being the cheapest source of FOB supply in the world. Argentine farmers have been slow sellers to date in part off inflation concerns and in part off a delayed crop. $15.00 soybeans also seem more attractive than $5.00 corn. At the close last night, US-Gulf corn was bid around +66K for spot, +64N for June and +63N for July putting is between $224/225/MT. In Argentina, price per tonne was sitting around $243/MT for spot, $229/MT for June and $225/MT for July. Ukraine remains near $245/MT. Import needs should continue being sourced out of the US, especially with cheapening freight costs. To wit, BNSF spot cars are now bid $500/car vs $2000 a week ago and $3500 a month ago.
While still on the subject of corn, worth noting the huge open interest increase yesterday on the bounce. Corn open interest jumped 22,810 contracts on volume of 317,000. Other notable changes included soybeans down 5,530, wheat up 2,340, meal up 270 and soy oil up 3,970. Some of the starch definitely seems to be coming out of soybeans this week with Brazilian FOB premiums continuing to trade at distressed levels, CIF NOLA premiums arching lower and the rhetoric coming out of China about crusher financing. Obtaining letters of credit is becoming a more difficult issue by the day, and just last night Reuters reported Chinese officials had detained Marubeni employees for failing to pay taxes on imported soybeans. None of the aforementioned leaves a good taste in mouth of the global exporter when the globe’s largest natural long is experiencing the issues it is.
Old crop export sales estimates this morning show wheat at 100-450TMT, corn at 300-800TMT, soybeans at -250/+100TMT, meal at 25-175TMT and soy oil at 0-50TMT. Keep an eye on wheat sales as with only 6-weeks left in the marketing year, wheat needs to see commitments rise a bit more to prevent a reduction in marketing year exports on next month’s WASDE report. Traders will also be watching soybeans intently to see if this is the week we finally have a net negative sales report.
Spring wheat continues to trade at a 20-25c discount to KC winter wheat on the board through March. Would continue monitoring this spread as even in very, very tight balance sheet years for HRW, the new crop spreads almost always see KC winter wheat lose premium relative to spring wheat and trade at par or even a substantial discount. There may be inter-market opportunities available.
Bottom Line: Grains are feeling the bounce this morning, and barring a disastrous export sales report, there is little to deter them from trading higher. Fieldwork will come to a halt, planting progress will remain behind the averages, farmers are focused on farming and not selling grain, and there is just enough geo-political unrest to keep things supported. Soybeans have been the bull-leg of spreads for weeks, and as funds roll length forward, they are entitled to some profit taking. Still no South American soybeans trading into Iowa.
Good Luck Today.
COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECEIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.