Outside Markets as of 6:00am: Dollar Index up 0.1750 at 80.0760; Euro is down 0.00460 at 1.37080; S&P’s are up 3.00 at 1895.50; Dow futures are up 27.00 at 16,682.00; 10-yr futures are up 0.04%; The Nikkei closed up 1.95% at 14,425.44; The DAX is up 0.66% at 9,766.79; The IBEX-35 is up 0.17% at 10,585.20; The Russian MICEX is up 1.35% at 1,393.83; Gold is down $3.50 at $1292.30; Copper is down $0.95 at $314.00; Crude Oil is up $0.70 at $101.29; Heating Oil is up $0.0153 at $2.9338; Paris Milling Wheat is unchanged at €204.25.
Asian and European equities are firmer this morning after the DJIA hit new, all-time record highs yesterday. Economic data out last night from China included April Industrial Output which was up 8.7% y/y vs expectations for a gain of 8.9%, while Jan-April Hosing sales were down 9.9% on the year. In the US today we will see April retail sales which are expected to be up 0.4% m/m, adding to the increases of 0.8% and 1.2% in February and March, respectively. Russian energy company OAO Gazprom is now giving Ukraine until June 2 to pay for June supplies or Ukrainian gas supplies will be turned off. Ukraine already owes Gazprom $3.5 billion for fuel delivered since 2013. If Russia shuts of natural gas shipments to Ukraine, then about 15% of Europe’s gas will be shut off because of its travel through Ukraine. The Dollar Index is hitting 80.1050 this morning, the highest level since April 8A band of showers extending from E-TX to S-WI is making its way East this morning, but after this system exits the eastern corn belt tomorrow, a fairly open week of weather will be seen across the Midwest. This should be the best opportunity for the lagging west and northern plains to catch up in terms of planting progress. The next system for the WCB and Northern Plains isn’t seen until Sunday/Monday, although temperatures this week are still expected to remain unseasonably cool. 6-10 and 8-14 day maps from NOAA suggest a slowly warming trend with temperatures moving from below normal to normal and above normal in the south, while precip will be below normal for much of the central and southern Midwest. The Northern Plains will remain the one areas which continues to see above normal precip in this 6-15 day time frame. FSU dryness remains on the world radar.
Turnaround Tuesday for most of the Ag markets with firmer prices in the early going, despite a price bearish crop progress report. The crop progress report out yesterday afternoon didn’t disappoint with corn planting progress jumping nationally from 29% to 59% thanks to huge progress in NE/IA/IL/IN/OH. The largest weekly change was in IA where farmers planted 47% of their intended corn acres last week. As was expected, MN/ND/WI/MI remain the notable laggards with ND at just 3% planted vs 33% average and MN at 31% vs 62% average. SD made decent progress in the southern half of the state with 52% planted statewide vs 25% last week and 43% average. There is still around 35 million acres of corn left to plant. Soybean planting progress advanced 15% last week to 20% complete vs 21% average. ND hasn’t made any progress vs 10% average, and MN is 4% planted vs 23% average. Spring Wheat planting progress was estimated at 34% planted vs 26% last week, 40% last year and 53% on average. ND remains the only state with serious delays as they have 11% of the crop planted vs 5% last week and 39% on average. Solid progress should be able to be made later this week.
The winter wheat portion of the crop progress report was also a feature as nationwide conditions slipped another 2% to 31% G/E vs 32% last year. NE saw its G/E rating slip 10 points to 46% G/E, while OK and KS saw their P/VP rating jump 8 and 10pts, respectively. Overall winter wheat crop conditions are now below last year and the second lowest of the last 18-years behind 2011. Oats, Barley and Sorghum planting all made solid gains last week and are now basically caught back up to averages.
Were some interesting observations in Friday’s Commitments of Traders Data worth sharing including the small spec in corn moving to the largest net short position since August 17th, 2010. The small spec is short -159,481 contracts while the large spec is net long 207,035 contracts, the largest net long since October 23rd, 2012. Interesting to have the two moving in such opposite directions, and definitely a case of “smart money vs dumb money,” but the question right now is which one is smart and which one is dumb? In soybeans, large specs sold 35,336 contracts last week, the 6th largest week of net selling on record. Here too, small specs are now short -56,859 contracts, the largest net short since June 8th, 2010. Between the buying yesterday and last night, it would appear funds are clawing back some of that position. In wheat, the one point worth noting is the continued selling by the gross commercial long in Chicago as that group is now down to a gross long of 56,616 contracts, the smallest long since 9/6/2011. This is significant as the commercial gross long is the entity which actually uses the wheat and they have yet to participate in this rally which isn’t a check mark on the side of the bulls. In Minneapolis wheat, managed money has moved to a net long of 12,233 contracts, the largest net long since 11/22/11. Last week alone, their net position jumped 19.7%, thanks to the planting delays in North Dakota. So far, the fund position looks well placed.
CIF corn bids were firmer by 1-3c Monday while PNW rail bids were largely steady. CK/CN continues to firm, moving to -2.00c overnight and following the stronger CIF basis. Keep an eye on the KW/MW spreads after they hit lows of -40.00c last week. After receiving the production numbers from the USDA it did, there is a chance we’ve seen the lowest HRW numbers of the season already, and spring wheat planting continues to be labored. That spread can move quickly if given a reason.
Export inspections released yesterday morning continue to support the recent export forecasts released by the USDA Friday.
Bottom Line: A little bounce in price today after yesterday’s drubbing in the grains. The US farmer showed once again how fast he can plant a crop, and why delays up to this point weren’t a reason to get runaway bullish. Moisture deficits have been cut in the central belt, and the western belt has a fairly open week to get caught up. Without further weather impetus, the managed fund long in corn might become a bit restless. Plenty of spring wheat left to plant, and soybeans too. We need to keep feeding the bull past Friday’s data and so far this week, weather isn’t on his side.
Good Luck Today.
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