Morning Commentary

May corn up 2 ½ at $3.59

May beans up 5 ½ at $8.8975

The DOW is up

USD is weaker

Crude oil up $.65 at $60.79

Good morning,

Corn bulls are trying to recover after taking a major blow from the USDA data late last week! Many inside the trade are scratching their head as the USDA forecasts 92.8 million planted acres of corn. Despite higher input costs, low prices, tighter cash-flow on the farm, and wide-spread flooding in key production states the USDA still sees a +4% jump in acres, a number that’s significantly higher than last years 89.1 million planted acres. The trade seems equally stumped by some of the specifics: all-time record high corn acres forecast for North Dakota +900,000 more; +400,000 more corn acres forecast for Iowa; +100,000 more corn acres forecast for Nebraska; +700,000 more corn acres forecast for South Dakota; +150,000 more for Wisconsin; +100,000 more for Minnesota??? At the same time, the USDA disappointed the bulls with a higher March 1 quarterly stocks estimate. The estimate showed 8.605 billion bushels vs. the average trade guess of 8.335 billion bushels. In other words, an extra +270 million bushels showed up in the quarterly stocks estimate. Throw that in with the extra +1.5 to +2 million extra planted corn acres that the trade wasn’t excepting, and we have a +500 million bushel swing in estimated supply.  The trend is negative.  The market is poised to challenge long term support at 352.5.  Closing under 352.5 should lead to a test of the low 340 area.  Stable action over 371.25 is the minimum needed to improve the short term outlook. 

Soybean prices are slightly higher this morning on optimism surrounding Chinese trade and somewhat bullish data from the USDA late last week. The USDA is forecasting a -5% reduction in total planted soybean acres, saying growers intend to plant 84.6 million acres in 2019 vs. 89.2 million last year. The March quarterly stocks report showed 2.716 billion bushels, which was fairly close to trade estimates. Bears point to the fact, even though the quarterly stocks estimate was near expectations, it’s still much larger than last year. In fact, March 1 soybean stocks are up significantly, from 2.109 billion on March 1 of last year to a whopping 2.716 billion this year, a +28% increase. Similarly, the March monthly WASDE report showed U.S. ending stocks at 900 million bushels vs. 555 million a year ago. Bottom-line, it’s tough to be bullish with this kind of balance sheet hanging overhead and still no official trade deal with the Chinese. Bears argue, even with a trade deal it’s going to be nearly impossible to be bullish nearby without a major wide-spread U.S. weather story. The trend is negative.  The market is poised to challenge long term support at 877.75.  Closing under 877.75 opens the door for a drop to 856.5.  Stable action over 9.01 is the minimum needed to improve the short term outlook. 

U.S. drivers now pay $2.71 for a gallon on average, up +28 cents from a month ago and nearly +50 cents higher since early January, according to price-tracking firm GasBuddy. Gasoline prices may get even more volatile toward the end of the year due to a shift in marine sulfur regulations that takes effect in 2019. Keep in mind, U.S. oil prices surged +32% to just order +$60 a barrel in the first quarter, its best quarterly percentage gain since the second quarter of 2009. Crude prices also posted their biggest first-quarter percentage rise since 2002. (Source: The Wall Street Journal)


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