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Morning Comments

May corn +3 ¾ AT 5.835

May beans + ¼ AT 14.155

The DOW is UP

USD is UP

Crude oil -.23 AT 59.37

 

Good morning,

Overnight grain markets traded higher building on yesterday’s momentum ahead of the USDA crop report at 11 am cst. The corn market is challenging contract highs in the old crop and trading into new highs in the Dec new crop near $5. Wheat is extending its recovery trade off recent lows. Meanwhile, the soy complex continues its temporary slumber with a choppy, sideways trade. The bean spreads are mixed with the nearby K-N trading a tick better while N-X is a few ticks lower. Soybean processor bids continue to trend higher while the futures remain stuck for now.

 

In the product trade, back and forth we go as the oil share turns lower with meal gaining on oil early on. Canola is touch lower after trading into a new contract higher yesterday. Malaysian palm oil closed -.63% lower following yesterday’s reversal to the downside.

USDA crop report comes out at 11 am cst today. This report focuses on the old crop balance sheet where demand projections can be adjusted. Corn stocks are expected to be lowered by an avg. guess of 106 mb with larger exports anticipated. Wheat stocks are expected to rise nominally by 9 mb on the avg. guess. Beans are less clear if the USDA will print anything lower than their current 120 mb carryout at this timing. If the USDA decides to increase their soybean exports from the current 2.250 billion bushels, they can offset that demand with an increase in their import number that sits at 35 million bushels as of now. The record for US soybean imports was in 13/14 when we imported 71.7 million bushels, Linn is currently estimating imports of 60 million bushels. The new crop balance sheet reveal comes in the May crop report.

 

Overnight, the corn market kept the rally party rolling, overcoming a slightly weaker start up-front to finish three cents higher across the curve by the morning pause. It is report day, and everyone is expecting the USDA to deliver something friendly. The question is, will it be enough to satisfy a market

pressing into new highs? The April WASDE is generally not a market-mover; the USDA will not offer their thoughts on new crop until next month. It is a pure balance sheet report, and continued strong implied disappearance in last week’s Quarterly Stocks data has the bull on point for a potential upward revision in U.S. demand expectations. We think they will raise exports ~100 million bushels, but will likely pass on any further adjustments for now. The average analyst guess for domestic ending stocks is 1.4 billion vs. 1.5 billion in March. It is also possible the USDA may take a hard look at the world S&D. Most analysts are below the USDA’s South American production forecasts; for instance, CONAB yesterday affirmed a ~105 mmt total Brazil corn crop estimate, which compares to the USDA’s 109 mmt. Some also think they are a little high on Argentina at 47.5 mmt, but a recent tilt towards better weather there may stay their hand another month? China was also out yesterday telling everyone what they already knew; they raised their 20/21 import “forecast” to 22 mmt, from 10 mmt prior (USDA already at 24 mmt?). So, a dip in world carryout is also expected (analyst average at 285 mmt vs. 287.7 in Mar).

 

Darren, David, and Elizabeth

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