MAY corn – ¼ at $3.885

MAY beans +2 at $10.6275

The DOW is UP


Crude oil +.03 AT $67.11

Good morning,

Overnight grains markets featured the continued break in wheat where weather forecasts continue to promote relief for the S Plains with rains seen for KS, and the panhandles of OK and TX in the near-term outlooks. The soy complex is trading slightly higher and corn a touch lower. May options go off the board a week from today. Trade agreement/negotiation news is quiet but the chatter late this week has been more positive or more open on all fronts from NAFTA, China and TPP.

The soybean market continues to push higher with both old and new crop beans challenging their highs. The change in the market has been the resurgence of export trade which brings some needed

but unquantified demand relief to the bloated 550 mb ending stocks number. The Argentine production shortfall is a supportive factor but known at point and largely priced into the market place. Brazil’s record crop helps to alleviate some of that concern but global stocks are tightening and this requires some risk premium as the US waits to get the planting season underway and the new crop rally above 10.50 should be attracting additional acreage.

Funds and specs are adding length but charts are nearing overbought territory and should be due for a correction lower – we est. funds long around 160k beans and 115k meal. You have to continue to feed the bull and if export headlines are not active (no sales announced this morning) the market is vulnerable but should find decent underlying support until more is known about the US growing season.

Overnight, the corn market was quietly mixed, finishing fractionally lower by the biscuit break. Volume was surprisingly robust, thanks in part to 33k+ K/N rolls trading. Heading into “Big Friday”, corn is unchanged for the week for a second week running. There is not much new around, as trade deals/negotiations hum in the background, Midwest farmers are getting antsy to plant, and U.S. biofuel policy remains in the news. On the latter point, news wires implied Trump favored less “red tape” around E-15, which to us seems like he is resurrecting the “RVP Waiver”. Waiving RVP for E-15 would allow it to be sold year round (currently prohibited in summer) nationwide without condition. I guess this is his idea of throwing ethanol a bone after taking RIN prices down by over half on less-than-judicious usage of refiner hardship waivers? Note, the RVP waiver is not a mandate, and merely opens the E-15 door another inch; retailers still need to adopt it and deploy the appropriate infrastructure to dispense it. This is no “switch to flip”; it could take years to see major demand gains from E-15, just as full E-10 adoption took many years to accomplish. Moving on, China auctioned off more 2013-2014 vintage reserve corn overnight, clearing over 85% of intended bushels. May options expire next Friday.

Big resistance has been confirmed near the March highs ($3.95’ish), while $3.80 was confirmed as good initial support. That may be our range here in the short-run. Users should buy weakness in the markets, using long futures + long puts and/or long call strategies to establish forward coverage. Momentum indicators are flashing signs of temporary exhaustion in corn, which could offer a major buying opportunity soon.

The corn market continued its recent “bob and weave” trade, ultimately finishing a couple cents higher Thursday. Overall interest was relatively light, though the final day of the Goldman Roll did plump up the volume numbers a little. Managed Money were viewed net buyers of about 5,000 corn today, which would leave them net long 160,000 combined futures and options. CFTC data tonight will tighten this up. CIF bids continued firm, though traders note they are not keeping pace with underlying increases in freight values. Barge freight at record high levels for the time of year? PNW corn trains were also said to be 5-10 cents firmer yesterday. Export sales were slightly disappointing for a second week, though the market did not seem to care. Net new sales of 839,900 metric tons were very close to the prior week, but down 46% from recent weekly averages. Total sold + shipped now for 17/18 stands 48.2 mmt vs. 49.2 mmt in the year ago week (and USDA estimates of 56.5 mmt). Looking down south, Brazil weather is mostly favorable, though southern growing areas could use a little extra rain. Argentina’s corn crop was estimated 25% harvested.


Brady, Darren, and David



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