GOOD MORNING,
It's month's end, end of a quarter, with a March 31 Planting Intentions and Quarterly stocks report on the way at 11:00 Chicago time. No doubt that we will all be a bit smarter after 11:00, as we see how the farmers responded to their survey of acreage intentions. Expectations are more or less for bullish wheat numbers, bearish corn numbers, and neutral to bearish beans. Spring acres could be smaller than expected, while durum should be larger.
The average advertised trade estimate for March 1 corn and bean stocks are 8.125 bln and 2.241 bln bu, respectively. March 1 wheat stocks are estimated at 1.432 bln bu, which would be down 10% from year ago, and the smallest for the date in four years. The average advertised guess for acres; beans at 84.87 mln, corn at 94.33 mln, and wheat at 44.98 mln.
Items to take into consideration as we head into today's numbers.
- Farmers filled out the survey before the coronavirus.
- Surveys were taken before the quarterly pigs and hogs data last week, which showed more than the expected number of animals.
- Ethanol plants were not being idled at the time of the survey.
All these factors can sway the numbers, or create profit-taking at either end of the spectrum post data.
Wheat prices continue to have a bid, but Russian export restrictions may be factored in. Since the start of its marketing year on July 1, Russia is said to have exported 30.2 mmt of grain, of which 25.9 mmt was wheat. Global wheat offers that were higher helped to cushion a profit-taking Monday for wheat. Corn continues to be sold by funds who look at the ailing ethanol industry.
Beans and meal catch a bid from the fact that transport logistics are snarled in Argentina, and crush is down. Trucks in Argentina have not been providing adequate bean supplies to crushing facilities, as inbound crews are tested for the virus. Soyoil decouples from a weak energies trade as charts post a probable bottom, and Malaysian palm production has been reduced with some plantations shutting down due to extra precautions.
As for current crop numbers, the crop progress report had this to say:
Texas: 50% corn planted vs. 36% week ago, and ahead of the 41% long term average. Emerged: 24% complete vs. NA week ago, and ahead of the 15% long term average. Sorghum: 61% complete vs. 40% week ago for planted, and lagging the 76% pace of year ago.
Louisiana: emerged for corn was 33% complete vs. 2% week ago, and ahead of 16% year ago. Soybeans: 3% complete vs. 0% week ago, and lagging 7% year ago.
Arkansas: corn 2% planted vs. 1% week ago, and 10% year ago.
Overall winter wheat conditions improved or are comparably good vs. this time year ago.
Oklahoma: 70% good/excllent
Colorado winter wheat: 51% G/E, and 27% P/VP vs. 55% G/E and 12% P/VP week ago.
Kansas winter wheat: 50% G/E and 12% P/VP vs. 48% G/E and 14% P/VP week ago.
WEATHER
SA - Dryness continues in southern Brazil, where reports of damage have occurred. Scattered showers are in central/southern Argentina, which will benefit filling beans but stresses other areas that are missed. The area turns drier on Thursday and could be a concern for double cropped beans that are filling through April.
US - Weather remains wet in the Delta, though conditions could turn drier this week. Showers are slated for the weekend. The 6/10 day outlook has scattered showers moving east Saturday across the Midwest.
ANNOUNCEMENTS
Russia will sell 1 mln tons of grain from its state stockpile to its domestic market. The announcement comes a day after the economy ministry backed a proposal made by the agriculture ministry to limit Russian grain exports to 7 mln tons from April through June due to the pandemic.
Egypt's President told authorities to boost strategic reserves of staple goods as global concerns about food security rise amid the virus. Egypt tendered today for 3,000 mt of soyoil and 2,000 mt of soyoil for May 1-25 delivery.
Kazakhstan will restrict wheat and flour exports during the state of emergency, as announced by the ministry.
Two of Brazil's largest fuel distributors announced Monday that they are cutting the amount of ethanol they will buy from local suppliers to adjust to a slump in demand amid the coronavirus lockdown.
JBS USA will reduce beef production for two weeks at a Pennsylvania facility after managers displayed flu-like systems.
CALLS
Calls are as follows:
beans: 3-5 lower
meal: 80-1.00 lower
soyoil: 10-12 lower
corn: 1/2-1 lower
wheat: 3-5 lower
OUTSIDE MARKETS
Crude oil is firmer trading to $21.89/barrel as talks between Trump/Putin took place. The US dollar firmer to 99.94, with stocks 199 pts lower.
TECH TALK
- May corn continues to defend its current lows of $3.32 as prices trend downward. Weekly chart indicators are negative, while dailies attempt to turn lower as well. Target lows under $3.32 are nearby at $3.30, then $3.25.
- May beans are still stuck in a trading range from $8.70-$8.88, but tops placed at $8.88 now become tougher resistance implying that a larger break could be coming.
- May soyoil gives back its gains over 27c, but prices are still trading in an uptrend channel, which is going to invite more buying interest at the bottom of the channel. The chart now suggests that 26c -2750c is a level at which the market could continue to travel.
- May meal prices still trade in a wide up-trend channel as well, with today's prices in congestion mode between recent lows of $320.00, and highs of $330.00. Markets will turn lower when prices can trade back below $320.00, which opens the door to profit-taking.
- July wheat charts are still overall positive, presenting as a bit of a bull flag after a vertical price run-up from $5.10 to $5.70. Bottoms are now located at $5.50, and therefore a break of that will create a market top. However, pullbacks would be crossing lines of support which are located at $5.43 and $5.30. If a seller, would scale down cover shorts should we go there.
The recent sideways trade now sets up these key support lows, which if broken would lead to lower prices. These levels could be tested on a weaker open at the start of the day.
May beans: $8.70
May meal: $320.00
May soyoil: 2660c
May corn: $3.38
May wheat: $5.45
MAY BEANS
Prices are sideways in a temporary range from $8.70-$9.00, but in the bigger picture trade in the top portion of a range that is from $8.45 on the low end, and $8.95 on the high end. The ADX denotes very little trend either way, as prices chop back and forth. It has shown some inherent strength for beans that breaks are holding for now, but any close under $8.70 is going to open the door for a trip down towards the lower red line of $8.45. Rallies have retreated from the blue trendline resistance which starts from $9.10 and runs down through well -defined tops at $8.88. Since resistance is stronger than support now, it increases the chance of a break lower at this point rather than higher. Could straddle/strangle $8.40-$8.80 as well.
TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America
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