GOOD MORNING,

Macro market weight created new lows in Ags yesterday, with mixed follow-through this morning.  Funds sold across the board yesterday, as corn printed new contract low.  Corn now has all the hallmarks of a bear market in progress, with new contract lows, higher volume, and rising open interest as new shorts hop onboard.  Wheat prices turn lower as longs went into liquidation mode on the poor technical performance, extending losses this morning.   Poor export sales sealed the deal as prices close out the PM session on market lows for wheat and meal.  Despite good sales in beans, prices took a technical turn lower here as well.   

Index rolls move into full gear this week.  Bean, wheat, and meal inverses were slightly lower yesterday as prices traded downward, but in general the trend has been for traders to bull-spread everything.  May corn may see support from funds moving from short positions to deferreds, as well as pricings as US corn is the most competitive in the world now.  Beans are not competitive as the Brazilian currency remains on the defensive, and entices farmers to sell.  

WEATHER

Still a non-event, with dry conditions in Brazil that could eventually impact the safrinha (second corn crop), at this point.  

US - 6/10 and 8-14 day maps are still warm and wet.  Need a little dry at this point to get things on track.  

REPORTS

USDA Feb. crush came in at a record 181.56 mln bu, well above the trade average estimate of 176.9 mln bu, and vs. Jan at 188.6 mln bu.  Oilstocks were higher by 270 mln to 2.420 bln lbs, the fifth consecutive month of gains and well above expectations.  Meal stocks were 419 mt, up from 394 mt in Jan.  

Export Sales:

beans:   19/20 net 957,400 mt and 20/21 net 114,000 mt  (vs. an expected 375 to 1.0 mt)

meal:     19/20 net 125,200 mt and 20/21 net minus 15,900 (vs. an expected 100-350 mt)

soyoil:   19/20 net 67,000 mt and 20/21 net 2,300 (vs. an expected 8-45 mt) 

corn:      19/20 net 1.08 mt and 20/21 net 20,300 mt (vs. an expected 700-1.3 mt)

wheat:    19/20 net 72,900 mt and 20/21 net 185,900 mt (vs. an expected 250-950 mt)

Sales were top end across the board except for meal and wheat.    Soyoil sales were better than expected. Soyoil prices were slightly better post sales report, as more unwinding of previous buy meal/sell soyoil spread trade continues.  

Wheat:  Sales were poor, with cheaper offers from the Black Sea and others.  The break in prices should garner some business if logistical issues persist.

Corn:  Good sales as expected, with increased business from Mexico, Japan, and Korea.  Logistical issues should mean that corn sees values at these lows.

Beans:  Better than expected with increased sales to Mexico and 131K to China.  China needs to purchase more in order for prices to trade much higher.

Meal:  Low end to poor, despite logistical challenges to Argentina.  If that continues, would expect business to return to US, and for meal prices to stabilize at lower levels.

Soyoil:   Good sales, with increased demand on tightening supplies.

STORIES

China was importing high quality breeding sows and hogs, with more than 150 plane loads of pigs needed.  According to a Reuters story, six planes carrying more than 4,000 high-quality French breeding pigs have arrived in China so far this year, the first of an expected dozens of plane-loads as the world's top pork producer rebuilds its decimated herds.

ANNOUNCEMENTS

Brazil trade data shows March bean exports at 11.64 mmt vs. 1.49 in Feb, and 8.46 last March.  Meal exports were 1.56 mt v. 1.06mt in Feb., and 1.41 mt last March.  Oil exports were 102 mt vs. 12 mt in Feb., and 78 last March.

Ethanol stockpiles rose to record highs as crude oil prices, which are down 66% this year, clips ethanol profitability.  Corn prices back in Feb/March of 2012 was trading at $5.50, vs. $3.60 today, when acreage was also totaling 97.2 mln acres.  

World food prices fell sharply in March, hit by lower demand and falling crude, the UN food agency stated. 

Russia will sell up to 83% of grain from its stockpiles on the domestic market, starting on April 13.  The Ministry has 1.8 mln tonnes of grain in its stockpiles, mostly in Siberia.  It had planned to sell 1 mln tons prev.  There will be up to 1.5 mln mt of grain used to meet the needs of the domestic flour and baking industry.

China's commerce ministry assured consumers that important grain supplies are sufficient to meet the country's domestic demand and would not fall short even without imports.  They claimed corn, wheat, and rice for 2019 ending stocks were more than 280 mln mt, and that consumption is 200 mln mt.  

BUSINESS

Egypt unexpectedly canceled their April 2 wheat tender.

CALLS

Calls are as follows:

beans:  3-5 lower

meal:  .80-1.00 lower

soyoil:  5-8 higher

corn:  1/2-1 higher

wheat:  5-7 lower

OUTSIDE MARKETS

Outside market include a slightly weaker dollar at 99.46, and firmer crude at $22.55/barrel as Trump said he expected a deal between Russia and the Saudi's soon.  

TECH TALK

• The markets turned lower from sideways yesterday, so could target $5.29-$5.33 July wheat, $8.45-$8.55 May beans, $310.00 May meal, 2550c May soyoil, $3.30-$3.32 May corn.
• May corn prices have a stiff line of resistance moving down from $3.50 to $3.42.   Prices are attempting to place new contract lows, but so far have started to place triple lows from $3.32 to $3.33.  The market appears to be stuck in a congestion phase here, but the next move may be higher rather than lower if prices cannot take out contract lows today.  
• Dec. corn places double contract lows at $3.47, close to the $3.45 indicated that could provide support as well.   
• July wheat turns lower from higher after prices congested from $3.50-$3.70, which now becomes a top.   Prices triggered sell-stops at the converging lines of support at $5.43, which opens the door to a test of $5.30-$5.33.  The up-trend has weakened, meaning more liquidation may be on hand.  
• May soyoil places a double low at 2582, with a rally back over 26c.   Would look for back and forth trade now from 2550c-26c, and the double lows are not as strong as the overall down-trend and peak high at 2740c.  
• May meal prices broke its steep up-trend channel when it broke $317.00, and therefore set the stage for liquidation.  Prices are weaker on follow-through, and broke through $315.00 as well.  The 200 day moving average in May meal is located at $310.00, and should offer some stabilization should we go there.  By all indications, it is likely we will, although critical support is also at $313.00.

MAY BEANS

The trend turned lower from sideways as key support at $8.70 was violated, with sell-stops triggered underneath.  Target low is now $8.45, though $8.55 could cushion as well.  The ADX reading at 19 denotes a clear lack of trend, but broken levels of support and a lack of a reversal trade probably triggers lower prices still.  Overall trading range has been from $8.45-$8.95, and in the big picture could straddle/strangle this range.  Would also systematically over shorts from $8.60 down to $8.45.  

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America