Morning Highlights


Highlights                                 

  • Global equity markets are falling, as the White House’s move against Chinese telecom company Huawei could start a “tech cold war.” Google announced that it will block Huawei from using most of its Android operating system, and many companies will stop selling them processing chips. The STOXX Europe is down 1% and the DOW is down 110 points.
  • Asian exports had a rough April, with China down 2.7%, Taiwan down 3.3%, Korea down 2%, and Indonesia down 13.1% YoY.
  • Crude oil was up as much as $1.28 overnight, as OPEC says they intend to maintain production cuts.
  • As of 7:00 am CT, crude oil is up 25 cents to $63.01/barrel, gold is up 0.40 at $1,276.00, DOW down 117 to 25,663, dollar index down 67, and Euro is up 15 pts.

Corn

  • Wet and cool forecasts are the main feature today, unsurprisingly. Some areas in the Midwest are trending 2-3” wetter, with parts of Kansas possibly seeing 11 more inches of rain over the next 7 days! Corn is expected to be 50% planted on today’s report, and then only 60-65% planted next week. The rain is also affecting barge traffic, with STL expected to hit its second highest level on record.
  • China’s Dalian corn futures were up 7 ¼ to a six month high, after armyworm was found in several Chinese provinces.
  • Corn open interest was up 26,420 contracts on Friday, as new longs continue to enter the market.
  • Commitments of Traders showed funds added 591 contracts to their short position in the week ending 5/14/19, now net short 282,918 contracts.

Outlook:  July futures up 2 ½ to up 6 ½ overnight.. more room to the upside with 4-5 million acres potentially in jeopardy. Funds are still very short, while the farmer might be as much as 70% sold on old crop. Likely more farmer engagement at $4.00 cash.

 

Oilseeds

  • Brazil’s soybean lineup increased from 5.7 MMT last week to 7.5 MMT, with most headed to China. May shipments will still be well below last year’s 11 MMT total.
  • China’s Dalian soybeans were up 14 ¼ overnight, while soymeal and soyoil were unchanged.
  • Late last week, an executive from the U.S. Soybean Export Council said the U.S. will permanently lose some soybean export market share in China, going against USDA Secretary Perdue’s comments that there will be no long-term impact.
  • COT showed funds added 8,282 contracts to their short soybean position, now net short 168,835 contracts. They added 9,556 to their soyoil short, now net short 80,406, and 6,498 to their soymeal short, now net short 39,633 contracts.

Outlook:  July beans up 3 to up 11 overnight.. following the rest of the market after falling on Friday. Trade war is still looming over soy and acreage is expected to increase, switching from corn.             

 

Wheat

  • Ukraine has exported 40.1 MMT of grain so far this marketing year, up from 31.5 MMT a year ago, according to APK-Inform.
  • French soft wheat conditions are 79% good-to-excellent, unchanged from last week. EU wheat exports in March totaled 2.66 MMT, up from 2.15 MMT in Feb, with April expected to be higher.
  • Taiwan is tendering to buy 110,000 MT of U.S. wheat out of the PNW.
  • COT data showed funds were net buyers of 3,685 Chicago wheat and 2,442 KC wheat contracts in the week ending 5/14/19, but are still net short 78,461 Chicago and 56,424 KC wheat contracts.

Outlook:  July KC wheat up 4 to up 14 ½ overnight.. corn is getting the most attention on wet forecasts, but many wheat areas will also be affected, and wheat futures have more ground to make up.