Morning Wire


Highlights

        

  • CHS Hedging is offering Energy Hedging classes June 19, Grain Hedging classes June 25 and Technical Trading classes on June 26. Go to our website at www.chshedging.com for registration and class details.      

  • Mexican President Andres Manuel Lopez Obrador has sent his foreign minister to Washington D. C. to negotiate a settlement with the U. S. after President Trump said that beginning Monday June 10, 2019, a 5 % tariff on all goods from Mexico will be implemented if Mexico does not do more to stop the flow of illegal immigrants from that country into the U. S. The tariffs could reach to 25 % by October if a negotiated settlement is not made.                          

  • Over the weekend China released a report explaining why in their view, the trade negotiations with the U. S. fell apart, along with a list of demands that need to be met before meaningful talks can begin again. The first demand is that all new tariffs be lifted immediately… and so the banter continues from each side.

  • Russia’s second biggest bank VTB, has purchased a controlling stake in Russian railway holding company RTC, a major transporter of grain and timber. This comes after VTB bought its second grain terminal in the Black sea port of Novorossiisk in February. Many think that this is a continuing sign of the Russian government’s increased involvement in the country’s grain sector, with cooperation from VTB bank.

  • Although rains were limited in some parts of the western Midwest this weekend, areas in the eastern portion of the country continued to receive unwanted rains. In Missouri, areas along the Missouri River and its tributaries, additional levee breeches this weekend have added to farmers woes with further flooded farmland, particularly in the areas east of KC into the St. Louis vicinity.                                                                        

  • A/0 7:10 A. M. Crude Oil up 94 @ 54.44, Dow Futures down 84 @ 24,736, U. S. Dollar Index up .0590 @ 97.6680.   

            

Corn

  • The COT Supplemental Report out Friday afternoon showed corn specs bought 96,500 contracts last week and had cut their net short position down to 25,000 contracts a/o the close on 5-28-19. Spec activity for the balance of the week leads us the estimate the corn spec is now long between 20,000-30,000 contracts a/o the close on 5-31-19.              

  • China has confirmed the outbreak of highly pathogenic bird flu in Horgos in the far western Xinjiang region. The flu killed 1,015 out of 2,545 birds raised by farmers in Horgos. Subsequently, 11,910 birds in the area were culled in hopes to control the spread of the disease.          

  • Trade estimates for corn planting progress on this afternoon’s Crop Progress Report range from 68-72 % vs 58 % last week vs the 5-year average of 97 %.                  

Outlook: Market is slightly lower overnight but is heading back towards unchanged as this is being written. Funds seems to be long now, wet pattern does not seem to be ending, flooding continues. The negative is the Mexican tariff threat but think weather will override that for now. Crop Progress Report will be of utmost importance for price direction from here.                 

 

Oilseeds

             

  • Soybean specs also continued to whittle down their net short position according to the COT Supplemental Report issued Friday afternoon. A/O the report date of 5-28-19, the bean short was reduced by about 22,400 contracts to a net short position of 134,900 contracts. Fund activity for the balance of this week leads us to estimate the fund short in soybeans at approximately 110,900 contracts. Funds bought about 14,300 in soymeal to bring their short position down to 25,300 contracts a/o 5-28-19. Additional buying in meal the balance of the week allows us to estimate the fund short in meal at approximately 13,300 contracts a/o the close on 5-31-19. Soybean Oil specs bot approximately 11,200 contracts last week to place their net short a/o 5-28-18 to 58,300 contracts. An updated look at soybean oil specs a/o the close on 5-31-19 places their net short at approximately 51,300 contracts.                

  • Trade estimates for soybeans planting progress on this afternoon’s Crop progress report range from 38-42 % vs 296 % complete last week vs a 5-year average of 79 %.  

  • April NASS crush will be released today and is estimated between 170.5 - 171.0 million bushels vs last year’s monthly crush record of 171.6 million bushels. The average estimate is 170.0 million bushels.

  • Malaysian palm oil futures fell 36 ringgits overnight to close the benchmark August contract 41 ringgits lower @ 2,028. Weak world equity markets attributed to the weaker tone overnight.                          

Outlook: Soybeans have seen both side of the ledger overnight but weather will continue to be at the forefront for traders. Planting progress this afternoon will go along way in determining market direction from here. Funds still short about 110,000 contracts as we begin the new week.                     

 

 

Wheat

  • Funds reduced their wheat short in KC by about 4,600 contracts on a week to week basis to approximately 37,800 contracts a/o 5-28-18. Fund activity for the last three day of last week allow us to estimate the fund short in KC at approximately 25,800 contracts. Chicago wheat specs bought about 13,600 contracts last week to a short of about 63,300 contracts a/o 5-28-19. Fund activity the last three days of last week places the funds short in Chicago a/o the close on 5-31-19 @ approximately 40,000 contracts. Funds in Minneapolis wheat a/o the close on 5-31-19 stand at even in futures only and about 500 short combining futures and options.                                   

  • The Argentina government expects Brazil to buy at least 5.5 million tons of wheat from Argentina in 2020. This announcement comes after a meeting between Argentine officials and the Brazilian Wheat Industry Association in Sao Paulo late last week.        

  • FranceAgrimer estimated French soft wheat was 79% good to excellent (unchanged from last week) in its weekly report. This compares to an 80% good to excellent rating at the same time last year.     

  • Weather forecasters in Australia are predicting that there is at least a 70 % chance that the entire country will record warmer and drier conditions over the next three months. This forecast will just add to the growing concerns for wheat production in that country this year. Some analysts in Australia are already lowering their estimates for wheat production down to around 18 million tons. Some earlier estimates in March estimated wheat production 2 around 24 million tons if rains were received. New weather forecast over the weekend are adding surprise rains this week in Australia that will help alleviate some dryness in that country.                                                                     

  • Winter wheat conditions are expected to fall another 1-2 % on this afternoon’s Crop Progress Report as rains continue to play havoc with this year’s crop whether it be HRW or SRW. Saturday’s GFS map, out through June 17 continues to show widespread and heavy rains of up to 6 inches in northern Oklahoma and up to 9 inches in southern Kansas. SRW areas are forecast to see 3-4 inches of rain in the same time, with some amounts of just over 6 inches forecast in portions of Missouri. Spring wheat planting is estimated to be 90-92 % complete vs a 5-year average of 96 %.          

Outlook:  Wheat continues to run on weather concerns due to all of the rain in the U. S. wheat areas. Hot, dry in Russia, overall dry in Australia (some rain coming this week) adds fuel to a long price depressed market. Anecdotal reports of increased disease problems along with wheat turning white due to standing water are increasing each day. Harvest in southern Kansas that would normally start around June 10th is at least delayed by two weeks, and that is if we could get some drying which does not seem forthcoming.  

 

7:30 AM CN SN SMN BON WN KWN MWN
Prior Settle 427.00 877.75 321.30 27.59 503.00 473.00 552.00
Contract High 445.00 1050.00 364.60 36.00 619.00 640.00 675.00
Daily High 429.25 886.25 325.70 27.59 516.50 490.00 562.00
R2 433.25 892.00 327.50 27.75 521.00 495.25 565.00
R1 430.00 884.75 324.25 27.75 512.00 484.25 558.50
Last Trade 427.25 879.00 322.70 27.34 515.50 488.75 562.00
S1 423.00 872.00 319.50 27.50 498.50 467.75 549.00
S2 419.25 866.50 317.75 27.25 494.00 462.25 546.00
Daily Low 422.25 873.50 320.90 27.31 503.00 473.50 552.50
Contract Low 343.00 791.00 283.10 26.21 418.50 382.00 506.00
Managed $ net 20,000 (111,000) (13,300) (51,300) (40,000) -25800 EVEN
,
10 Day MA 410.25 850.75 309.25 27.25 491.75 452.48 549.75
20 Day MA 388.00 837.50 301.50 27.25 467.75 428.25 535.00
50 Day MA 377.25 871.00 306.25 28.25 461.25 428.75 534.75
100 Day MA 382.75 901.50 311.00 29.25 480.50 458.75 552.50
200 Day MA 387.25 908.50 313.75 29.25 512.25 503.00 576.50