News Source: SETZ

Closing Comments; Friday, May 25th, 2018

Trade was on the positive side today as pre-weekend short covering provided support. Soybeans took additional support from overnight sales to China and reports that Argentina may produce a smaller crop next year if tax rates are no longer adjusted downward. The building drought in the Southwestern U.S. also provided market support as it will not only impact crop production, but possibly livestock feeding as well. Advances were capped by a lack of follow-through buying and building concerns over the state of the U.S. economy.

Demand for U.S. ethanol in the world market has risen considerably in recent months. The latest monthly reports show that in March the United States exported 195.2 million gallons of ethanol. The main buyer was Brazil who accounted for 45% of the exports. Even China has stepped in and bought U.S. ethanol recently, which has been a great benefit for industry margins.

The question surrounding this elevated ethanol demand is how long it will last. Brazil is already forecasting it will produce more ethanol domestically next year due to economics in the sugar market. The same is true in China where the government continues to sell corn out of reserves. It is not out of the question that both of these countries could shift from being ethanol importers to exporters in the near future.

Trade is closely monitoring global buying habits, and nothing that several buyers have purchased less than usual from the United States. The most talked about of these is China, but there are others as well. One getting more attention is Japan, with April purchases from the U.S. down 4.6% on corn and 2% on soybeans from a year ago. Japan’s April imports were down on a whole though, which is actually better than simply walking away from the United States as a source.

July corn futures finished today’s session 1 cents higher at $4.06, July soybeans gained 5 cents at $10.41 , and July wheat in Chicago was 12 cents higher at $5.43.

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Weekly Market Review; Friday, May 25th, 2018

U.S./Chinese Trade Tensions Ease

The announcement that trade tensions between the United States and China have subsided for now are having mixed reactions in the commodity market. For one we do not know how long any tariffs may be avoided, we simply know they are not on the immediate horizon. Analysts are also skeptic of projections for a 40% rise in trade between the two countries. Above all, the delay to any tariffs does not include all commodities, as the 25% rate on pork trade remains in effect at this time.

China did step in and book 312,000 metric tons of U.S. soybeans at the end of the week, which helped ease fears.

As expected, a large amount of planting took place in the United States last week. As of last Sunday the U.S. corn crop was 81% planted which is equal to the five-year average. Corn was 50% emerged, 3% ahead of average. The soybean crop was 56% planted with the average only being 44%. Soybeans were 26% emerged, a large 11 points ahead of normal for that date.

Even though we are moving into the heart of the U.S. growing season we continue to see a minimal amount of risk premium in the futures market. Even though reserves of both corn and soybeans are greater than normal, it would not take much of a shift and we could see these quickly erode. This is especially the case on corn where we are already expected to see stocks shrink both domestically and globally next year.

The real question when it comes to risk premium is how much is needed, or even wanted for that matter. Many cash buyers claim to have enough coverage to last them for the next several weeks and are in no urgency to extend bids for added purchases. Futures traders are also showing little interest in extending their positions much more than they already have. It may take proving to these individuals that we will be losing production this year before buying takes place, especially after the last two production seasons.

More opinions are being released over what we may see to revised acreage numbers in the June update. It is becoming more likely that we will see an upwards revision to both corn and soybeans. These acres would come from wheat in the Upper Plains and sorghum in the South. Delays to planting and better returns for corn and soybeans over wheat and sorghum are contributing factors for the shift.

Trade is keeping a close eye on world soybean economics. This is not just from a demand point of view, but from what could take place to new crop production as well. At the present time the break-even on soybeans in Brazil is around $4.70 per bushel. Given current soybean futures and currency exchange rates soybeans in Brazil are currently worth just over $17.00 per bushel. There is little doubt this will cause further expansion in the country’s soybean plantings.

Trade continues to focus on U.S. soybean sales. We are still seeing record demand for our soybeans in the global market, which is preventing analysts from lowering their export forecasts. It is also believed that the United States will be called upon to cover the 500 million bu shortfall in South American soybean production this year. While these are positive factors, they may already be priced into soybean futures.

We are starting to see more interest in U.S. corn exports. The United States currently has a record 725 million bu of unshipped corn sales on the books. This is a 38% increase from a year ago. The question in the market now is if this corn will all get shipped or if we will see cancellations similar to what has taken place in soybeans recently. Given the tighter world corn reserves, it is less likely buyers will wash out of those bookings.

A big story in the market recently has been Argentine soybean bookings. While this is receiving much attention, the process is really not that unusual. In many years Argentina buys soybeans, but usually these are from other South American suppliers, not the United States. If worries ease over the size of the soybean crops in these other sources, we could easily see sales on the books with the United States cancelled.

Movement of farm stored corn and soybeans remains quite low. This is in part from all attention being placed on spring fieldwork, but also from the fact many producers have moved all of the cash inventory they wish to at this time. It is not uncommon to see producers across the Corn Belt hold back a portion of their inventory until they become comfortable with new crop production possibilities.

As a result of this slow selling, buyers have resorted to several different tactics to try and secure bushels. This is mostly being done by processors who wish to capture as much profit margin as they can in today’s market environment. One tactic many are using is the offering of free storage contracts. While these can be attractive to a producer, commercials have little interest in them, and that is where most movement is currently coming from.

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Friday, May 25th, 2018

Trade is higher as we move into the holiday weekend. Not a lot of fresh news from either side as we move forward today. Most talk is still on yesterday’s exports, and even though numbers were less than expected, all in all numbers were still favorable. This is especially the case on corn. Soybeans took mixed results from the sales data, as even though net sales were negative due to cancellations, we did see some business listed with China. China even bought a small amount of corn from the US last week. Thoughts are we will continue to see business with China as for at least now, the tariff issues between the two countries has been put on hold. This verified by news China booked 312,000 mt new crop soybeans overnight from the US and another 165,000 mt of optional origin soybeans. The market is still monitoring developments with North Korea and what they could mean for Asian trade on a whole. The other story trade is monitoring this morning is weather and what is means for the remainder of the spring planting season. Corn planting expected to be on the top side of 95% next Tuesday and soybeans close to 80%. All in all, planting is quickly becoming irrelevant for trade. Attention is now on crop conditions, and Tuesday we should get our first look at the corn number. Trade expecting to see a number of nearly 80% Good/Excellent to start the year. Undoubtedly we will immediately see yield estimates follow this release; albeit right or wrong. We are also seeing more positioning today ahead of the long holiday weekend as Trade will be closed Monday in observance of Memorial Day. Trade resumes Monday night at 7:00 PM CT. The cash market is unchanged today as we continue to see some locations push bids while other buyers report having adequate coverage for now. Many are waiting to see how much movement we see following the conclusion of planting before extending their bids.

Headlines

  • US sells China soybeans overnight
  • US ethanol stocks -2.4% from year ago
  • Little acreage shift expected this year
  • China may ease GMO regulations
  • Winter wheat quality is low
  • Wheat may displace 200 mbu of corn demand for feed
  • More reductions to SAM crops
  • IGC raises world corn production
  • Funds long 177,000 corn, 102,000 soy and 10,000 wheat contracts

Bull Side

  • Mkts need risk premium
  • Corn exports rising
  • Chinese soy bookings

Bear Side

  • Technicals
  • Soybean cancellations
  • Weaker basis in SAM

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Friday, May 25th, 2018

Even though we are moving into the heart of the U.S. growing season we continue to see a minimal amount of risk premium in the futures market. Even though reserves of both corn and soybeans are greater than normal, it would not take much of a shift and we could see these quickly erode. This is especially the case on corn where we are already expected to see stocks shrink both domestically and globally next year.

The real question when it comes to risk premium is how much is needed, or even wanted for that matter. Many cash buyers claim to have enough coverage to last them for the next several weeks and are in no urgency to extend bids for added purchases. Futures traders are also showing little interest in extending their positions much more than they already have. It may take proving to these individuals that we will be losing production this year before buying takes place, especially after the last two production seasons.

The markets will be closed next Monday in observance of Memorial Day. When trade resumes on Tuesday, all interest will be on the weekly crop report, as we are expected to receive our initial corn crop rating of the year. Last year the crop was rated 65% Good/Excellent to start, and held there most of the growing season. No matter what we see for a number trade will undoubtedly be quick to try and determine a final yield, which will be debated all growing season.

Market Movers: Fund Activity, Outside Markets

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Thursday, May 24th, 2018

Trade started on the positive side today as fund buying again surfaced in the market. Soybeans took additional support from rumors China may be willing to relax their strict non-GMO policy on imports. Advances were capped by lackluster exports and favorable weather for much of the Corn Belt. News that talks are breaking down between the U.S. and North Korea rattled the outside markets today, which also capped gains in the commodities.

Export sales for the week ending May 17th were mixed. Corn sales totaled 33.6 million bu on old crop and 10.8 million bu for new crop which were above weekly needs. Soybean sales were a negative 5.1 million bu on old crop and just 300,000 bu for new crop. Wheat bookings for the week came in at 4.1 million bu of old crop but a large 12.5 million bu on new crop.

We are starting to see debate increase over future soybean production in Brazil. Brazil is starting to establish a trend of record sized soybean crops and it is thought this will continue. This is in part from weather, but also from improved farming practices and expansion. Given current returns it is likely this trend will continue.

For the past several months the United States has seen record soybean crush. If this trend continues it is thought we will see a total crush soybean demand of 1.99 billion bu this year. This is at the very top end of the U.S. crush capacity, which is raising some questions. Once we see crush facilities take down-time for annual maintenance we will likely see this number decrease.

July corn futures finished today’s session 4 cents lower at $4.04 , July soybeans were down 3 cents at $10.35 , and July wheat in Chicago lost cent to close at $5.30 .

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Thursday, May 24th, 2018

Trade is keeping a close eye on world soybean economics. This is not just from a demand point of view, but from what could take place to new crop production as well. At the present time the break-even on soybeans in Brazil is around $4.70 per bushel. Given current soybean futures and currency exchange rates soybeans in Brazil are currently worth just over $17.00 per bushel. There is little doubt this will cause further expansion in the country’s soybean plantings.

The big unknown in the global soy complex remains how much of a role Argentina will have in trade. Argentine crushers have recently had to resort to imports of soybeans to cover crushing needs. The initial reaction to this is that the country is going to be holding less soybeans this year than in the past. The alternative side is that it is cheaper to make imports on soybeans than push bids to try and shake soybeans out of tight-fisted farmers at the present time.

Planting across the United States is moving along in full force. Trade is not as much focused on getting the crops planted, but now looking at what impact the delays could have in the future. It is not out of the question that later plantings could push the redevelopment stage of crop growth into late-summer conditions that can be less than favorable. There is also a possibility of a later harvest, elevating chances of an early frost or freeze affecting crops next fall.

Market Movers: Fund Activity, Export Sales

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Wednesday, May 23rd, 2018

Trade spent most of today’s session on the positive side as light buying took place in each complex. Rumors that China is again showing interest in U.S. soybeans and sorghum were also beneficial for the market. Advances were capped by a lack of active buying and thoughts rains for the Corn Belt are providing more benefit than damage. The fact U.S. export offerings remain the highest priced in the global market also weighed on today’s trade.

The ethanol report for the week ending May 18th was bearish for the industry. An average of 1.03 million barrels of ethanol were manufactured each day, a 30,000 barrel decrease from the previous week. At the same time ethanol reserves jumped a large 624,000 barrels. U.S. ethanol inventory now stands at a large 22.13 million barrels.

U.S. ethanol manufacturing is giving trade mixed signals. At the present time ethanol manufacturing volume is running 2.5% ahead of a year ago. Even with this increase, U.S. ethanol reserves have shrunk by 5%, mainly from exports. Thoughts are this will change as we move through the remainder of the marketing year however, especially on the export pace. Brazil is harvesting a record sugar cane crop and given the value of sugar, much of this will likely end up being processed into fuel.

China continues to avoid the United States in the global soybean market. While some of the reason for this is political, seasonal tendencies are more of a factor. Every year at this time China shifts all of its soybean buying interest to South America as the new crop supply becomes available. One factor that is getting attention this year is that even with season tendency U.S. soybeans are more affordable, and China is still not making any purchases from us.

July corn futures finished today’s session 3 cents higher at $4.08 , July soybeans were 8 cents higher at $10.39 , and July wheat in Chicago rallied 9 cents to finish at $5.31.

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Wednesday, May 23rd, 2018

Trade is on the positive side this morning as we see light buying surface in the market. Soybeans were the early leader as rumors are circulating through the market that China is showing interest in our offerings. The question is if this is for immediate shipment or for the deferred months. Hard to believe that China would buy spot soybeans from the US given the fact Brazil’s offerings are at a substantial discount to the US. US soybeans are at a discount for August forward though, so to see sales that far out would not come as a surprise. China also rumored to be looking for US sorghum and DDGs. Some support coming from ongoing delays to planting in regions of the Corn Belt. These are not very widespread though, and not as much of a factor as we have seen in the past. Trade also aware of the fact that late plantings do not necessarily mean poor crops. Last year is a perfect example of this where corn planting in Illinois was delayed considerably, yet the final corn yield was a record for the state. I’m not saying we will see that again this year, but the possibility has greatly reduced spec buying and the addition of Risk Premium into futures. Trade is also anticipating a high initial corn crop rating next week. Back to Illinois, last year that state had an initial corn crop rating of 51% Good/Excellent. By the end of the year this had increased considerably. Analysts in IL are projecting the crop at 88% G/E to start this year. We need to remember that crop ratings are NOT indicative of final yield though, and there is a lot of growing season ahead of us. Fresh news is sparse this morning, and that is keeping advances in check today. Weakness from the outside markets are also spilling over into the commodities. The cash market is unchanged today as excepted to remain that way. We are seeing some pushes for coverage, but these are becoming fewer and fewer as we see profit margins erode. This is especially the case for ethanol manufacturers. It is not out of the question we could see basis start to widen if these margins continue to decline.

Headlines

  • Argentina may suspend tax improvement on soybeans for now
  • Corn conditions reports start next week
  • Initial US corn rating expected to be above 70% G/E
  • Uncertainty remains on US/China trade
  • Argentina to plant 10% more corn in 2019
  • Ethanol margins eroding
  • Dry conditions impacting Black Sea production
  • Drought expanding in Southwest US
  • Funds long 181,000 corn, 103,000 soy and 8,000 wheat conts

Bull Side

  • More rain delays to planting
  • China shows interest in US commodities
  • Transit issues in SAM

Bear Side

  • Argentina to increase corn production
  • Brazil soy cheaper than US
  • High crop ratings next week

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Wednesday, May 23rd, 2018

Trade is awaiting the monthly soybean import data from China. The latest data showed a well-defined shift from the United States to Brazil as a main supplier of soybeans, and this was before any talk of import tariffs was brought into the market. Thoughts are we will see an even greater shift away from U.S. soybeans as we have seen cancellations of previous booked needs take place. Not only has China avoided U.S. soybeans, but also shown an interest in alternative vegetable oils to soy oil as well.

Weather remains a significant factor in price discovery. This is not just for the U.S. market, but for the global market. Trade is still trying to determine what impact drought and flooding had on South American production this year, as production reports are quite variable. There are now concerns over frost in parts of Brazil which may have brought an early end to the Safrinha growing season.

This uncertainty on Brazil’s corn crop has some analysts rethinking their production estimates. The U.S.D.A. currently estimates Brazilian corn production at 87 million metric tons. The firm CONAB believes the crop will be larger, estimating it at just over 89 million metric tons. We are now seeing some private estimates that much lower, with the Safras group at just 79 million metric tons.

Market Movers: Outside Markets, Crop Reports

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Tuesday, May 22nd, 2018

Trade started on the positive side today as light fund buying surfaced on every complex. This was the result of several factors, including reductions to South American crops and an increase in export loadings of corn and soybeans. There are now thoughts we could surpass yearly export projections if our current loading pace continues. Advances were capped the U.S. planting pace and crop progress which are both at or ahead of normal.

More attention is being given to weekly export sales reports. Ever since talk began surrounding possible tariffs on U.S. soybeans to China, purchases by China has dropped off. In fact, Chinese buyers have went as far as cancelling sales already on the books. At the same time China has been booking new crop soybeans. We have also seen other buyers show up for U.S. offerings, and keep our total sales at an elevated volume.

We are starting to see more interest in U.S. corn exports. The United States currently has a record 725 million bu of unshipped corn sales on the books. This is a 38% increase from a year ago. The question in the market now is if this corn will all get shipped or if we will see cancellations similar to what has taken place in soybeans recently. Given the tighter world corn reserves, it is less likely buyers will wash out of those bookings.

We are seeing more and more estimates released on what crops might be planted on uncommitted acres this year. One problem with these is what numbers are being used when determining which crop is more economical, mainly yields. Some forecasters are using yields that are distorting projections, including some soybean yields in the 60 bushel per acre range. These distorted yields are giving trade the indication that soybean returns are much higher than they really are.

July corn futures finished today’s session 2 cents higher at $4.04 , July soybeans gained 5 cents at $10.30 , and July wheat in Chicago rallied 14 cents at $5.21 .

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Tuesday, May 22nd, 2018

Trade started the day session firmer as we continue to see light buying in each complex. The grains are showing more strength today, mainly the wheat complex. Concerns are being voiced over the impact spring weather has had on the US wheat crop. This has been debated for several months though, and its impact on the market depends on whether buyers or sellers show up. The bullish momentum in the soy complex has faded today as the long-term impact of the trade deal between the US and China is more closely weighed. There are several opinions on this topic, and several different ways to look at it. Even if there are no tariffs in place, China does not have to buy commodities from the US. Buying decisions will still be placed on price and the US will need to remain competitive. In all reality, this news could end up being bearish for soybeans as import buyers will not feel they have to take US offerings to avoid high prices in South America. At the end of the day, regardless of tariffs in place or not, supply and demand will dictate how many soybeans the United States sells and at what value. The weekly planting report is keeping a lid on the market today as progress is at or ahead of average. Corn is now 81% planted and soybeans are at 56%. Another jump in progress is expected again next week. The numbers of acres that may not get planted this year is shrinking and more of a localized issue than a widespread one. More attention is being placed on crop progress, and emergence data shows this is off to a fast start as well. This starting to reduce the chances of late summer heat impacting crop development. This does not remove all concerns over crop development, it just minimizes them for now. One benefit of this faster planting is that it will reduce the number of acres that may shift to soybeans and help prevent the build in reserves that has been forecast for that crop. Weather and fund activity will be back in the driver’s seat for today’s trade. The cash market remains firm and will be for some time. Interesting to see some buyers starting to report adequate coverage though, and talking of pulling bids. This may be more talk than anything and an effort to scare bushels loose.

Headlines

  • US corn 81% planted, equal to 5ya
  • US soybeans 56% planted, +11% from 5ya
  • Emergence ahead of average on corn/soy
  • Corn/soy loading pace increasing
  • Commercial movement rising
  • Uncertainty surrounds US/Chinese trade
  • Shipping back to normal on Miss River
  • Chinese corn auctions equal to $5.84/bu
  • Light frost in Brazil, no crop damage reported
  • Funds long 175,000 corn, 98,000 soy and even on wheat

Bull Side

  • Brazil rains too late to benefit
  • Argentine soy quality
  • Corn acres likely to shift to soy

Bear Side

  • Trade uncertainty
  • Crops progressing ahead of average
  • Mkt becoming over-bought

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Tuesday, May 22nd, 2018

As expected, a large amount of planting took place in the United States last week. The U.S. corn crop is now 81% planted which is equal to the five-year average. Corn is 50% emerged, 3% ahead of average. The soybean crop is now 56% planted with the average only being 44%. Soybeans are 26% emerged, a large 11 points ahead of normal for this date.

The announcement that trade tensions between the United States and China have subsided for now are having mixed reactions in the commodity market. For one we do not know how long any tariffs may be avoided, we simply know they are not on the immediate horizon. Analysts are also skeptic of projections for a 40% rise in trade between the two countries. Above all, the delay to any tariffs does not include all commodities, as the 25% rate on pork remains in effect at this time.

We are starting to see wheat have more of an impact in the corn market. Argentine officials claim the country could plant upwards of 500,000 more acres of wheat this year due to better returns. Others claim weather may restrict wheat plantings by 800,000 acres if conditions remain dry. The unknown in the world wheat market is Russia who is projecting larger grain exports this year. These factors could easily impact how much competition corn sees in the global market, mainly for feed.

Market Movers: Fund Activity, Planting Reports

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Monday, May 21st, 2018

Trade was mixed for much of today’s session with soybeans posting solid advances while the grains were weaker. Soybeans took nearly all of their support from easing trade worries between the United States and China, and how this may elevate demand for U.S. offerings. Soybeans also took support from a smaller long position than trade had expected. Corn tried to follow soybeans higher, but struggled with pressure coming from losses in the wheat complex and mostly favorable weather for the Corn Belt.

Export loadings for the week ending May 17th favored corn and soybeans over wheat. Corn loadings for the week totaled 60.2 million bu, above both trade estimates and the volume needed per week. Soybean loadings were at the top end of estimates but also more than needed at 32.8 million bu. Wheat shipments were at the bottom of expectations and under the volume needed weekly at just 12.5 million bu.

More opinions are being released over what we may see to revised acreage numbers in the June update. It is becoming more likely that we will see an upwards revision to both corn and soybeans. These acres would come from wheat in the Upper Plains and sorghum in the South. Delays to planting and better returns for corn and soybeans over wheat and sorghum are contributing factors for the shift.

A big story in the market recently has been Argentine soybean imports. While this is receiving much attention, the process is really not that unusual. In many years Argentina buys soybeans, but usually these are from other South American suppliers, not the United States. If worries ease over the size of the soybean crops in these other sources, we could easily see sales on the books with the United States cancelled.

July corn futures finished today’s session cent higher at $4.02 , July soybeans rallied 26 cents to close at $10.25 , and July wheat in Chicago was 11 cents lower at $5.07 .

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Monday, May 21st, 2018

Soybeans have started the week with sizable gains as fresh buying interest has surfaced in the complex. The primary reason for this is the avoidance of an all-out trade war between the United States and China. Details are not being released at this time though as both sides have simply agreed to continue to work through their differences. This does not mean we will not see tariffs at some point, just that they will not take place in the immediate future. What is interesting in this whole development is that an “unknown” buyer cancelled a large 949,000 mt of US soybean bookings last Friday. If this was in fact China, it seems odd they would cancel these soybeans knowing the market would likely rally. This brings into question China’s soybean demand regardless of a tariff or not. It appears as though China has all of their old crop soybean needs covered at this time and is showing less concern over new crop coverage. Soybeans are also taking support from low yield reports out of South America. More than anything the fact funds were holding a smaller than expected long position is giving that complex some support today. The grains are not nearly as strong as soybeans, mainly wheat. Wheat futures in Chicago are posting solid losses today as we see a correction from last week’s rally. Corn is stuck between the other two markets and is only fractionally higher. An active weekend of planting is weighing on corn, as is reports of good stands across some regions of the Corn Belt. Corn is finding support from reports of less than expected production in Brazil’s Safrinha crop. These are being questioned by trade though, as decreases are contrary to what other analysts are predicting. The firm Safras is now projecting a total corn crop for Brazil of 79 mmt. The firm CONAB is higher, with 84 mmt of production. The big question with corn is if the global crop is getting larger or smaller, and right now, most analysts are expecting it to increase. The cash market remains firm as buyers continue to push for deliveries. We are at a point where basis improvement is not having as much of a reaction on values though, as movement is nil at any price. All attention is on planting and will remain so for the next several weeks.

Headlines

  • US/China to work on trade issues
  • Planting tonight at 83% on corn, 52% on soybeans
  • Record unshipped US corn sales
  • Farmers selling remains light
  • Farm Bill does not pass House
  • US corn basis +1c last week, soybeans +2c
  • Japan importing less corn, soybeans
  • Firms lower Safrinha crop estimates
  • Last week; corn +12 , soybeans +3 cents, wheat +28 cents
  • Funds long 185,000 corn, 88,000 soy, and 7,000 wheat

Bull Side

  • Chinese trade developments
  • More rains for Corn Belt
  • Slow country movement

Bear Side

  • Planting reports
  • SAM rains beneficial
  • Soybean demand peaked

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Monday, May 21st, 2018

Trade continues to focus on U.S. soybean sales. We are still seeing record demand for our soybeans in the global market, which is preventing analysts from lowering their export forecasts. It is also believed that the United States will be called upon to cover the 500 million bu shortfall in South American soybean production this year. While these are positive factors, they may already be priced into soybean futures.

Movement of farm stored corn and soybeans remains quite low. This is in part from all attention being placed on spring fieldwork, but also from the fact many producers have moved all of the cash inventory they wish to at this time. It is not uncommon to see producers across the Corn Belt hold back a portion of their inventory until they become comfortable with new crop production possibilities.

As a result of this slow selling, buyers have resorted to several different tactics to try and secure bushels. This is mostly being done by processors who wish to capture as much profit margin as they can in today’s market environment. One tactic many are using is the offering of free storage contracts. While these can be attractive to a producer, commercials have little interest in them, and that is where most movement is currently coming from.

Market Movers: Global Trade Developments, Crop Reports

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Thursday, May 17th, 2018

Trade started the day session on the positive side although advances were trimmed from the overnight market. Not as much buying interest has surfaced this morning which is behind the trimmed gains. If we do not see buyers surface, a move into negative territory would not come as a surprise. The problem with today’s market is that while it has supportive news, it lacks a story that would entice a move higher. This is more of a case for corn. There is practically no risk premium associated with corn futures at this time. Add to this corn volatility remains at an all-time low. Normally this would cause substantial buying in a complex ahead of the growing season, especially with less than perfect growing conditions across parts of the Corn Belt. That said, there are enough areas reporting very good growing conditions that the two stories are offsetting. Trade also monitoring the ongoing issues with sorghum that was destined to China being diverted to other destinations. Corn sales have suffered as a result of this, mainly into the Asian market. Weekly export sales on corn were respectable at 38.8 mbu old crop and 5.1 mbu new crop. These were above both trade estimates and the volume needed per week to reach our yearly estimate. Soybean sales on the light side with 10.4 mbu old and 8.3 mbu new crop. These also above needs but below trade estimates. Interesting to see cancellations on both commodities. Soybeans are also struggling to make a move today. Soybeans being limited by the fact the US is already the highest priced source for the oilseed in the global market. That said, we continue to see a steady stream of demand for our offerings. Same as in corn, soybeans will likely remain range-bound until we get closer to the end of the marketing year and ending stocks are better known. The cash market remains firm as country movement is nil. The only real movement right now is from either previously booked inventory or from the commercial side. To see basis remain firm until we wrap up planting would not come as a surprise. Basis strength may last even longer in regions where planting is delayed and crop size is becoming questionable.

Headlines

  • NAFTA likely delayed until Nov election is over
  • Corn loadings to miss projected total by 35 mbu
  • Soybean shipments to fall 202 mbu short as of today
  • More sorghum diverted away from China
  • Ethanol stocks 92% of last year
  • Warm, wet forecast for Midwest
  • Market volatility remains low
  • Funds long 183,000 corn and 112,000 soy contracts, short 1,500 wheat

Bull Side

  • Technical Rebound
  • More rains for Midwest
  • Domestic demand rising

Bear Side

  • Chinese imports down
  • Improved Sam weather
  • Sorghum displacing US corn

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Wednesday, May 16th, 2018

Soybeans suffered sizable losses today as funds were liquidating long positions. This was from a combination of several factors including an excess amount of risk premium in that complex and building concerns over future soybean demand. This is mostly on China, where immediate needs are thought to already be covered. Corn was also on the negative side but did find support from the fact that complex has very little risk premium attached to values at this time.

Ethanol manufacturing for the week ending May 11th again increased from the previous week as more plants come back on line following annual maintenance. Production for the week averaged 1.06 million barrels per day, an 18,000 barrel increase. What was more positive for the industry is that ethanol reserves declined by 459,000 barrels for the week. This puts ethanol stocks at 21.5 million barrels, down 5% from a year ago.

Recent weather conditions are being heavily debated by trade. There are several models that show how a cool spring can lead to reduced yields, mainly on corn. Others show there is no reason as to why we cannot see trend corn yields, and possibly even higher. These individuals point out that a cool April has no correlation to weather during the remainder of the growing season.

The volume of soybeans needed from the United States, or other sources, to cover for losses in Argentina may be less than initially suspected. Revised data shows the global market will need roughly 74 million bu of soybean demand from alternative sources to cover this shortfall. This number is debatable though, as Argentina can use soybean reserves to cover demand if needed. It is also likely that the huge crop in Brazil can easily satisfy these needs.

July corn futures finished today’s session 3 cents lower at $3.99 , July soybeans were down 19 cents at $9.99 , and July wheat in Chicago gained cent to close at $4.94 .

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Wednesday, May 16th, 2018

There remains a significant amount of uncertainty in the market surrounding the possible tariffs between the United States and China. The answer to this may not come for some time, especially on soybeans. Chinese demand for U.S. soybeans tends to decline from this point forward in the marketing year, so any changes to imports may not happen until we get to new crop. The greatest concern on old crop is that we could see sales already on the books being cancelled.

It is possible that these proposed tariffs will not impact the United States’ exports at all. If China shifts all of their buying interest to South America, it will bring most other soybean buyers to the United States for needs. This has already been seen when the possibility of a tariff was first announced. Any decline in exports could also be consumed by the domestic market, mainly for feed and ethanol production.

Even with a huge crop being harvested and record values, Brazilian soybean sales have been light this year. Data indicates that just 50% of Brazil’s soybean crop has been sold at this point. This seems odd given the fact soybean values in Brazil have only eclipsed today’s mark two times in history. This delay in sales could be from producers waiting for tax incentives to kick in before extending sales, and also to see if the United States has a production issue this growing season.

Market Movers: Global Trade Relations, Weather Outlooks

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Morning Comments; Tuesday, May 15th, 2018

Active planting took place across the United States last week. As of Sunday night, 62% of the U.S. corn crop was planted, just behind the five-year 63% average. Corn is also 28% emerged, ahead of the 27% average. Soybean planting is 35% complete with the normal pace being just 26%. Soybeans are 10% emerged, 4% more than normal.

Trade continues to discuss what we could see for total production in South America this year. Given the favorable weather in most regions of South America and solid returns it is quite likely double cropping will be greater than initially thought. Weather is also benefitting late developing crops, mainly soybeans. Even if crops only increase a minimal amount it will be enough to alter the current mind-set of the market.

Trade is also keeping a very close eye on Chinese plantings this year. It has been thought Chinese farmers would plant more fields to corn this year than last due to more favorable returns. The Chinese government is paying better subsidies on soybeans though, which may limit how many acres would shift over. Even if this is just a minimal amount it could easily change China’s soybean import forecast.

Market Movers: Fund Activity, Planting Reports

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comment; Monday, May 14th, 2018

There has been considerable discussion in the market over the slow planting pace this year. The reason this is not much of a factor yet is that delays are becoming more regional than widespread. The most concern is in the Upper Plains, mainly Iowa and Minnesota. If delays continue in this area it is not out of the question we will start to see acres shift from corn to soybeans.

U.S. soybeans continue to be offered into the global market at a sharp discount to those from Brazil. Even with this advantage, Chinese buyers continue to source needs from Brazil. This is from the ongoing trade dispute and how tariffs could be enacted on all purchases, same as they were to sorghum. If this would happen it would inflate U.S. soybean values to a point where they are more expensive, and this is concerning to both sellers and buyers.

Argentina farmers are seeing some of the highest soybean prices amongst recent years. This is mainly because of their less than stellar crop along with their currency situation, which is also helping the soybean complex. The inflationary pressures are so great that farmers are holding onto the physical bean in an effort to hedge against further devaluation.

July corn closed the day down 2 cents at $3.96 . July Soybeans finished 14 cents at $10.17 . July Wheat in Chicago closed down 7 cents at $4.91 .

Morning Comments; Monday, May 14th, 2018

Even though just updated, we are seeing heavy debate surrounding corn and soybean demand estimates. Thoughts are the U.S.D.A. is too low in its crush demand on soybeans as cumulative totals indicate a yearly usage above the last projection. While an increase to soybean crush is possible, the real factor in soybean balance sheets right now is exports, which continue to lag. To see soybean carryout increase 200 million bu would not come as a surprise, even with our elevated crush.

The same debate is taking place in the corn complex. Domestic corn demand has been better than expected this year, mainly for ethanol. This has been negated by a slower feed demand and low export loadings. The combination of these two could easily give us a 100 million bu higher carryover on corn than what the U.S.D.A. predicted last week.

When it comes to ending stocks, the real focus is starting to shift to the global side. Even if domestic usage on corn and soybeans does increase, ending stocks of both commodities is more than adequate. From a global point of view there is a little less of a cushion. This is especially the case on corn where ending stocks have shrunk considerably in the past two years.

Market Movers: Fund Activity, Planting Reports

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Friday, May 11, 2018

Corn, soybeans and wheat all closed under pressure in today’s session. Soybeans saw the largest losses as profit taking developed ahead of the weekend. Corn and wheat followed suit finishing the week in negative territory.

Weather in South America is still very much a factor for the market. Many analysts claim weather loses its impact on the market once the Brazilian harvest begins, but that is not the case. Recent dry weather in Brazil has cut corn production, and easily could even more. Brazil has a large volume of old crop corn in storage though which is expected to soften the reaction from this loss.

Just the opposite is taking place in Argentina. Parts of Argentina are suffering from excessive rainfall, with some regions receiving up to 10 inches of precipitation recently. This has stalled harvest and undoubtedly caused some yield loss. It is also possible that soybean quality has been impacted by these heavy rains.

For the past several weeks we have seen elevated soybean selling out of South America. This was not so much from soybean values, but from currency valuations. This has now changed and very few fresh sales are taking place. As a result, soybean basis in South America has firmed. The price spread between the United States and South America now favors the U.S. even more, and hopes are this will bring about some much needed export business.

July corn finished today’s session 5 cents lower to close at $3.96 , July soybeans fell 18 cents closing at $10.03 , and July Chicago wheat closed 7 cents lower at $4.98 .

Early Market Update; Wednesday, May 9th, 2018

Both sides of unchanged have been traded already in today’s session. Nearly all activity in today’s session has been focused on final positioning ahead of tomorrow’s balance sheet updates. Trade expects minimal changes to old crop numbers tomorrow and such a wide range of guesses on new crop that almost anything is possible. A quick reminder on this; DO NOT get too wrapped up in what the USDA estimates for new crop ending stocks tomorrow. It is impossible to accurately guess ending stocks on crops that are not even planted yet. All these are is “best guesses” and will change several times before September of 2019. What we see then is what will be more important than what trade is guessing in May of 2018. There is an interesting story developing in the Argentine soy market that needs to be monitored. Drought has been replaced with excessive rainfall and flooding across parts of Argentina. This has delayed soybean harvest, but that is not the real issue. Soybean pods in Argentina are reportedly splitting from the rains, and in some cases, starting to sprout in the field. At the same time, Argentine farmers are holding old crop soybeans as an inflationary hedge. To further complicate things, Argentine currency exchange rates are at a point where it is not profitable to import any more soybeans. This has caused Argentina to seek relief from the International Monetary Fund to ease financial hardship. To top it off the port in Argentina that was damaged from a vessel two weeks ago is now expected to be out of service for nearly a year and a half. Given all of this going on it is almost impossible to try and predict what Argentina may need for soybeans now or in the future. It is quite possible this could lead to even more US soybean trade than the market currently predicts. Aside from all of this going on, trade continues to monitor US planting. A large amount of the crop is going in despite rains moving through the Corn Belt. To see a sizable advance in next week’s progress report would not come as a surprise. Look for fund positioning to determine today’s close. The cash market is firming today as buyers are pushing for deliveries. Not only has fieldwork halted country movement, but so has the drop in futures earlier this week. Even with this improvement, it is not enough to compensate for futures losses and all interest has dropped off.

Headlines

  • US river shipments back to normal next week
  • EU corn imports +48% this year
  • Lost corn in Brazil could bring the US 150 mbu of export business
  • China predicts smaller soy imports in 2018/19
  • China soy imports in April smallest in 4 years
  • Rains causing quality issues in Argentina
  • Govt proposals favor year-around E-15
  • US planting is progressing
  • Funds long 176,000 corn and 164,000 soy conts, short 27,000 wheat

Bull Side

  • Corn c/o to shrink
  • Weather forecasts wetter
  • Argentina farmers holding inventory

Bear Side

  • China soy demand slows
  • Outside mkts draw away from commodities
  • Better rains forecast for Brazil

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Tuesday, May 8th, 2018

Trade started out today’s session with a slight recovery of yesterday’s losses. Rapid planting progress reports and fresh selling interest limited advances. It was noted that open interest grew in both corn and soybeans on Monday, showing sellers were entering the market. Losses were held in check by solid demand on corn and thoughts more buyers will soon be showing up for U.S. soybeans, as U.S. offerings are the cheapest in the global market at this time.

Trade received some questionable news today on Chinese soybean production. Chinese officials claim this year’s soybean plantings will increase 8.8% from last year. In turn, they believe China will actually be able to reduce soybean imports for the first time since 2003. While possible, given China’s ever growing soybean demand, this seems unlikely to happen.

Trade is also showing more interest in Chinese corn production. Chinese officials believe corn planting will decrease 1% this year as incentive are being paid to encourage soybean production. If no change takes place to corn yield this would only reduce total production by 85 million bu. Given recent trends we could actually see corn yields increase though, and more than negate any reduction to corn acreage.

Country movement across the Corn Belt has all but came to a complete halt. This is not uncommon once all attention turns to spring planting. Normally we see commercial movement ramp up at this time to make up for the decline in farmer movement. Commercial movement may be limited this year as well though given the rate at which farmers are going to want to get planting completed in.

July corn futures finished today’s session 2 cents higher at $4.03 , July soybeans were 8 cents higher at $10.20 , and July wheat in Chicago was up 3 cents at $5.14 .

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Tuesday, May 8th, 2018

Trade is on the positive side as we work into the day session, although gains have been trimmed from the open. A recovery of some of yesterday’s losses is the primary reason for the firm start to the day. That said, initial gains have been hard to build on. Yesterday’s melt down in the market is being credited to the rapid planting that took place over the weekend. Last night’s progress report verified this activity, as the US corn crop is now reported at 39% planted. This is just behind the 44% that is average for this date. Soybean planting is now 15% planted, 2% ahead of average. In all reality, planting is likely further along than these numbers indicate, as heavy planting took place in the past 36 hours. The only thing really surprising about planting is the wide range in completion. IL corn planting reported at 74% complete on Sunday while Minnesota is just 9% done. The range in states is just as wide. Southern Iowa is about wrapped up on planting while the north-western region is just getting a good start. Rains are in the forecast for the next 2 to 3 days in this area, but then another window of opportunity opens. Other than planting and weather, there is not much from a fundamental side to look at today. We are starting to see more positioning for Thursday’s supply and demand report. For the most part trade is expecting mostly steady old crop domestic numbers and no real surprises on the initial new crop projections. All eyes will be on the global side, mainly South America. Even then, more attention will be on Brazil to see if the corn crop is reduced given recent weather. It is also thought Brazil’s soybean crop will increase in size enough to compensate for losses in Brazil. All in all, there should be something for everyone in this release. The cash market is relatively steady today. We have seen some movement, but most of this is what was sold over the past week. All attention is on planting now and will remain so. This leaving most deliveries from commercials.

Headlines

  • US corn 39% planted, average is 44%
  • US corn 8% emerged, 14% is average
  • Soybeans 15% planted, average is 13%
  • Iowa corn 40% planted, soybeans 12%
  • Positioning increasing for S/D report
  • Brazil ethanol exports only 75% of year ago
  • No trade resolution with China
  • China to increase soy plantings 8% this year
  • China hopes to reduce soy imports for the 1st time since 2003
  • Funds long 168,000 corn and 156,000 soy conts, short 31,000 wheat

Bull Side

  • Corn lacks risk premium
  • Technical support
  • More rain for WCB

Bear Side

  • Soybeans over-valued
  • Planting advances
  • O/I up; indicates fresh selling

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Closing Comments; Monday, May 7th, 2018

Long liquidation and fresh selling weighed heavily on today’s trade. This was the result of several factors, but the fact U.S. soybeans are over-valued was a primary reason for the selling in that complex. Ongoing global trade uncertainties and reports of active planting across the Corn Belt added to the negative tone. Corn losses were held in check by a lack of risk premium in that complex and building demand.

Export loadings for the week ending May 3rd favored corn over wheat and soybeans. For the week the United States loaded out 75.4 million bu of corn, well above both expectations and the volume needed on a weekly basis. Soybean loadings were in the middle of trade estimates at 19.6 million bu, as was wheat with 12 million bu. These totals were both below what is needed to reach yearly projections however.

The recent shift in Chinese soybean buying from the United Sates to Brazil may have less to do with tariffs than the market believes. Recent improvements to Brazil’s infrastructure has allowed the country to make not only more timely exports, but at a lower cost. In turn, this is making Brazilian soybeans more attractive to an importer. Even when Brazilian soybeans are at a premium to the U.S., timely shipments are more of a buying factor.

One of the most watched numbers in this week’s balance sheets will be South American soybean production. We are seeing most analysts reduce the size of Argentina’s soybean crop to 38 million metric tons compared to the current U.S.D.A. projection of 40 million metric tons. Just the opposite is taking place to the Brazilian soybean crop though, as most analysts are near 120 million metric tons for crop size. The U.S.D.A. is only forecasting a crop of 115 million metric tons however.

July corn futures finished today’s session 5 cents lower at $4.00 , July soybeans were down 25 cents at $10.11 , and July wheat in Chicago was 14 cents lower at $5.11 .

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.

Early Market Update; Monday, May 7th, 2018

Sizable losses are being posted to start the week’s trade in the commodities. Technical profit taking is the primary cause of this action, although ongoing trade concerns are also a factor. Last week we saw buying in the market as it was believed the trade dispute between the United States and China would be resolved. This was quickly disputed and it now appears as though any resolution is some ways off. The fact that even with delays we are seeing planting take place in the United States is weighing on the market as well. The only region of concern right now is in Iowa and the Upper Plains, and even then fieldwork is moving forward. That said, we are already hearing rumblings of prevent plant and acreage shifting from corn to soybeans. This is adding to the negative tone in the soy complex. Average estimates are for corn planting at 35% tonight and for soybeans at 11%. In other weather talk this morning we are hearing of 100 deg temps for the Wheat Belt later this week. Some models show this heat moving east into the Corn Belt. While it is far too early to make a prediction, to see a shift from excessive rains to drought conditions has happened before. This already bringing into question whether we will see trend yields or not. As I said, it is far too early for this to impact futures, but it easily could in the near future. The buffer between crop loss and weather is the old crop cushion the market has. Updated weather outlooks and fund activity will determine where we close today. The cash market is again starting to firm as movement grinds to a halt. All attention is back on spring fieldwork today and will be for the immediate future.

Headlines

  • US soy to China 40c/bu cheaper than Brazil
  • Aug soy to Brazil 60c cheaper
  • Chinese corn auction demand is slowing
  • Cash corn values highest in recent history
  • Firms estimating smaller Argentine crops than USDA is
  • Heavy rains a concern in Argentina
  • Weather impacting Brazil corn pollination
  • Planting est at 35% on corn, 11% on soybeans tonight
  • Last week; corn +9 , soybeans -17 , wheat +32
  • Funds long 180,000 corn and 168,000 soy contracts, short 24,000 wheat

Bull Side

  • Warmer pattern for US
  • Corn loss in Brazil
  • Flooding in Argentine soy

Bear Side

  • No Chinese trade deal
  • Heavier SAM selling
  • Rains for Safrinha crop

For more information, you may contact Karl Setzer at 1-800-383-0003, or e-mail at ksetzer@maxyieldgrain.com.The opinions and views expressed in this commentary are solely those of Karl Setzer. Data used in writing this commentary obtained from various sources believed to be accurate. This commentary is intended for informational purposes only and is not intended for developing specific commodity trading strategies. Any and all risk involved with commodity trading should be determined before establishing a futures position.