Report neutral for corn, bullish for soybeans, bearish for wheat

Shortly before the report corn was down two cents, soybeans were up three cents, and wheat was down one cent. Corn was up 4 cents shortly after the report and fell to 1 cent lower at 12:06 p.m. Soybeans were up 17 cents and then fell to up 10 cents. Wheat is trading down 7 cents.

Some of the numbers today include, U.S. old corn ending stocks 2.182 billion bushels, U.S. old soybeans ending stocks 535 million bushels, U.S. wheat ending stocks 1.07 billion bushels. U.S. new corn ending stocks 1.682 billion bushels, U.S. new soybean ending stocks 415 million bushels, U.S. new wheat ending stocks 955 million bushels. New crop ending stocks for soybeans were 120 million bushels below trade expectations and bullish.

This report marks the first USDA estimate of new crop 2018 corn, soybeans and wheat supply/demand tables. Trade estimates of ending stocks are: new corn 1.628 billion bushels, old corn 2.178 billion bushels; new soybeans 535 million bushels, old soybeans 541 million bushels; new wheat 930 million bushels, old wheat 1.065 billion bushels. Traders will also be watching world ending stocks of corn. If they fall below trade expectations it could be helpful for further advances higher for corn.

Traders are expecting Brazil soybean production to increase and Argentina soybean production to decline, with corn production declining in both Brazil and Argentina.

World production numbers are as follows: Brazil soybean production 117 million tons, last month 115 million tons; Argentina soybean production 39 million tons, last month 40 million tons. Brazil corn production 87 million tons, last month 92 million tons; Argentina corn production 33 million tons, last month 33 million tons.

Ohio producers have been relentlessly planting corn and soybeans this week. Planting began for many last week. Much of Illinois finished planting in the past week. It is hard to imagine such a huge difference in planting activity between the two states. Planting in the days ahead is expected to be sluggish for Iowa, Minnesota, and Wisconsin.

While planting has been on the minds of Ohio and Midwest producers, China remains a nagging concern. Much like that gnat that appears almost constantly, eluding capture while still taunting you with its presence. The market has become extremely sensitive to headlines. We have to remember that headlines are a snapshot of what someone thinks is occurring. They can be wrong. Two instances come to mind in the recent week. First, was last Thursday afternoon. Soybeans had been lower overnight and into the morning. Mid-day prices then turned higher, closing up 10 cents on the July 2018 contract. The cause — a CNN headline last Thursday that progress was taking place with the talks between the U.S. and China. Second, on Tuesday this week soybeans were up nine cents on news that President Trump had a morning phone call with China’s President Xi. A huge sticking point continues to be China’s reluctance to agree that they are taking advantage of intellectual property, technology transfer, and innovation against the U.S.

While U.S./China trade tensions are not dominating the news every moment, they continue to play a huge role in price activity. Bottom line, if grain prices are to mount a sustained rally in the weeks ahead, those trade tensions need to ease sooner not later. May 22 marks the date that U.S. tariffs could go into place as the 30-day U.S. Treasury comment period on proposed tariffs ends.

U.S./world weather will continue to be a huge factor in the weeks ahead. Recent weather areas of concern have included the U.S. Plains, the U.S. northern cornbelt, Russia, Brazil, Argentina, and Australia.

With the market extremely sensitive to headlines, a big news event could see the reaction for corn at 5-10 cents up or down, soybeans and wheat 15-20 cents up or down. Do not expect volatility to end by Memorial Day.


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