Not bearish, neutral to friendly

Old corn ending stocks were 2.259 billion bushels, old soybean ending stocks were 435 million bushels, with old wheat ending stocks at 1.159 billion bushels. New crop corn ending stocks were 2.110 billion bushels, new crop soybean ending stocks were 480 million bushels, while new crop wheat ending stocks were 914 million bushels. The trade was somewhat surprised to see new crop soybean ending stocks at just 480 million bushels.

Overall, the trade is bearish new crop soybeans due to record production in Brazil along with 2017 US soybean acres at a record high. Evidently, two records make a bear in the traders’ mindset. 

Prior to the noon report corn was up 1 cent, soybeans were up 5 cents, with wheat down 2 cents. Shortly after the report corn was up 4 cents, soybeans up 5 cents, while wheat was up 1 cent.  Soybeans did reach 15 cents higher for the day within the first two minutes only to move off those highs.

Brazil soybean production was pegged at 111.6 million tons compared to 111 million tons last month.

This report will provide the first supply and demand table for corn, soybeans, and wheat for the 2017-2018 production year. Traders seem concerned that new crop soybean ending stocks could be 600 million bushels or higher due to the record number of acres in the U.S. that could reach close to 90 million acres. New crop corn ending stocks should be below 2.3 billion bushels as some are expecting it could be as low as 2.1 billion bushels. New wheat ending stocks should be slightly above one billion bushels.

Old crop ending stocks for corn were expected to be 2.326 billion bushels for corn, 438 million bushels for soybeans, and 1.162 billion bushels for wheat. Those numbers reflect very minor changes from the April report.

Many producers have been most disappointed with grain price activity for months. More specifically, prices from recent weather events have been very frustrating for producers. The perfect example was Monday, May 1, when corn was up 11 cents, soybeans were up 14 cents, while wheat was up 23 cents. The gains came largely due to the cold, wet conditions in Kansas when days earlier they had received 10 inches or more of wet, heavy snow in many locations. The hard red winter wheat crop in Kansas was thought to be reduced 50-100 million bushels. Yet, the following day grains were all lower. Why? The commodity funds seem to be extremely comfortable holding record short positions in the grains complex. So far they have not been forced out of that mentality; they have not yet been spooked. Grains have had several one day wonders this year with strong gains only to be lower in the days that follow.

Numerous days this past week grains have closed lower when producers anticipated higher closes due to the planting delays in the eastern cornbelt of Illinois, Indiana, and Ohio. It boils down to clearing forecasts in the west that allow drying and planting which overshadow wet, cool conditions in the east. Bottom line, sun trumps ponding and wet fields. Producers in Ohio are starting to get back into the fields in limited fashion with others needing into the weekend with no additional rains for field work to begin.

Three storm systems are slated to move through the central U.S. in the next 10 to 12 days. Corn planting progress with the Monday report indicating the U.S. had 47% of the corn planted, 52% was the five year average.

Producers have a record amount of unsold 2017 corn in their bins. They are trying to be patient with many holding out for the $4 mark. Numerous reports indicate if July CBOT corn climbs above the $3.80 level, heavy selling will ensue. For the last eight weeks July CBOT corn has been firmly entrenched in a range of $3.60 to $3.79.

Weather and planting progress in the next two weeks will have a major factor on price direction for the month of May.


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