· Grains trading mixed to lower overnight; A strong start on Sunday night was met with selling around midnight
· Friday’s trade spurred by largest one-off corn export sale in 20 years; Unknown buyers purchased 1.4mmt for new crop delivery while China purchased a smaller amount; Many believe the new crop purchase was a China buy
· Flat price old crop corn as well as old vs. new spreads posting huge gains on Friday; Fundamental bulls have been touting tight old crop supplies, strong basis and inverted spreads for months now
· Above average warmth to hit the Corn Belt over the next 7-10 days; Near to above-average rainfall to accompany warm weather in many areas; Stress added to HRW wheat areas due to heat later this week; No major changes in weather patterns seen beyond this week
· Export Inspections this morning at 10am CST; Crop Progress this afternoon at 3pm CST; Export Sales Thursday at 7:30am CST; May Crop Production on May 10th at 7:30am CSt
· Outside markets slightly negative with US$ higher, crude/equities/metals lower
This week will be a good test to find out whether or not corn can sustain a rally on increasing export demand. Weather patterns are still very bearish for new crop contracts in our opinion; we believe any rally will be accompanied by bull spreading action as a result. Spec funds had reduced their long positions in corn more than any other commodity ahead of the big export sale last week, which means that they certainly have some buying power if they decide to get involved again in a bigger way.
Soybeans have yet to see any "major" correction during the last several weeks despite overbought technical conditions. It’s tough to say how much of the South American crop issues are priced-in at this point, but we continue to recommend using option strategies to protect new crop soybean production; we have reason to believe that a significant amount of US corn acreage has switched to soybeans in the past several weeks.
As always, call the office with questions or concerns.