What Traders are Talking About:
Overnight highlights: As of 6:15 a.m. CT, corn and wheat futures are narrowly mixed, while soybean futures are 3 to 6 cents higher. While ovenight trade was relatively quiet, there could be some fireworks today ahead of the May contract expiration, especially in the corn and soybean markets. Cattle and hog futures are expected to open with a narrowly mixed tone this morning.
* Fireworks as May contracts expire? Monday's price action signaled there may be some fireworks as the May corn and soybean contracts exit the board today. While short position holders got out of some positions in May corn and soybeans yesterday, there was still open interest of 668 contracts and 1357 contracts, respectively, as of Monday's close. Given no deliveries against May contracts, short position holders are forced to exit remaining positions ahead of expiration.
The long and short of it: There's potential for a short squeeze in May corn and soybean futures ahead of today's noon CT expiration.
* Slowest corn planting pace on record. Last week was the "best" planting week of the spring so far, as producers increased corn plantings by 16 percentage points to 28% complete as of Sunday. But that still leaves corn planting at the slowest pace on record for this date (dating back to 1980) and well behind the five-year average of 65% complete on this date. Meanwhile, corn is only 5% emerged, up just two percentage points from the previous week and well behind 52% last year at this time and the five-year average of 28%. For soybeans, planting stands at just 6% -- the slowest pace since 4% on this date in 1984. Very active planting was reported across the Corn Belt Monday and is likely to continue the bulk of this week as conditions are expected to be mostly dry through Thursday. But another rain event is forecast to move into the Corn Belt by late in the week and linger into early next week.
The long and short of it: Despite the record-slow planting pace, traders remain hesitant to actively build premium into the market as they expect record production this year.
* HRW crop finally stabilizing? When USDA's weekly crop condition ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale), the HRW improved a modest 1 point to 252. That's the first uptick in the HRW CCI rating since the growing season started last fall. While this could be a sign the crop is finally stabilizing, it by no means indicates significant improvement is likely. Because of the delayed maturity, the crop still has time to recover somewhat if late-season conditions are near ideal, but a major "bite" has been taken out of the crop. And forecasts don't suggest ideal conditions are likely.
The long and short of it: Even if the HRW crop stabilizes (or improves slightly from current levels), it's no better than a "poor" to "fair" crop.
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