We are just about ready to close out another week and astonishingly nearly another month as well, and for the grains at least, we appear headed for a positive close. If we held right here, for the week nearby corn would be up 11-cents, spot wheat up 21-cents but nearby beans about a nickel lower. Overall, that would stand to make sense as the corn trade is mildly concerned about the slow planting pace, winter wheat conditions stink, and spring planting is slow, and China appears to no longer care for our beans. It is not that often that markets can make that much sense. We, of course, have through Monday, but as it stands, we have a similar situation on price levels as right now for the month, spot corn is basically unchanged, but considering we have advanced in each of the previous four months, that is not bad, wheat is up 32-cents, although not into higher highs, and beans are down 20-cents.
Looking out into May (and beyond), trade focus should be almost entirely on crop progress and growing conditions. This is not to say that items such as the ongoing trade spat will not carry a big stick as well, but keep in mind that can swing both ways, and if Treasury Secretary Mnuchin came back from China with encouraging news, markets would breathe a big sigh of relief. Remember as well that on the 10h of the month the USDA will issue the May production and supply/demand estimates, which will be the first to include yield projections for this upcoming crop.
Looking around the globe, most of what I have read this morning does appear to have a slight positive bias, particularly for grains. The U.S. attaché to Russia now predicts that the 2018/19 wheat crop in that country will come in at 74 MMT, which would be down 11 MMT from this last year. Also, spring planting progress would not appear to be any better in Europe that it has in North America as corn planting in France is now estimated to be 33% complete. Last year at this time they had planted 72% of the crop. In Argentina, obviously, farmers have shifted their focus to bean harvest, which according to the Buenos Aires Grain exchange is now 54% complete, up 14.4% for the week, while corn harvest moved forward by just a bit more than 1% and is estimated to stand at 30.9% complete.
The challenge as I see it as we move into the month of May and beyond is that considering we have the prices for these three major crops toward the upper end of recent ranges and what has been stiff resistance for the past several years, we are going to need a fresh batch of price positive news to think we can extend much from current. While less likely, that could come via demand, but odds are it will need to be the form of weather issues, and literally, God only knows what is in store for that category.
As I noted in last weekend’s newsletter, as well as a number of other commentaries, I am a longer-term commodity bull, but for the time being, if the bull cannot find a little more fresh feed, he may need to lay down and take a nap for just a while.