After posting a lower low for the swing yesterday the wheat market was able to rebound for the close and is trading firmer once again this morning. I suspect that prices should turn basically sideways now as we await the quarterly reports on Monday.
There is a little growing concern about what has been a lighter than normal start to the monsoon season in India but forecasts do point to a pickup in moisture as we move into July. Of course domestically we are dealing with the opposite scenario as the spigot does not want to shut off enough to allow harvest to really kick into gear. While the overall world fundamental picture remains negative, which should limit rallies, the delay here could potentially be the stimulus to spark as short covering rally by the managed funds.
Export sales for wheat came in at 359,000 MT or 13.19 million bushels right about in the middle of estimates. This number was 4% down from last week. Marketing year to date we have sold 267 million bushels, which is just over 22% of the USDA target for the year.
Stats Canada will issue updates for production and inventories tomorrow but most the attention will be focused yet on the Monday reports. The average estimates according to the WSJ has June 1st wheat stocks at 603 million with a range of 561 to 715. Planted acreage for all wheat is expected to be 55.707 million acres with a range of 54.8 to 56 million. The Hueber Report is looking for stocks of 715 million and an acreage number of 55.2 million.
The corn market has moved into report mode as we are just treading water at this point and will most likely continue to do so into Monday.
The EIA ethanol numbers were pretty much as expected reporting production of 275.77 million gallons for the week, which equates to around 99 million bushels of corn. Weekly stocks bumped up 14 million gallons and stand at 763.69 million gallons.
The was an interesting story from China overnight and while it does not produce any immediate market impact, it does mark a major shift in Chinese Ag policy. What has been a decades old policy of fixed subsidies to encourage domestic production is going to be gradually replaced by target prices that are set more in line with world values with government support if prices fall below those levels. This should be more of a market-based approach than the current system. They also announced plans to boost grain storage capacity throughout the country. The new program will be introduced initially with soybeans and cotton and will expand to other commodities after.
Export sales bounced back well from the disappointing number posted last week coming in at 321,400 MT or 12.65 million bushels. This was still 22% below the 4-week average.
We cannot overlook the Hog and Pigs report that will be issued on Friday, which could set the tone for the Monday reports as well. The average trade estimate has All Hogs and Pigs at 97.1%, Kept for Breeding at 101.8% and Kept for Marketing at 96.8%.
The average estimate according to the WSJ for Monday are; June 1st corn stocks at 3.724 billion bushels with a range of 3.046 to 4.05. The average acre estimate stands at 91.787 million with a range of 91 to 92.3. The official Hueber Report estimates are 3.775 billion of the stocks number and 92.2 for acreage.
Once we have moved post report, the complete focus should be on weather and while we know there are a few spots of concern with the excess moisture, the bull does not seem to have much of a case. That does not preclude the potential for a short-covering bounce but they could be disappointing in size.
Each week we continue to see a few more beans sold, which should make the report next week all the more interesting. The range of estimate for exports sales was from a negative 100k MT to a positive 150k MT and we actually came through at 317,200 MT or 11.66 million bushels. In buying were Unknown destinations for 197.6k MT, Mexico for 56.1K MT and Thailand for 38k MT to round out the top three. We now stand at 1.671 billion bushels or 71 million above the USDA target. This was enough to give the market a boost this morning but nothing out of the ordinary or out of recent ranges and the cash market still does not appear to be in any kind of panic.
Looking out to Monday, according to the WSJ the report estimates are as follows; June 1st stocks 387 million bushels with a range of 334 to 450 million. The Hueber Report estimate is 410 million. For acreage the average estimate is 82.173 million with a range of 80.5 to 83.2 million. Our estimate is 82.95 million.
For now the bean bull is alive and kicking but I suspect is going to need a fresh batch of feed come Monday to maintain the energy. Action between now and then will mostly be market noise.