NASS Crop Conditions Report / USDA Planting Progress May 20th:


As noted earlier today, the USDA came out with the planting progress report as of Sunday May 20th and things are looking better despite the slow start to the planting of the 2018 crops.


Corn planting progress was reported at 81% complete as of Sunday, now matching the average pace and 1% behind last year. The crop was also shown at 50% emerged, moving ahead of the average 47%.


U.S. producers are now 12% ahead of the average pace for soybean planting progress at 56% complete. The crop was also 25% emerged, with the normal pace at 15% for this date in time.


The USDA’s report indicated that the winter wheat crop was 61% headed on Sunday vs. the average 64%. Condition ratings showed stead at 35% gd/ex (Good/ Excellent). Planting of the spring wheat crop tallied at 79%, just 1% behind the normal pace. The spring wheat crop was 37% emerged, with the average at 37%, right on schedule.

!Andale, Andale!

With Wheat selling off from the overnight gap higher on Sunday night, I’d like to dive deeper into the conditions report outlined by Brugler Marketing and Management, LLC.

So far this year, winter wheat conditions have been pretty dismal compared to past years… At week 20, we are just 7-8 weeks from most of the crop being out of the fields. In fact, some producers in Southern Texas have already started.

What does this mean for the potential yield from this crop?

As you can see from the graph below, this year’s ratings are fairly low. They started out the worst in the past 16 years and were the third lowest since 1990. That has set the tone for the year, as ratings have not gotten a whole lot better since then. However, they may be doing slightly better than the average trend would suggest.


Normally ratings will drop of into the final weeks of the year (see the dotted line). This year, however, they have recovered a little from conditions earlier in the year. That has been caused by a mix of things ( mainly weather). 

Taking a look at the individual factors that are affecting the wheat conditions this year in further detail.

One explanation is by looking at the different classes of wheat (SRW and HRW). HRW is typically grown in the Southern Plains, while SRW is grown in areas that see more moisture. The HRW graph below shows the ratings for CO, KS, NE, OK, and TX. You can see that the overall HRW conditions took a dip, but are back where they started at 278.


Ratings in NE and CO have consistently stayed above 300 ( scale from 100-500), with NE closer to the 350’s, while the Southern Plains states are sub 250 ratings. The drought from last winter continued to plague that area, especially in the western parts.

By correlating historical yields to the currents ratings, we get an r-squared of 0.5244. That is not as high as we would like to seem but it is tighter than the overall winter wheat correlation of 0.0866.

Using that relationship, we would get a final yield of 36.26 bushel/acre for HRW. That would be a 6.28 bpa (bushel per acre) drop from the previous year, and on fewer acres this year would drop production quite a bit. Compared to the past 20 years, it would be the sixth worst. This is still the 20th week ad the correlations tend to get stronger as the year progresses, but we are looking for a significant drop in yield.

Moving to the Soft Red Winter Wheat.

We find the average SRW ratings by taking AR, IL, IN, MO, MI, OH and NC condition ratings. As with the HRW ratings, conditions will tend to drop into the last weeks until harvest. This year though, they are getting a nice boost in the spring months, nearly following 2015 to a T.


This (SRW) is the main reason that the overall winter wheat ratings have gotten a little better over the past several weeks. Currently conditions are at 371, after starting at 357. The r-squared correlation between the Week 20 SRW ratings and its respective final yield is 0.2219.

That is much weaker than the HRW r-squared. With the equation given we would expect to see a final yield of 60.26 bpa, in the top half of the past 19 years.

With that weak correlation there is a large standard error, i.e. you can miss by a mile. Ratings this year are better than they were the same time last year, but that best fit yield would be 7.5 bpa lower. This shows that with a weaker correlation, projecting a yield at this point is not very reliable. We think it will be higher.

At this point in the year, trying to correlate yield with conditions would be just slightly better than throwing a dart at a dart board. We do know that the overall yield will likely be lower than in past years, just based off how poor the conditions have been to date. The projected HRW yield would not be surprising, especially since the Wheat Quality tour showed an expected yield of 37 bpa for top producer Kansas. The SRW yield projection is less likely to be the right one, given the lower r-squared and the fact that conditions are better than last year but projected yield is worse. We should have a stronger handle on crop size in a couple weeks


NASS reported that 52% of the cotton crop in the U.S. was planted as of Sunday. That was a 16% jump from last week and is now 7% ahead of the average.



USDA Crop Progress Report:​ 贸易战很好,很容易赢



Monday’s bring gaps higher in the grains complex, cotton, and wheat, initially.

Image result for monday geico camel

Wheat is lower today, but still only taking back half of Friday’s gains. Looking at the money movement it seems as if the wheat market is in a stand-off, waiting to decide on a bearish or bullish tone.

Moreover the old adage of “be careful what you wish for you just might get it” comes true for instance over the weekend rains of substantial volume fell over the HRW wheat crops of Texas, Oklahoma, and Kansas. They were, of course, needed given the D3-D4 drought conditions of the past two months affecting the area. Had there not been the U.S. / China news wheat would have sold off while the other grains rallied.



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Soybean futures gap higher to start the week as China and the U.S. agree to stop the tariffs for the time being. Raising the question whether China really increases U.S. agricultural good imports? The market didn’t respond that much.


Corn futures are holding on to the recent gains, and right around the previous highs. To break above the $4.30 region, we might need a significant story for a catalyst higher. Nonetheless, the corn market has a bullish skew.


Cotton futures are trading 200 to 230 points higher after they posted strong 79 to 152 point gains in the front months on Friday. Nearby July was up 2.28% on the week. A jump in exports is seen following Chinese commitments to import more US ag commodities if a trade deal is reached.

Thursday’s CFTC cotton on call report showed mills trimming their unfixed July sales by 5,442 contracts. That position was still at 49,643 contracts on Friday May 11. The Commitment of Traders report on Friday showed large spec funds reducing their net long position in cotton futures and options by 8,605 contracts.

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Monday’s also bring our attention back to how trade wars are good and easy to win, for the time being.

Image result for trade wars easy to win tweet


Monday’s also means USDA Crop Progress Reports this afternoon. LaSalle Street is expecting 82% of the nation’s corn crop to have been planted this weekend, up from 62% last week. It is also looking for 55% of the bean crop to have been planted, up from 35% one week ago and for the Good/ Excellent rating for the HRW winter wheat crop to be a few points higher.

Below is a recap of last weeks’ report.

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The Grains Complex: Hogs,Wheat, & The Week Ahead.

Global markets have come through an eventful week with a mildly positive tone. US long- term yields continued to rise, with 10-year rates reaching their highest level in nearly seven years. While there were lukewarm readings on retail sales and housing starts, a one-year high was reached in the Philly Fed survey, as well as a multi- decade low in ongoing jobless claims. Recent Fed commentary has strengthened the case for a June rate hike, but whether there are three or four hikes this year will probably come down to US inflation readings. Mixed signals have been coming from the US/China trade talks, but there is some optimism that they will achieve some benefit for the US.

The dollar has reached its highest level since late last year, and it remains especially strong against emerging market currencies, which could be negative for commodity markets. US sanctions on Iran have given a boost to energy prices, with Brent crude climbing back above $80 per barrel for the first time since late 2014.

Comments by Saudi officials that they will ensure that the world has adequate supplies, coupled with the prospect of US crude production climbing above 11 million barrels per day has helped soothe concerns over negative long term impacts. With some weather concerns for the wheat market and the global corn situation showing one of the tightest in 45 years, it will not take much in the way of a weather issue to spark a major rally in corn. The short-term focus is on trade.

Over the weekend, there were positive comments from US officials on progress with US/Chinese trade negotiations which have boosted global risk sentiment.

The Asian session will feature an April reading on the Japanese trade balance.

The European session will be fairly quiet due to several nations observing the Whit Monday holiday.

The North American session will be highlighted by the Chicago Fed’s April national activity index that is expected to see a moderate increase from March’s 0.10 reading. Atlanta Fed President Bostic, Philadelphia Fed President Harker and Minneapolis Fed President Kashkari will speak during afternoon US trading house. Earnings announcements will include TJX Companies before the Wall Street opening while Intuit reports after the close.

Economic Events

May 21

– Chicago Fed National Index

May 23

– Euro Zone “Flash” PMI’s – UK CPI/PPI

– New Home Sales

– FOMC Meeting Minutes

May 24

– Jobless Claims

– Existing Home Sales

– KC Fed Manufacturing Index

May 25

– German IFO Survey


– Durable Goods

– Consumer Sentiment


Corn futures ended the Friday session with 6 to 7 1/2 cent gains in the front months, as nearby July was up 6 cents on the week. That followed a report that China has dropped their Anti-dumping investigation into US sorghum and removed the 178.6% deposit requirement. Payments made into that fund will be rebated.

Managed money was reported to trim their CFTC net long position in corn futures and options by 20,220 contracts in the week that ended May 15. Their net position stood at 191,672 contracts on that day. China sold 3.28 MMT of corn from state reserves on Friday, totaling 52.7% of the total amount offered.

Jul 18 Corn closed at $4.02 1/2, up 7 1/4 cents,

Sep 18 Corn closed at $4.11, up 7 1/2 cents,

Dec 18 Corn closed at $4.20 1/4, up 7 1/4 cents

Mar 19 Corn closed at $4.28 1/4, up 6 1/2 cents


Soybean futures got a little help from the rest of the commodity complex to hold out for 3 to 4 cent gains on Friday. Soy meal was up $1.20/ton, with front month soy oil 4 points higher. The USDA reported export sales cancelations of 829,000 MT for old crop soybeans and 120,000 MT for new crop. They also reported 56,000 MT in sales for 17/18 and 112,000 MT for 18/19 all for unknown destinationss through their daily reporting system. Spill over from corn and wheat helped to offset that news.

Friday’s CFTC report showed spec funds in soybean futures and options backing off their net long position by 18,981 contracts. Their net position on Tuesday was 108,061 contracts. Palm oil prices hit a 5 week high on Friday, helping to support soy oil and vice versa.

Jul 18 Soybeans closed at $9.98 1/2, up 3 1/2 cents,

Aug 18 Soybeans closed at $10.02 1/2, up 3 3/4 cents,

Sep 18 Soybeans closed at $10.04 1/2, up 3 1/2 cents,

Jan 19 Soybeans closed at $10.12 1/4, up 3 3/4 cents.

Jul 18 Soybean Meal closed at $376.30, up $1.20.

Jul 18 Soybean Oil closed at $30.98, up $0.04


Wheat futures saw sharp 19 to 20 3/4 cent gains in most CBT and KC contracts on Friday, with MPLS 12 to 14 1/4 cents higher. Both nearby KC and MPLS were up 4% on the week, with CBT 3.9% higher. Dryness in other major exporting countries helped, along with strength in corn.

Spec traders in Chicago wheat futures and options flipped their CFTC net position by 9,848 contracts back to the short side at -5,522 contracts. In KC wheat they trimmed 4,440 contracts off their net long position to 44,190 contracts in the week ending May 15. Iraq purchased 100,000 MT of wheat in their recent tender, with 50,000 MT sourced from the US and Australia each. Pakistan is tendering for 500,000 MT of wheat, with late July delivery, through a government export subsidy program.

Jul 18 CBOT Wheat closed at $5.18 1/4, up 20 3/4 cents

Jul 18 KCBT Wheat closed at $5.38 3/4, up 19 3/4 cents

Jul 18 MGEX Wheat closed at $6.29, up 14 1/4 cents


Lean hog futures settled with losses of 30 cents to $1.775 on Friday. The CME Lean Hog Index was up 87 cents from the previous day to $67.01 on May 16 and continues to rise seasonally. The USDA pork carcass cutout value was down $1.59 at $73.91 this afternoon. All primals but the butt and belly saw sharp losses. Bellies were up 12% for the week. The national base hog weighted average price was 16 cents lower at $64.89 on Friday afternoon.

The USDA estimated FI hog slaughter at 2.348 million head through the weekend. That is a 35,000 head jump from last week and 84,000 above the same week in 2017. CFTC data showed specs increasing their net short position in lean hog futures and options by 1,239 contracts to -7,858 contracts as of May 15.

Jun 18 Hogs closed at $74.700, down $1.775,

Jul 18 Hogs closed at $77.250, down $0.950

Aug 18 Hogs closed at $76.625, down $1.000


Cotton futures posted strong 79 to 152 point gains in the front months on Friday. Nearby July was up 2.28% on the week. Bulls are talking up Chinese crop problems. Thursday’s CFTC cotton on call report showed mills trimming their unfixed call sales position for July by 5,442 contracts. That position was still at 49,643 contracts on Friday May 11.

The Commitment of Traders report on Friday showed large spec funds reducing their net long position in cotton futures and options by 8,605 contracts. As of Tuesday their net position stood at 89,260 contracts. The Cotlook A index was up 45 points from the previous day to 92.50 cents/lb on May 17. The USDA Adjusted World Price for this week is 74.09 cents/lb, down 149 points from the previous week.

Jul 18 Cotton closed at 86.550, up 152 points,

Oct 18 Cotton closed at 83.820, up 79 points

Dec 18 Cotton closed at 82.430, up 98 points


The Grains Complex : et in Arcadia ego

Outside Markets

After a quite overnight session, global markets have come through a volatile morning and afternoon with a mildly negative tone. There were contrasting reports on whether the U.K. would remain in the EU customs union after Brexit, while members of the likely ruling coalition in Italy backed away from an attempt to have the ECB forgive 250 billion Euros of debt.

Although initial jobless claims were higher than expected, the ongoing jobless claims reading had a sizable decline to reach their lowest levels since December of 1973. In addition, the latest Philly Fed survey had a sizable increase and reached its highest reading since May of last year.

Rising U.S. yields continue to generate news headlines as the 10-year yield reached a 6 1/2 year high. U.S. equities initially sold off after U.S. data results, turned back to the upside to post moderate gains at mid-session, and then fell back on the defensive as all 3 major indices finished the day with modest losses.

Treasuries saw choppy price action throughout the day, but mostly remained in negative territory after Bonds and Notes posted new lows for the move.

The Dollar rebounded from overnight lows to post a mild gain for Thursday’s trading session while the Japanese Yen continued to have safe-haven outflows and dropped to a new 4-month low.

The Asian session will feature an April reading on Japanese national CPI that is expected to see a moderate decline from March’s 1.1% YoY rate.

The European session will include April German PPI and the March Euro-zone trade balance.

The North American session will start out with April Canadian CPI that is forecast to hold steady with March’s 2.3% YoY reading. March Canadian retail sales will follow and are expected to have a minimal downtick from February’s 0.4% reading.


The drought area continues to expand very slowly, with 45.64% of the CONUS at some level of D0-D4 drought. There is definitely more yellow in the northern Plains and Minnesota. The D3-D4 extreme drought areas are now 9.5% of the CONUS surface area vs. 9.32% last week and 0.43% one year ago.



Corn futures posted losses of 3-4 cents in most contracts on Thursday. The USDA export Sales report indicated that 985,702 MT old old crop corn was sold in the week of May 10. That was near the top of the range of expectations and nearly 3.5x as large as this time last year. Japan bought nearly 401,500 MT, with 154,500 MT switched from unknown destinations.

New crop sales totaled 129,240 MT. Shipments of corn were reported at 1.564 MMT in that week, more than 2x this time last year. None of that mattered on a “buy rumor, sell the fact” type of day. China sold 1.427 MMT of 2014 and 2015 corn from states reserves on Friday, totaling 80.48% of the totaled offered. The Buenos Aires Grain Exchange estimates that the Argentina corn crop is 34.1% complete, compared to the average 33.9%.

July ’18 Corn closed at $3.95 1/4, down 4 cents 

Sept ’18 Corn closed at $4.03 1/2, down 4 cents 

Dec ’18 Corn closed at $4.13, down 4 cents

Mar ’19 Corn closed at $4.21 3/4, down 3 3/4 cents 


Soybean futures ended the day with most contracts 4 to 5 cents lower. Soy meal was down 41.50/ton, with front mo nth soy oil 35 pts higher. The USDA reported a private export sale of 132,000 MT to unknown destinations this morning and it initially provided support.

Export sales of old crop soybeans in the week that ended May 10 totalted 281,850 MT, just short of analysts’ estimates. That was down 20.4% from last week and 12.9% lower than this week in 2017.

New crop sales were tallied at 224,650 MT. Exports of soybeans were shown at 654,489 MT, more than 2x the total for this time last year.

Soy meal sales were reported at 375,960 MT for 17/18 and 45,666 MT for 18/19.

Sales of soy oil were shown at 10,185 MT.

BAGE trimmed their Argentina production number to 36 MMT, while estimating the crop is 71.1% harvested.

July ’18 Soybeans closed at $9.95, down 4 3/4 cents 

Aug ’18 Soybeans closed at $9.98 3/4, down 4 1/2 cents 

Sept ’18 Soybeans closed at $10.01, down 4 3/4 cents

Jan ’19 Soybeans closed at $10.08 1/2, down 4 1/2 cents

July ’18 Soybean Meal closed at $375.10, down $1.50 

July ’18 Soybean Oil closed at $30.94, up $0.35 


Wheat futures settled the day with most contracts 3-5 cents in the green. Dry conditions during Australian planting are supportive, and there are some concerns about the Russian crop.

U.S. old crop export sales during the week of May 10 totaled just 63,057 MT, on the low side of estimates. reductions of 143,000 MT were shown for unknown destinations, switched manly to Yemen, Iraq, and Ecuador.

Export sales of new crop wheat were tailed at 131,681 MT. Actual shipments were 409,869 MT, down 39.12% from the same week last year. Japan purchased 89,937 MT of wheat from Australia, Canada, and the U.S. in their weekly MOA tender, with 33,992 MT from the U.S. .

July ’18 CBOT Wheat closed at $4.97 1/2, up 3 1/4 cents

July ’18 KCBT Wheat closed at $5.19, up 5 cents

July ’18 MGEX Wheat closed at $6.14 3/4, up 3 1/2 cents



Cotton futures saw another round of gains on Thrusday, with most contracts 63-98 pts higher. This morning’s Export Sales report showed 153,270 RB in old crop sales for the week that ended May 10, close to trade estimates. That was down 20.61% from last week but 26.97% larger than the same week a year ago,

New crop sales were reported at 229,335 RB. Export shipments of upland cotton were taillied at 422,735 RB, nearly 8.95% larger than a year ago.

The Cotlook A index was down 5 pts from the previous day to 92.05 cents/lbs on May 16. The USDA Adjusted World Price for this week is 74.09 cents/lb, down 149 pts from the previous week.

July ’18 Cotton closed at 85.030, up 68 pts

Oct ’18 Cotton closed at 83.030, up 63 pts

Dec ’18 Cotton closed at 81.450, up 76 pts


The Energy Complex:

I suppose the olde adage is true, ” scared money don’t make no money”. I said earlier this week that I was cautious about the direction in oil prices until the next OPEC meeting on June 22nd. That of course was the “lets leave some on the table, take the money and run” voice in the back of my head talking. Well now, they’re have been some developments in which I’d like to attempt to regroup my thoughts through this post.

First, I came yesterday’s EIA gasoline and distillates weekly stock reports which showed declines in both, in which supports higher energy prices. Secondly, this afternoon came Mr. Greer’s “BREAKOUT TWEET”:


Granted, $XLE ‘s top holdings are the major oil companies and they not necessarily make money when oil prices rise, so there is that.

Thirdly, was how crude oil trading during today’s session. Where prices held their ground close to multi-year highs, but their choppy price action late in the session to me feels like tomorrow we could see a downbeat finish to the week. More to the the third point, is how July crude oil barley missed posting a negative reversal.

From the headlines came the concerns whether Iranian sanctions will play out have been a major tailwind for Brent crude oil prices, which topped out at $80/barrel today; a level not seen since December 2014.

Additional headline risk came in that the Saudi Arabian and UAE Oil Ministers would meet with Russian officials in St. Petersburg next week to discuss security of supply and establishing market stability (price fixing).

The combined OPEC nations are currently well below their Oil Producer Agreement cumulative quota total, due in part to Venezuelan output falling to multi-year low levels. With the global surplus worked down, this could provide some working room to tweak their output levels if Iranian sanctions lead to a sharp drop in their crude oil exports.

There is no consensus yet on how much Iranian oil will go off-market, however, as some estimates have their exports falling by only 200,000 to 300,000 barrels per day. In addition, the prospect of U.S. crude oil production climbing well above 11 million barrels/ day continues to shadow the market.

The weekly Baker-Hughes oil rig count will come out at midday tomorrow, and expectations are that crude oil rigs will post a 3-year high. To wit: last week’s reading of 844 U.S. rigs is still far below the record high of 1609 rigs set in October 2014.

Rig Count Summary_051118



Crude Oil Product Fundamentals

The product markets outperformed crude oil early Thursday, but both RBOB and ULSD fell well below their highs for the move as July RBOB ended up with a negative key reversal. Strong domestic demand levels have been a source of strength for both products on their recent upside move.

Average U.S. retail gasoline prices have climbed above the $2.90 level for the first time since the autumn of 2014, which is getting plenty of attention in the mainstream news media.

The North America driving season will start next weekend, which is widely expected to strengthen gasoline demand and sen retail prices even further to the upside.

Petroleum Positioning

While the Iranian sanctions situation will be around for a while, a lack of fresh inflammatory rhetoric could shift focus back towards rising US crude oil production.

Today’s Baker Hughes oil rig count could put pressure on energy prices if there is a sizable weekly gain. In addition, crude oil and RBOB have very large net spec long positions that could fuel additional long liquidation going into the weekend.

Near-term support for July crude oil is at $70.80 while resistance is at $72.20.

Near-term support for July RBOB is at $2.2200:

while near-term support for July ULSD is at $2.2480.