The Grains Complex : Cosi fan tuttte

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Outside Markets 

After a lukewarm start, global markets took a decidedly negative shift during Tuesday’s trading session. Following disappointing readings for German GDP and Euro zone industrial production, U.S. retail sales ex autos were slightly below forecasts.

While the New York Fed’s Empire State survey and the NAHB housing market index came in above expectations, the lowest business inventories reading since October cast a shadow over many market sectors.

There were comments from the U.S. ambassador to China that trade negotiations between the two nations were still ” far apart”, and from the Mexican Secretary of Economy that he does not see an updated NAFTA agreement by Thursday’s deadline.

Late in the day, the latest TIC report showed a smaller than expected net outflow of U.S. Treasury securities from foreign holders. U.S. Equity Markets were initially able to rebound from their midsession lows, but then turned back to the downside and went on to post heavy losses on the day.

Treasuries remained squarely on the defensive as Bonds, 10-Year Notes and 5-Year Notes posted heavy losses and new lows for the move.

The Dollar was the big winner during Tuesday’s trading as it reached a new 5-month high, and was especially strong against key emerging market currencies.

The Asian session will feature a first quarter reading on Japanese GDP, which could have an impact around the globe as there is an outside change it could show a negative result. There will be March readings on Japanese industrial production and Japanese capacity utilization.

The European session will start out with April German CPI and March Italian CPI. April Euro zone CPI is forecast to hold steady with March’s 1.2% YoY rate.

The North American session will start out with a weekly private survey of mortgage applications, followed by April housing starts and April building permits which are both expected to see minimal downticks from their March annualized rates. April industrial production and April capacity utilization are forecast to see modest upticks from their March reading. Atlanta Fed President Bostic will speak during morning U.S. trading hours while St. Louis Fed President Bullard will speak during the afternoon.

WEATHER:

Planting is a little behind, so this GDD map probably overstates the heat units accumulated in the corn. We think it does a good job of showing relative maturity based on input from clients. The northern IA and southern MN area is behind on planting due to cool and wet conditions. Central IL is pretty much done, along with most of MO and KS. Those crops have seen more heat units than usual for the middle of May, but are generally wanting a drink.

Corn

Corn futures led the way higher on Tuesday, up 3 to 5 3/4 cents, with the emphasis on continued delays in northern corn planting. Consultant Informa estimates that the US will plant 89 million acres of corn in 2018, higher than the March USDA number of 88 million acres. Planting progress across the Corn Belt moved at a decent pace last week as IL, IN, NE and OH are all ahead of their average pace. Progress in IA was 5% below the normal pace at 65%. The main delays are in the Upper Midwest. The crop was at or above average for emergence in most Corn Belt states.

Jul 18 Corn closed at $4.02 1/4, up 5 3/4 cents,

Sep 18 Corn closed at $4.10 1/2, up 5 3/4 cents,

Dec 18 Corn closed at $4.19 1/4, up 5 cents

Mar 19 Corn closed at $4.27 1/4, up 4 1/4 cents

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Soybeans

Soybean futures came back from double digit losses earlier in the day to post 1 to 2 cent gains on Tuesday. Weakness was still seen in soy meal, down $5.30/ton, with front month soy oil down 13 points. Soybean acreage is estimated at 89.4 million acres in 2018 by Informa, above the current USDA projection of 89 million acres. Soybean planting progress was at or above normal for most states on Sunday, with exceptions for MN, ND, SD, and WI. This morning’s NOPA report showed soybean crush during April by NOPA members was 161.016 mbu. That was below last month but slightly above estimates and 15.7% larger than last year. Soy oil stocks were shown at 2.092 billion pounds.

Jul 18 Soybeans closed at $10.18 3/4, up 1 cent,

Aug 18 Soybeans closed at $10.22, up 1 cent,

Sep 18 Soybeans closed at $10.22 3/4, up 2 cents,

Jan 19 Soybeans closed at $10.28 1/2, up 3/4 cent,

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Jul 18 Soybean Meal closed at $382.30, down $5.30,

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Jul 18 Soybean Oil closed at $31.12, down $0.13

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Wheat

Wheat futures ended the session with KC contracts steady, CBT 1-2 higher and MPLS up 4-4 3/4 cents. Support from corn spilled over to help ease pressure from a sharply higher US dollar index on Tuesday. Informa numbers released on Tuesday put all spring wheat other than Durum at 12.4 million acres, down from the USDA’s 12.6 million acres. Condition ratings in KS were down 1 point last week to 247, with OK up 15 and TX 2 points better. Spring wheat planting is progressing, but Washington is the only of the 6 states to show progress matching the average pace. Japan is seeking 89,937 MT of wheat from the US, Canada, and Australia. The weekly MOA tender will close Thursday, with 33,992 MT sought from the US. Egypt’s GASC purchased just 60,000 MT of Ukrainian wheat in their latest tender on Tuesday. Keep in mind that this was during local harvest, when they usually don’t buy much.

Cash Grain Prices

Jul 18 CBOT Wheat closed at $4.93 1/2, up 2 1/4 cents,

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Jul 18 KCBT Wheat closed at $5.09 3/4, unch,

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Jul 18 MGEX Wheat closed at $6.06 1/4, up 4 3/4 cents

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Cotton

Cotton futures ended the Turnaround Tuesday session with most nearby contracts 6 to 25 points higher. The weekly USDA Crop Progress report showed TX at 28% planted, 5% above normal, with GA 10% faster than average at 41% complete. Consultant Informa estimates US 2018 all cotton plantings at 14 million acres, above the current USDA number of 13.47 million acres. The Cotlook A index was UNCH from the previous day to 93.1 cents/lb on May 14. The USDA Adjusted World Price for this week is 75.58 cents/lb, up 59 points from the week prior.

Jul 18 Cotton closed at 83.760, up 6 points,

Oct 18 Cotton closed at 81.340, up 14 points

Dec 18 Cotton closed at 80.110, up 25 points

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-R.W.N II

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