Export Sales in line for Wheat; Good for Corn; Slow for Beans

A higher start is expected across the floor this am, roughly 5 in wheat and corn, 7-10 in beans. The outside markets point higher with the $ much lower, by itself a bullish influence for all the grains. Crude oil and the equity markets are higher, which will lend additional support to the grains, especially corn and bean oil due to their biofuel link with crude oil. Chinese markets remain closed today for the dragon boat festival.

Weekly export sales were in line for wheat at 104,000 tonnes this crop year and 228,000 tonnes next crop year, starting June 1. Corn sales were good at 756,000 tonnes this crop year and 267,000 tonnes next crop year, starting Sep 1. Bean sales were slow at only 237,000 tonnes this crop year and 227,000 tonnes next crop year, starting Sep 1. Meal sales were very good at 194,000 tonnes this crop year and 173,000 tonnes next crop year, starting Oct 1. Oil sales were poor at just 5300 tonnes.

The International Grain Council cut their estimate of the world corn crop for the 2009-10 year by 7 million tonnes to 771 million tonnes. They cut their guess of ending world corn stocks by 11 million tonnes to 118 million tonnes. In the 2008-09 crop year, the world produced 784 million tonnes of corn with ending stocks of 139 million so this would be a sharp fall in stocks.

Technicals: The charts still look bullish for wheat, beans, meal and oats despite yesterday's mixed results. Corn still appears to be in a sideways, consolidation phase while oil still looks like it is headed lower, all based on daily bar (high, low, close) charts.

Little sign of rain the next several days in Argentina's wheat belt could result in additional stress for this crop.

Early harvest results for US winter wheat are disappointing with poor yields. This is one of the supporting influences in wheat the last week or so as poor yield results continue to be heard out of the southwest. The northern plains spring wheat belt will enjoy favorable planting weather the next several days with mostly dry conditions now forecast most of next week. This is a welcome forecast as it should allow late planting to speed up. The Midwest will be mostly dry the next several days. Up to 1" of rain is forecast over much of the region the first half of next week. This will slow late planting efforts in corn in the east. It shouldn't be much of a problem in the west, where planting is on schedule, nor for beans in the east, where there is still enough time to plant. ---Vic Lespinasse

Lower Grains Start Likely with Outside Factors Mixed

A lower start is likely this am, roughly 5 in wheat, 1 in corn, 2 in beans. The outside markets are neutral/negative for the grains this am with the $ higher while crude oil and the equity markets are mixed.

The Census Bureau April crush report was mostly in line with trade ideas: 140.6 million bushels crushed with oil stocks of 3.134 billion lbs. Meal stocks were the only surprise, coming in at 422,000 short tons vs trade estimates of 339,000.

Open interest continues climbing quickly with corn up 14,000 lots, beans 5000 higher, wheat up 3000, meal 2000 better and oil 1000 larger. Open interest in beans is now up well over 50% since March 1st. Many analysts think this reflects a growing fund presence in the market.

There is a little talk that China cancelled a cargo (around 55,000 tonnes) of US beans but this type of talk is heard everytime the bean market faulters so I would not put much credence in it.

Index funds are expected to start spreading out of their massive long position in Jul beans as early as tomorrow but most of this will take place starting next Friday and continuing for a week or so. It is estimated index funds will move roughly 125,000 Jul bean long positions into Aug or Nov, which could put some pressure on Jul relative to these other months. Index funds will also be rolling long positions forward from Jul wheat, corn and oil during this time to deferred months such as Aug, Sep or Dec.

Technicals: The daily bar charts still look very bullish for wheat, beans and meal. Oil still looks bearish while corn appears to either be in a sideways consolidation phase or it has topped and is in the process of turning lower. Jul beans touched many bulls long term target of $12 yesterday but couldn't trade above it, sparking a lot of technically-oriented long liquidation in this pit. The $12 level in Jul now becomes overhead resistance, meaning some traders will short beans around current levels and cover their short if Jul trades over $12.

The Australian Meteorlogy Bureau said the chances of an El Nino event in the Pacific Ocean are much higher for their fall/winter period than they were a month ago. El Ninos are associated with drought in Australia's wheat belt so traders will be watching developments closely in Australia over the next several months. Remember, Australia's fall started Mar 1 and their winter starts Jun 1 with most wheat planted during May/Jun.

The US northern plains spring wheat belt will remain dry today-Sat but rain is forecast to return early next week and the 6-10 day calls for above normal rain, which could force farmers to switch acreage from wheat to oilseeds. The southwest winter wheat belt will be dry the next several days with light, scattered rain forecast early next week, keeping the crop in good shape overall. The Midwest will see more dry weather in the west through Saturday with light rain possible Sun-Tue. The eastern half of the Midwest had scattered rain of up to 1" yesterday and more is forecast today. Additional unwelcome rain is predicted early next week and the 6-10 day calls for above normal rain, which could further delay corn and bean planting in the east. ---Vic Lespinasse

Chartwise, grain markets still headed higher

A higher start is indicated across the floor this am, roughly 5 in wheat, 3 in corn and 10 in beans. Crude oil, the $ and the equity markets are sending mixed signals to the grains at this am so these outside markets probably won't be much of an influence on the direction of the grains at this time. Malaysian palm oil was strong today, gaining 75 ringgit. Dalian, China grain prices were mixed, however.

Chartwise, the markets look like they are still headed higher, especially wheat, beans and meal, all of which have very strong uptrends on their daily high, low, close or bar charts. The only market that has a bearish chart pattern is oil, which keeps losing sharply to meal on a spread basis. The Jul oil share, or % of the crush oil represents as opposed to meal, fell to just 32.75% on yesterday's close, down from over 40% a few months ago. Spreaders continue doing meal/oil, help drive this spread. Funds are returning to the commodities markets with increasingly large positions, following the strong uptrends in several of the grains, which is probably helping push the uptrend higher than it would otherwise go.

The increasing presence of the funds in the grain markets is reflected by the growing open interest: yesterday, corn open interest jumped 27,000 lots, including 22,000 in Sep! This is almost certainly fund buying. Beans jumped 9000, meal 6000 while wheat and oil increased 3000 each.

Grain prices are at multi-month highs in some cases, with beans at an 8-month peak, for example. These high prices have caused some would-be buyers to pass or delay buying. Taiwan, for example, passed on their tender for 40-60,000 tonnes of US/Brazilian beans while Jordan cancelled their tender for 100,000 tonnes of optional origin wheat.

Planting progress was reported last night and the numbers were mostly in line: 82% of the corn crop has been planted vs 93% average; 48% of the beans are in the ground vs 65% average and 79% of the spring wheat vs 95% average. Corn emergence reached 52% vs 71% average; beans emerged are 17% vs 31% average and 45% of the spring wheat crop has emerged vs 77% average. The only surprise in the report was in the condition of the winter wheat crop with 45% rated good to excellent vs 48% average. Traders had expected a 1-2% improvement in the condition of this crop, not a 3% decline. Kansas wheat fell to just 47% good to excellent vs 54% last week. Over 15 million acres of corn remains to be planted at this late date. Usually, late planting results in below trend yield unless the weather is exceptionally good. Bean planting is not as much of a concern as there is still enough time to plant without endangering yields. Illinois beans are only 12% done vs 69% average, for example.

The northern plains spring wheat belt will be dry the rest of the week with rain returning early next week. The 6-10 day calls for above normal rain and this slow planting pace could keep over 1 million acres from being planted to spring wheat this season as farmers switch to oilseeds instead. The southwest winter wheat belt saw up to 1.5" of rain the last 24 hours but dry weather is forecast the next several days before rain returns early next week. The Midwest saw up to 1.5" of scattered rain the last 24 hours. Dry weather is predicted in the western half of the belt the next several days but up to 1.5" of additional rain is forecast in the eastern half of the belt the next two days, which will keep planting progress slow. The 6-10 day calls for above normal rain, which will be welcome in the west but very unwelcome in the east. ---Vic Lespinasse

Outside markets point the grains lower

A lower start will be seen in all pits this am, around 5-8 in wheat and corn, 10 in beans, following overnight losses. The outside markets point the grains lower with the $ index up while crude oil and equities are down, a bearish combination for all the grains.

Technically, the charts all look bullish with strong uptrends in place, especially in wheat, beans and meal. Oil's chart is the only one that looks bearish, reflecting all the meal/oil spreading of late. Oil share, the % of the crush represented by oil as opposed to meal, is down sharply, ending Friday at only 33.5%. It had been over 40% a few months ago. Of course, chart patterns are mercurial no matter how strongly they appear to be trending so traders must remain ever vigilant for market reversals.

China's Agriculture Minister said China will harvest a record rapeseed crop this year. He didn't give any figure but the old record rapeseed harvest was 13.18 million tonnes in 2004. There is talk China is negotiating the export of up to 300,000 tonnes of meal, making up for lower South American meal export availability due to lower bean production this year in South America, especially Argentina, and increased Chinese meal supplies due to huge Chinese bean imports and reduced Chinese meal demand.

Mostly favorable corn and bean planting conditions were seen over the long holiday weekend in the Midwest, especially in the west, where only 1/4-3/4" scattered rain was seen. The east had more rain, up to 1.25", but still mostly favorable weather prevailed, allowing for rapid planting progress. Up to 1.5" of rain is forecast in the west the next 2 days with scattered rain possible again this weekend. The east will see more planting delays the next couple of days with up to 2" forecast before dry weather moves in the second half of the week. The 6-10 day calls for above normal rain, which will not be a problem in the west but will keep planting slow in the east. The southwest winter wheat belt benefited from up to 1.5" over the long weekend with up to 1.5" more forecast in parts of the region today, followed by dry weather the next 3 days. The northern plains spring wheat region had unwelcome weekend rain, up to 1.5" but dry weather will occur today-Friday, allowing for at least some planting progress. However, the 6-10 day predicts above normal rain.---Vic Lespinasse

Higher Grains Start Expected; Outside Markets Supportive

A higher start is expected this am, roughly 5-7 wheat, 5 corn and 10 beans. The outside markets are supportive for the grains this am with crude oil and the equity markets up while the $ continues to weaken. A lot of evening up is likely later in the session ahead of the long holiday weekend. There isn't much fresh news so far this am.

The influencial China National Grain and Oilseed Information Center, a government-linked think tank, reported that for the first time this year, imported beans are more expensive when freight costs are included than domestically produced beans. If this condition continues, this might finally slow down Chinese bean imports.

The Chicago Federal Reserve Bank reported farmland in various Midwestern states fell 6% in value during the first quarter of 2009, the biggest quarterly drop since 1985, partly due to lower grain prices compared with last year.

Drought conditions are forecast to continue in the already drought-stressed Argentine wheat belt. Continued mostly favorable weather will benefit China's main wheat, corn and bean areas over coming days. Western Australia's wheat belt, which accounts for over 1/3 of all Australian wheat production, had up to 1" of welcome rain the last 24 hours. Light rain is forecast in the southeast part of the country the next few days, where it will be very welcome also in the wheat belt there.

The US Midwest will see up to 1.5" of rain in the west today through Tuesday. The east will be dry until Sun-Wed, when up to 2" of rain is forecast. The second half of next week is expected to be mostly dry across the Midwest. The upcoming rain will further slow corn and bean planting in the east but shouldn't be much of a problem in the west, where planting is roughly on schedule. The southwest winter wheat belt will be dry the next 2 days. Up to 1.5" of scattered rain is forecast Sun-Wed, which will help keep the crop in good condition. The northern plains spring wheat belt will be dry the next two days. Up to 2" rain is forecast Sun-Wed, which isn't welcome as it will further delay already seriously slowed planting efforts. ---Vic Lespinasse

Weekly Export Sales higher than expected for beans

A lower start is indicated this am, roughly 3-5 wheat and corn, 12-15 beans. However, Weekly Export sales were much higher than expected for beans, which could temper early selling in this pit. Malaysian palm oil fell 103 ringgit today, which isn't friendly for our bean oil market. Crude oil and the equity markets are lower and the $ index is higher currently, a negative combination for all the grains.

Funds have been buying bean futures as quickly as China has been buying beans in the cash market, pushing open interest in beans up by about 50% since the beginning of the year to almost 430,000 lots. Bean export sales were 701,000 tonnes this crop year and 667,000 tonnes next crop year. Wheat sales were also higher than expected at 20,000 tonnes this crop year and 543,000 tonnes next crop year. Meal sales were about as expected at 211,000 tonnes this crop year and 17,000 tonnes next crop year. Oil sales were slow at just 3500 tonnes this crop year. Corn sales were also slow at 683,000 tonnes this crop year and 139,000 tonnes next crop year. The crop year starts Sep 1 for beans and corn, Jun 1 for wheat and Oct 1 for meal and oil.

There is an interesting article in the June issue of National Geographic about the looming world food shortage. The article examines world grain production and demand. Review the article here in the online edition.

Improving weather conditions in Australia's wheat growing area are likely to continue with more rain in the forecast over the weekend. Dry weather continues to hurt Argentine wheat production prospects.

The US western corn belt will see scattered rain the next 7 days but only light amounts are predicted. The next 3 days should produce only .25-.75". The eastern corn belt will stay dry until Sun-Wed, when over 1.5" is possible in some parts of the belt, favoring the west. The 6-10 day calls for warm and wet weather. The southwest winter wheat belt will stay generally dry through Sunday with up to 1" of rain forecast early next week. The 6-10 day calls for warm temps and below normal rain. The northern plains spring wheat belt will be dry the next several days but up to 1" of rain is likely early next week. The 6-10 day calls for warm temps with below normal rain, a welcome combination. ---Vic Lespinasse

Below is a time-delayed sample of Vic Lespinasse's Daily Grain Commentary. To receive his commentary IN REAL TIME throughout the trading day PLUS Vic's trade calls in the six major grain markets, REQUEST A FREE ONE WEEK TRIAL!

Another Higher Grains Start Indicated

Another higher start is indicated this am: 3-5 wheat, 1-3 corn and 10-15 beans. Crude oil and the equity markets are a little higher while the $ is slightly lower, a friendly combination for the grains.

South Korea reportedly bought 330,000 tonnes of corn, half from the US and half optional origin. The Argentine Rural Confederation (CRA), a farm group, estimates Argentina's bean crop at just 30.5 million tonnes.

Xinhua, the official Chinese news agency, says unnamed Chinese experts want the government to use some of its massive foreign currency reserves to build up a Chinese bean stockpile of 50 million tonnes!! This is unimaginable and will not happen but it makes one wonder why Xinhua would even print such a story.

The Obama administration's plan to boost auto gas mileage could be a negative development for ethanol demand as it is generally acknowledged ethanol use lowers a car's gas mileage unless the engine is changed, something that isn't planned for currently.

Significant rain is forecast in western Australia's wheat belt the next 24 hours which will be very welcome.

The US northern plains spring wheat belt will benefit from mostly dry weather the next 7 days, allowing for rapid planting progress. The southwest winter wheat belt will see up to 1.5" rain this weekend into early next week. The 6-10 day calls for cool, wet weather. Some traders worry too much rain could fall in this region but overall conditions remain favorable. The Midwest will see rain in the west starting Thursday or Friday, continuing into early next week with up to 1" expected. This shouldn't be a problem as planting progress is roughly caught up to average in both corn and beans. The east will be dry today-Saturday with up to 1.5" unwanted rain Sun-Tue, favoring the north. The Midwest 6-10 day calls for cool, wet weather, which will keep planting progress slow in the east. ---Vic Lespinasse

Higher Grains Start Expected

A higher start is expected this am, roughly 3-4 wheat, 5 corn and 12-15 beans. The outside markets are mildly supportive for the grains this am with the $ index lower while crude oil and the equity markets are a little higher. Malaysian palm oil jumped 60 ringgit today.

South Korea bought 110,000 tonnes each of US/South American corn and meal.

The Weekly Crop Progress report yesterday afternoon showed corn planting 62% done, as expected, vs 85% normal for this time of year; beans are 25% planted, also as expected, vs 44% average; spring wheat reached 50% done, in line with trade estimates, against 90% average. Emergence is also slow, just 30% in corn vs 49% average and only 21% in spring wheat vs 59% average. The sharp contrast between the eastern and western halves of the Midwest remains. For example, Iowa corn 90% in the ground vs just 20% for Illinois while Iowa beans are 41% complete compared with only 1% done in Illinois. Normally at this time in the season, both states are around 90% planted in corn and 50% done in beans. Winter wheat rated 48% good to excellent vs 46% last week.

Reports from China say veg oil prices have risen sharply lately, increasing calls for the government to release beans from their reserves. The government shows no signs of doing this as they continue their program to buy 7.25 million tonnes of beans by the end of next month.

Supposedly, Informa, the widely-followed analytical and consulting firm, thinks the US old crop bean carryover, currently estimated at 130 million bushels by the USDA, will end up being only 77 million bushels - an extraordinarily tight number by historical (or any) standards. Other well-known analysts have similar estimates, one being 86 million, for example. IF these guesses are right, old crop beans have only one way to go from here: HIGHER. The old crop/new crop bean spread is certainly acting bullish with Jul trading over $1.60 premium to Nov yesterday. As long as this spread keeps strengthening, that is Jul keeps gaining on Nov, the bean market is very likely to keep rallying.

Continued dry weather keeps stressing the Argentine wheat crop.

The US spring wheat crop will be mostly dry the rest of this week and the 6-10 day calls for below normal rain, which should allow for rapid planting progress there. The southwest winter wheat belt will stay mostly dry the rest of this week but up to 1" rain is forecast early next week. The 6-10 day predicts wet conditions in the northern part of the region, below normal rain in the south. The midwest will enjoy more dry weather the rest of the week but up to 1.5" rain is likely to return to the western half of the belt Fri-Mon. This won't be a problem as planting is roughly on schedule there. The eastern half of the belt will stay dry until Monday, when light, scattered rain is forecast. The 6-10 day calls for above normal rain, which would once again slow planting in the east but wouldn't be a problem in the west.

Traders will watch the late am weather update again today for guidance the second half of the session. ---Vic Lespinasse

Favorable planting weather forecast this week

What a difference a week makes! Last week, widespread planting delays from ongoing wet weather drove beans to new 7 month highs, corn to a 5 month best and wheat to a 3 month top. The weekend featured mostly dry weather in all the major US growing areas and more of the same favorable planting weather is forecast this week, which should allow farmers to race across fields, planting at a hectic pace. This is the reason prices were lower overnight and are very likely to start lower this am, roughly 5-7 wheat, 5-10 corn and 10-12 beans. The outside markets are friendly for the grains this am with crude oil and equities up while the $ is lower. However, the outside markets haven't moved nearly enough to offset the bearish influence of the weather this am.

Farmers have a long way to go to catch up with a normal planting pace: expectations for this afternoon's weekly crop progress report are for 60-65% of the corn crop to be planted vs around 85% average and around 25% of the beans vs average of about 45%. Farmers will be increasingly tempted to switch acreage from corn to beans now that we are past the middle of the month as corn yields can decline as much as 1 bushel an acre each day the crop is planted after mid May.

Beneficial rain is forecast for the dry western Australian wheat belt this week. The US forecast is mainly dry this week for the spring wheat belt of the northern plains and the Midwest corn and bean belt following a dry weekend. The only area expected to get more than a sprinkling of rain this week is the western half of the Midwest, where up to 3/4" could fall the second half of the week. This won't be a problem as this area is much further advanced with corn and bean planting than the eastern half of the belt. The 6-10 day outlook calls for continued favorable planting weather in the northern plains with below normal rain. The outlook isn't as sanguine for the Midwest, however, with above normal rain predicted in the 6-10 day forecast for the eastern Midwest, the area that is severely behind normal in planting, while the western half of the belt will see below normal rain, allowing for continued rapid planting progress. Some areas of the eastern Midwest won't make as much planting progress this week as hoped because some areas will need at least a few days to dry out enough to allow farm machinery onto the fields. The southwest winter wheat belt was mostly dry over the weekend with more of the same predicted the next few days before rain returns to the belt Thur-Sun, up to 1".---Vic Lespinasse

Outside markets paint a negative picture for grains

A mixed start is expected this am, 1-2 up in beans, steady-2 better in corn and 3-5 lower in wheat. The outside markets paint a negative picture for the grains this am with crude oil and the equity markets lower while the $ index is a little higher. There isn’t a lot of fresh market moving news this am although maybe something will develop later in the day.

Some much needed rain fell in Argentina’s wheat belt this week but dry weather is now forecast until late next week which will increase the need for additional moisture there soon. Continued mostly dry weather in western and southeastern Australian wheat areas will continue to delay wheat planting in these major Australian wheat producing areas.

The US northern plains spring wheat belt will see more unwelcome light rain today but mostly dry weather is forecast over the weekend, along with very cold temps. Light, scattered rain is forecast again early next week and the 6-10 day calls for above normal rain, which could keep planting efforts slow. The southwest winter wheat belt will see up to 2″ of rain in the southeast the next two days with lesser amounts in the rest of the belt. The forecast for next week calls for below normal rain, which won’t be a problem following all the rain this region has had recently. The Midwest will see up to 1.5″ of rain the next couple of days with cold temps over the weekend. The 6-10 day calls for wet weather in the west, which will not be a problem as planting there is advanced while the east will see below normal rain, allowing for increased corn and bean planting efforts.---Vic Lespinasse

Lower start is indicated in Grains

A lower start is indicated this am, roughly 5-10 down in wheat, 2 lower in corn and 5 off in beans. Malaysian palm oil fell 105 ringgit today. The outside markets are a bearish influence for grains this am with crude oil and equities lower while the $ index is higher.

Weekly export sales were slow for wheat at 103,000 tonnes this crop year and 131,000 tonnes next crop year, starting June 1. Oil sales were about as expected at 20,000 tonnes. The rest were good: 937,000 tonnes of corn for this crop year and 246,000 tonnes for next crop year, starting Sep 1; 402,000 tonnes of beans for this crop year and 353,000 tonnes for next crop year, starting Sep 1; meal sales were 260,000 tonnes this crop year and 79,000 tonnes next crop year starting Oct 1. Included in the bean sales were 132,000 tonnes of old crop to China and 178,000 tonnes of new crop to China. China needs to keep buying large amounts of US beans to keep prices rallying, especially if Midwestern weather improves, as expected, starting next week.

The National Oilseed Processors Association April crush was about 2 million bushels higher than expected at 134.1 million. Oil stocks were also higher than expected, 2.710 billion lbs vs trade ideas of 2.593.

An ADM executive said late yesterday they think the amount of ethanol allowed to be blended into gasoline will increased next year by the EPA from 10% to 12%. This would increase the demand for ethanol, which would be bullish for corn prices. Of course, ADM is one of the biggest producers of ethanol so they have a vested interest in a higher blend rate and would like to see it increased. I think there is a fairly good chance the EPA will increase the blend rate since the Obama administration is a big advocate of alternative energy, including biofuels.

India's Trade Secretary said India will allow wheat exports starting sometime after about June 15. Traders think up to 2 million tonnes could be available for export.

Argentine wheat fields had some much needed rain the last 24-48 hours but little is now forecast the next week or so with much more rain needed soon. Favorable growing conditions continue in Chinese wheat, corn and bean areas for the time being. Continued dry weather is delaying wheat planting in western and southeastern Australian wheat areas.

There is a chance of freezing temps in the northern plains spring wheat belt Saturday am which could do some damage to the crop there. Freezing temps are also possible in the Midwest and southwest Sunday am. Wheat in the flowering stage could suffer some damage in the southwest if this freeze hits. The US spring wheat belt had light, scattered rain yesterday with more of the same today-tomorrow with dry weather Sat-Mon. More rain is possible Tue-Wed. The 6-10 day calls for wet, cool conditions, which will keep planting progress slow. The southwest winter wheat belt saw rain in the east the last 24 hours. More is expected today-Sat, up to 1 1/4" with dry weather following for several days. The Midwest had up to 1 1/4" in the west the last 24 hours. More is likely tomorrow, then dry weather is forecast for several days. The east had up to 2" the last 24 hours with more expected Fri-Sat, up to 1.5". Dry weather is forecast Sun-Tue. The 6-10 day calls for dry weather in the east, which should allow for increased planting progress, with wet weather in the west, where planting is advanced already.

May futures expire at noon today, US Central time.

Momentum from Higher Overnight Grains Call for Higher Start

The call is for a higher start for corn, soybeans, and wheat today. There is momentum carrying over from a higher overnight grain market.

A wet weather forecast for much of this week is really setting corn planting back in the eastern Corn Belt, and that is bullish for the corn market. Freese-Notis weather service reports the radar early on this Wednesday was showing extensive rain and thunderstorms in the western Corn Belt in the vicinity of the Missouri River, and in the eastern Corn Belt throughout much of Illinois, Indiana, and Wisconsin. Since yesterday morning, rainfall has been most widespread through the eastern half of Iowa through much of northern Illinois, with radar suggesting that localized areas have received more than an inch. This current weather system should be a prolific rain producer over the next 24 hours for the southeastern two-thirds of Missouri, eastern Iowa, and much of Wisconsin, Michigan, Illinois, Indiana and Ohio with a lot of 0.75-2.00 inch amounts (and of course, locally even heavier totals).

Meanwhile, some of the outside markets could add some support for the grains today. Crude oil is trading higher this morning. Crude hit over $60 per barrel yesterday for the first time since November. China's Dalian Commodity Exchange settled higher Wednesday, supported by expectations of rising cash.

Overall, World markets traded mostly lower overnight. Plus, the Dow Jones Industrial is expected to open lower on expected weak retail sales report. Consumer spending accounts for two-thirds of U.S. economic activity.
---Reported by Mike McGinnis, Chicago Markets Bureau Chief for Agriculture.com

USDA Report Considered Neutral/Bullish; Higher Start Likely

Overnight grain prices were higher ahead of this morning’s USDA report. The outside markets are friendly for the grains this am with crude oil and the equity markets up while the $ index is lower.

The Crop Progress Report yesterday afternoon showed corn planting 48% complete vs. 71% average. Beans are 14% planted against 25% average while spring wheat is just 35% done vs. 78% average. Emergence is also slow, 14% in corn vs. 28% average and 13% in spring wheat vs. 38% average. Winter wheat rated 46% good to excellent compared with 47% last week. The divide between the eastern and western halves of the Midwest remains stark: Iowa corn is 81% planted compared with only 10% in Illinois. Beans are 21% done in Iowa against 0% in Illinois, for example.
There were 1000 each delivered in wheat and oil this am with no large commercial stoppers (takers of delivery).
The USDA report this am was considered neutral/bullish and a higher start is likely in all pits, roughly 5-10 cents each in wheat, corn and beans.

Winter wheat production was put at 1.502 billion bushels with hard red winter at 871 million bushels, soft red winter at 422 million bushels and white winter at 208 million bushels. Ending stocks were estimated at 130 million bushels for 2008-09 beans and at 230 million bushels for 2009-10 beans. Corn ending stocks were guessed at 1.600 billion bushels and at 1.145 billion bushels, respectively. Wheat ending stocks were at 669 million bushels and at 637 million bushels, respectively. Oil ending stocks came in at 2.703 billion lbs and at 2.383 billion lbs, respectively. Meal ending stocks were figured at 300,000 tonnes for both crop years. The crop year starts June 1 for winter wheat, Sep 1 for corn and beans and Oct 1 for meal and oil.

World ending stocks were guessed at 167.1 million tonnes for wheat in the 2008-09 crop year vs. the previous guess of 158.1 million. The USDA’s initial guess for the 2009-10 crop year for wheat is at 181.9 million tonnes. The USDA estimated corn ending world stocks for 2008-09 at 139.6 million tonnes against their April guess of 143.3 million. Their first guess for the 2009-10 crop year for corn is at 128.2 million tonnes. For beans, the USDA estimates world ending stocks for 2008-09 at 42.55 million tonnes against 45.84 million previously and for 2009-10 they estimate 51.88 million tonnes. World meal ending stocks are predicted to fall to 4.81 million tonnes this crop year from the previous guess of 5.32 million with next year’s meal ending stocks forecast at 4.99 million tonnes.

World oil ending stocks were guessed at 2.51 million tonnes vs. 2.73 million previously. Next crop year, ending stocks were guessed at 2.44 million tonnes. Some other salient features of the report included a cut in the Argentine bean crop guess to just 34 million tonnes vs. 39 million previously for the 2008-09 crop year; a big rebound is forecast next year for Argentine bean production by the USDA to 51 million tonnes, about the same as initially forecast for this crop year before drought hit the crop during the critical yield determining period; no change in the Brazilian bean estimate from last month, 57 million tonnes; 60 million tonnes estimated for next year’s Brazilian bean crop; China’s 2008-09 bean crop guess was cut to 16 million tonnes from 16.8 million previously and their next bean crop is only expected to total 15.6 million tonnes; bean oil used to make bio diesel fuel (methyl ester) was cut to just 1.900 billion lbs from the previous guess of 2.981 billion by the USDA for this crop year with 2.200 billion lbs expected to be used next year for this fuel; the USDA guessed 3.750 billion bushels of corn will be used this crop year to make ethanol vs their previous guess of 3.026 billion and they put next crop year’s use of corn for ethanol at 4.1 billion bushels.

Some analysts think we could be as much as 20 higher in corn and beans, 10 up in wheat, based on both the USDA report this am and the wet weather forecast for the Northern Plains and the eastern half of the Midwest. The USDA report was mostly friendly while the wet forecast will further delay the already seriously delayed spring wheat and corn planting pace. Some other reflections on this morning's USDA numbers: while the US wheat production and ending stocks estimates were less than expected and therefore supportive for our wheat market this am, the world ending stocks estimates for this year and next are bearish, showing a significant jump in both. This could weigh on wheat prices longer term.

Rain is predicted the next 1-2 days in Argentina’s wheat belt but the driest area, southwest Buenos Aires province, is expected to get the least amount. More dry weather is forecast in southeast and western Australian wheat areas the next several days, delaying wheat planting further.

The US Midwest will see up to 1″ of rain in the west today-tomorrow with up to 1″ also expected Friday before dry weather moves in over the weekend. The eastern half of the belt will see rain tonight through Thursday, up to 1.5″. More rain is forecast Fri-Sat, up to 1.5″. The 6-10 day calls for wet weather in the northwest, below normal rain in the southeast part of the belt. All the rain in the east is unwelcome as farmers struggle to catch up in planting corn and beans. The southwest winter wheat belt saw scattered rain of up to 3/4″ the last 24 hours. More is forecast in the eastern half of the belt today-tomorrow. Fri-Sat up to 1.5″ is predicted. The 6-10 day calls for below normal rain in the south, above normal rain in the north. The northern plains spring wheat belt saw .5″ of unwelcome rain in North Dakota, the largest spring wheat state, the last 24 hours. More is forecast the next two days, up to 1 1/4″, before dry weather returns Fri-Sun. The 6-10 day calls for wetter than normal weather, which could keep planting slow.

Bull market in the grains could be derailed this am

The bull market in the grains could be derailed this am: the first case of swine flu was reported in China, sending Dalian, China grain futures prices, especially meal, lower today. It is feared pork demand will fall now that swine flu is present in China. Lower pork demand would reduce meal demand, which would in turn, reduce bean demand as well as reduce crushing margins (the premium of meal and oil to beans, which largely determines bean processors “crushers” profits). WHO, the UN’s World Health Organization, has repeatedly said swine flu is not spread by eating pork but in many countries around the world the public is not convinced and widespread belief remains that pork is to be avoided to help prevent swine flu. Lower crushing margins and lower meal demand could reduce Chinese bean import demand and this possibility weighed on our bean market overnight with more of the same bearish psychological impact expected this am. Additional pressure could spring from lower crude oil, equity and $ index prices this am; lower grain prices were seen overnight, falling roughly 3-4 cents in wheat and corn and 16 cents in beans while meal dropped $4.

Deliveries were 300 lots in wheat and 1200 in oil with ADM stopping 119 oil for the only large commercial feature. Open interest jumped sharply in most pits on Friday’s rally, up 10,000 in wheat, 19,000 in corn, 6000 in beans, 5000 in meal and 2000 in oil. This represents a lot of new longs, some of whom will want to get out of the market this am, which could add additional pressure to all the pits. A lot of evening up is likely today ahead of the big USDA supply/demand, winter wheat production and world production reports tomorrow am.

Some much needed rain is forecast for the dry wheat belt of Argentina this week but more rain will still be needed over coming weeks to offset drought damage in this region. Beneficial rain is forecast for the wheat belts of the Ukraine and southern Russia this week. Mostly dry weather in western and southeastern Australian wheat belts has delayed wheat planting there and more of the same is forecast, increasing the need for rain soon.

The US northern plains spring wheat belt had up to 3/4″ of unwelcome rain over the weekend with up to 1.5″ more forecast Tuesday in the east. This will further delay planting. Dry weather is forecast Wed-Thur but scattered rain is predicted Friday. The 6-10 day calls for below normal rain in the west, above normal rain in the east. The southwest winter wheat belt saw up to .7″ over the weekend with more forecast today-Wednesday in the north and east. Scattered rain is forecast Thur-Sat in the southeast. The 6-10 day calls for above normal rain in the east, below normal in the west. The Midwest saw light, scattered weekend rain with mostly dry weather predicted today. Rain is forecast again Tue-Wed, up to 1.5″ and again Fri-Sat, up to 1.5″. This rain is useful in the west, where planting progress is advaned but in the east it will further slow an already seriously delayed planting effort, especially for corn. The 6-10 day calls for cool temps with wet weather in the southeast, below normal rain in the northwest. -- Vic Lespinasse

A higher start is indicated this am: prices were higher overnight

A higher start is indicated this am: prices were higher overnight; crude oil and the equity markets are up and the $ index is lower, all of which is friendly for opening grain prices. The early call is roughly 5 higher wheat, 3-4 better corn and 10-15 up in beans.

Stats Canada this morning estimated all wheat stocks as of March 31 at 15.5 million tonnes vs. trade ideas of 16.7 million. They put oat stocks at 2.5 million tonnes vs. trade estimates of 2.7 million and canola stocks at 5.85 million tonnes against trade guesses of 6.1 million. All these estimates are also friendly for the grains this am, specifically wheat, oats and bean oil.

China's government linked think tank, the China National Grain and Oils Information Center, increased their winter wheat production estimate for 2009 from 105 million tonnes to 107.2 million. They upped their all wheat crop guess by the same amount, to 113.2 million tonnes vs. 111 million before. They left their corn and bean production guesses unchanged at 163 million tonnes and 15 million tonnes, respectively. They also increased their estimate of Chinese bean imports for this crop year, which ends August 31, to 39.5 million tonnes from 38 million tonnes previously.

Deliveries this am were 750 wheat and 1700 oil with no corn, beans or meal delivered. ADM took delivery of 459 oil for the only commercial feature. The USDA announced this am the sale of 120,000 tonnes of US corn to an unknown destination for this crop year, which ends Aug 31, and 176,000 tonnes of US corn to an unknown destination for the next crop year, starting Sep 1. There is no confirmation of yesterday's rumors that China cancelled 300,000 tonnes of beans and defered shipment of 500,000 tonnes from May to June.

Beneficial rain is forecast in China's main wheat, corn and bean growing areas either this weekend or next week, keeping crops there in good shape overall. There is a chance for light rain in the dry Argentine wheat belt the next 5-7 days, which is badly needed to allow wheat planting to pick up. Continued dry weather in western and southeast Australian wheat areas will delay planting there.

The US Spring Wheat Belt will see light rain today in the southern part of the belt with dry weather following for several days. More unwelcome rain is forecast mid next week and the 6-10 day calls for above normal rain, which could keep planting efforts slow. The US Southwest Winter Wheat Belt will see beneficial rain today through Sun, up to 1.5" with more rain possible the second half of next week. The Midwest will see mostly dry weather in the west the next several days with rain returning to the region mid next week, when up to 1.5" could fall. The eastern half of the belt had up to .75" yesterday and more is forecast in the southern part of the area today before mostly dry weather moves in over the weekend. Light rain is forecast the second half of next week. --Vic Lespinasse

Friendly Outside Markets Point To Higher Start For Grains

A higher start is likely this am following overnight gains with the early call 5 up in wheat and corn, 10 higher beans. The outside markets are mostly friendly as far as the grains are concerned this am with crude oil and equities higher while the $ index is steady/mixed.

Weekly export sales were in line for wheat, 255,000 tonnes this crop year and 132,000 tonnes next crop year, which starts Jun 1. Corn sales were slow, just 589,000 tonnes, as was meal, 135,000 tonnes. Bean sales were in line, 654,000 tonnes this crop year and 121,000 tonnes next crop year, which starts Sep 1. Oil sales were strong, 35,000 tonnes.

Conab, a division of Brazil's Agriculture Ministry, estimated Brazil's bean crop at 57.6 million tonnes vs. their April guess of 58 million. They guessed their corn crop at 51.4 million tonnes vs. 50.4 million previously.

There were no beans or meal delivered this am with only 5 lots of corn, 1700 wheat and 2000 oil. ADM was the only large commercial stopper, taking 248 oil.

The head of the US House Agriculture Committee, a democrat from Minnesota, said he will oppose any Obama administration supported legislation that would curtail the growth or use of corn based ethanol and bean oil based bio diesel. Most farm state legislators are likely to take a similar approach, making it difficult to restrict the growing use of bio fuels from corn or beans.

Indian sources said the government there is likely to allow up to 2 million tonnes of wheat exports after the middle of this month. Remember, Informa will put out their acreage estimates tomorrow am and the USDA May supply/demand report and initial winter wheat production estimates will be out Tuesday am.

Argentine wheat areas continue dry but some scattered rain is possible early next week, which would be very welcome. Beneficial rain is still forecast in China's wheat, corn and bean belts this weekend. Continued dry weather is forecast in Australia's western and southeast wheat areas, delaying wheat planting.

The US Midwest saw light, scattered rain in the west the last 24 hours. Mostly dry weather is forecast the next several days, allowing more corn and bean planting progress. The east had up to 1" of scattered rain yesterday. Rain is forecast in the southern part of the belt tonight and tomorrow, up to 1.5" with dry weather Sun-Mon. The 6-10 day calls for above normal rain in the midwest. The Southwest Winter Wheat Belt will see widespread rain today-Saturday, up to 1.5", favoring the east. More is possible early next week, keeping conditions favorable for the crop. The northern plains spring wheat belt will see scattered, unwelcome rain today-tomorrow, followed by dry weather over the weekend. The 6-10 day calls for above normal rain, which will delay planting. --Vic Lespinasse

Outside Markets Pointing To Bullish Grains

A higher start is expected across the floor this am, led by beans, which are called roughly 10 higher. Corn and wheat are projected to start around 1-2 higher. The outside markets are pointing the grains higher with crude oil and the equity markets up while the $ index is lower, a bullish posture as far as the grains are concerned.

Malaysian palm oil gained 55 ringgit today while Dalian, China grain futures were mostly higher, supportive background influences for our grain market. There were no meal deliveries this am and less than 50 lots of corn and beans combined. Wheat deliveries totaled 3300 while 2100 oil was put out on delivery, all without any large scale taking (stopping) of deliveries by commercials. Later in the month, commercials will probably start taking delivery.

The Kansas Wheat Tour concluded its first day of its three day tour. Kansas wheat yield was estimated at 43 bushels per acre vs. 45.4 bushels last year at this time. The tour will put out a final yield and production estimate Thursday afternoon.

Even though grains were mostly lower yesterday, they closed much better than they were shortly before the end of the session, recovering much of their losses in the closing minutes of trading.

The bull spread continued working in beans with, for example, Jul continuing to gain vs. Nov. This is the sign of a bull market and many traders will be wary of being short beans as long as the bull spreads keep working so well. As I said yesterday, the bean spreads are all inverted, with the nearby months higher than the deferred months while the spreads in wheat and corn reflect carrying charges, that is the deferred months are higher priced than the nearby months. This suggests beans are much more bullish than wheat or corn currently so traders will be watching beans for direction today. If they rally, wheat and corn are likely to follow suit.


More unwelcome dry weather is forecast for the Argentine wheat belt the next several days, increasing the need for widespread moisture soon so wheat planting can proceed. The Australian wheat belts in the southeast and western parts of the country also have an increasing need for rain but little is forecast the next 7 days or longer. Welcome rain is predicted in the wheat, corn and bean growing regions of China Fri-Sun. Beneficial rain is forecast in the wheat areas of the Ukraine and southern Russia the next 5 days or more.

The US Northern Plains Spring Wheat Belt will be on the wet side the rest of the week with light, scattered amounts continuing to delay spring planting. More rain is forecast next week according to the 6-10 day outlook. The Southwest Winter Wheat Belt saw up to 1" of rain in Oklahoma the last 24 hours. More scattered rain is forecast Thur-Mon. The 6-10 day calls for wet weather in the north and west, below normal rain in the southeast. The Midwest will see light rain in the west the next few days, up to .7". The east will see more rain in the southern half of the region the next several days, up to 2.5", which is unwelcome as it will further delay spring corn and bean planting. The 6-10 day for the Midwest calls for above normal rain, which will continue to slow planting efforts. Overall, the above weather forecasts are more bullish than not and should underpin rally efforts in the grains today. --Vic Lespinasse

Higher Start Expected For Grains

Another higher start is expected today, 6-8 in wheat, 1-2 in corn and 7-10 in beans. The outside markets are mixed for modest amounts so far this am and not a major influence on the grains at this time. Deliveries were 3600 wheat, less than 100 in corn and beans, 2000 oil and 0 meal.

The Weekly Crop Progress Report showed winter wheat continues to improve, as expected with 47% now rated good to excellent vs. 45% a week ago. Corn planting was at the low end of trade estimates, 33% vs. 50% average. Bean planting was also at the low end of trade estimates, 6% done vs. 11% average while spring wheat remains way behind normal, only 23% in the ground vs. 59% average for this time of year.

Argentina's Agriculture Secretary warned wheat acreage will fall below even last year's low level if needed rain doesn't come soon. Argentine farmers only have until about mid-June to plant the crop.

The latest forecast for Argentina calls for continued dry weather, however, keeping planting very slow. More beneficial rain is predicted in the wheat, corn and bean areas of China Fri-Sat. There has been some concern about adverse weather in southern Russia’s and the Ukraine’s wheat belts lately but the latest forecast calls for scattered rain over the next 5-7 days, which should improve conditions there. Dry weather concerns in Australia's western and southeastern wheat belts will remain as the forecast calls for more dry conditions over the next 7 days or longer.

Here in the US, the Midwest will see light, scattered rain the next few days with cool temps in the west. The 6-10 day calls for above normal rain, which could keep spring planting progress slow. The Southwest Winter Wheat Belt will see scattered rain in the east today and again Thur-Sun. The 6-10 day calls for wet weather in the north and east, below normal rain in the southwest part of the belt. The Northern Plains saw light rain the last 24 hours with more forecast Thur-Fri. The 6-10 day calls for cool, wet weather, which could further delay spring wheat planting.-- Vic Lespinasse

A Mixed Start Possible This Morning

A mixed start is possible this am, roughly 3-4 lower in wheat and corn, 20-25 higher in beans. The outside markets are mixed and probably won't be a big influence therefore on the grains initially. This could, although, change later in the day depending on what the outside markets do.

Dalian, China grain futures were sharply higher and Malaysian palm oil jumped 107 ringgit, both of which are supportive for our grain market. Deliveries totaled 4700 wheat, 800 corn, 2000 oil and 121 beans with no meal. Dreyfus put out 500 corn and ADM stopped 184 oil for the only commercial features. There is a little talk China might have bought as many as 5 cargoes of US beans late last week, roughly 275,000 tonnes. There is also some talk the Argentine bean crop could be as low as 31 million tonnes, much lower than the 34-36 million tonne range many traders are currently using.


The European weather model is wetter in the 6-10 day outlook for the US Southwest Winter Wheat Belt and the western Midwest than the US model is. The Western Corn Belt was mostly dry over the weekend and is likely to stay that way today. Up to .6" is forecast tomorrow with more of the same Thur-Fri. The Eastern Corn Belt had up to .75" early in the weekend. Scattered rain is likely to return to the region the second half of the week. The 6-10 day outlook calls for above normal rain. The Southwest Winter Wheat Belt saw rain over the weekend in the east, up to 1.25", with up to .5" in the west. More rain is likely today-tomorrow and again Thur. The 6-10 day calls for above normal rain. While rain in the southwest is welcome, in some areas there has been too much of a good thing and some flooding is possible, which could damage the wheat crop in those areas. The Northern Plains Spring Wheat Belt was generally dry over the weekend but scattered rain is forecast today, up to .6". Dry weather will follow for a couple of days before wet weather moves back into the belt the second half of the week. More dry weather is needed in this area so spring planting can catch up to normal. However, the 6-10 day calls for above normal rain. --Vic Lespinasse