National Ag Day and Large Exit of Funds From Corn Market - Thursday, 23 March 2017

Tuesday, March 21st was National Ag Day.  The event is sponsored by The Agriculture Council of America and the theme this year was Food for Life. There are 7 billion people in the world today and this event helps put a spotlight on the  role agriculture plays in feeding the world.

 

There has been a large exit from the market by the Funds.  The CFTC reported on March 17th that the hedge funds and money managers had reduced their net long positions by -104,000 contracts, which is a very significant reduction in a weeks’ time. This sell-off moved them from a net long to a net short of 20,000 to 30,000 contracts.  Some of the optimistic members of the trade believe that this fall off gives investors ample opportunities to buy back into the market if U.S. weather looks unfavorable.  In general though, the weather has been cooperative in areas of the southern U.S. and early field work has been commencing. Large amounts of rainfall are expected across a wide portion of the nation’s mid-section from the end of this week through the weekend, most of which is currently viewed as beneficial moisture for the upcoming growing season.  There is a lot of speculation throughout the market place regarding corn acres for 2017, this will be a major focus for the trade as we approach next week’s USDA Planting Intentions report that is due out, Friday March 31st.

There is a lot of concern regarding Mexico’s threat to import less corn from the U.S. but that may not happen, at least for the next season.  According to “Agrimoney” the USDA’s Mexico City bureau reported that the total of Mexican corn imports for 2017-2018 are predicted to remain fixed at 13.4 million metric tons with the U.S. portion remaining unchanged from current levels. “Private sources indicated that as Mexico becomes a more attractive and sophisticated importer, some other countries that produce yellow corn, such as Brazil and Argentina, have shown interest in exporting to Mexico,” the bureau said.  The USDA’s Mexican bureau also cautioned that the Mexican government has “indicated that it has a strategic objective to increase diversification of its agricultural import suppliers”.

 

The Van Trump Report ran a story this week regarding a new Ag website designed to be, “an eBay for grain trade”.  The new startup company is called FarmLead and was started by Monsanto Growth Ventures Fund and Serra Ventures in an effort to connect grain producers and buyers directly to one another online.  I visited the website and found it to be very simple to navigate and quite similar to eBay in design with most current listings found in Canada.  Kevin Van Trump wrote, “There’s no doubt in my mind technology, particularly the “transparency” it brings along with it, is about to rapidly change the face of agriculture.  Make certain you are paying very close attention!”

Severe weather is expected to arrive in the Plains and South later this week and then spread into Nebraska and Iowa.  This system is predicted to bring severe thunderstorms including hail, tornadoes and high winds over several days. It is expected to form late Thursday as “an energetic upper-level system, swinging from the Southwest U.S. into the Plains”.  By Friday it is likely to move into Missouri, Arkansas, Louisiana and northward into Nebraska and Iowa. 

The weather is likely to remain unsettled and quite active for the 7 day period shown on the map below.  Dry regions of the country will benefit greatly from this moisture but will cause planting delays in those southern states.

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