Spring and Summer Forecast and Market News - Tuesday, 18 April 2017

The trade managed to move corn $0.11 ½ higher and soybeans $0.13 ½ higher last week. A few of the items contributing to this price bump:

  • The positive meeting between President Trump and Chinese President XI a week ago which relieved a great deal of concern regarding a possible trade war with one of our largest customers. 
  • Planting progress has been slowed by a wet weather pattern that appears to continue through this week.  This will become a negative to soybean prices if more corn acres start to switch to soybean acres due to wet soils.
  • President Trump has made comments that he believes that the U.S. Dollar is too strong.  Weaker Dollar=more trade, Stronger Dollar=less trade.
  • China’s economy is starting to improve.
  • China is importing soybeans at record levels.

Not all of the news is rosy though. 

  • Funds are still short 129,000 corn contracts and 22,000 soybean contracts.
  • Argentina soybean losses are at or under 50 million bushels.
  • China announced they plan to plant less corn and instead will plant more soybeans, approximately +8% more land will be dedicated to soybeans than in previous years.

The USDA reported yesterday that the U.S. corn crop is now 6% planted which is 3% higher than a week ago. Some states of notable interest:

  • Texas 60% complete vs 49% last year.
  • Missouri 17% complete vs 53% last year.
  • Illinois 6% planted vs 11% last year.
  • Iowa 2% planted vs 11% a year ago.
  • Minnesota 1% complete vs 11% last year.

The USDA continues to wait for Congress to confirm President Trump’s nominee for the job, Sonny Perdue.  Former Secretary of Agriculture, Tom Vilsack told Politico in an interview that he stated that the USDA is at a “severe disadvantage” because they suffer from a lack of leadership and political appointees.  Vilsack also believes that this lack of leadership is what has allowed the agency to get assigned one of the top three largest cuts facing any federal agency this year.  To complicate matters further, lawmaker will be meeting to enact appropriations for the rest of 2017 which must be completed by April 28th to avoid a government shutdown.  Vilsack stated, “The folks who are putting the USDA budget together at the OMB and White House have little to no awareness of what USDA actually does.”

Weather concerns are mounting for producers and traders as more moderate to heavy rainfall is expected to cause additional planting delays in the western and northern portions of the Corn Belt for the next 7 days. An approaching storm system in the Pacific Northwest is expected to move eastward along the U.S. and Canada border bringing showers and thunderstorms with precipitation amounts estimated from 1 to 4 inches.  According to Weather Trends 360 this week week, April 17th through April 23rd is expected to be one of the nation’s 4 wettest years out of the last 26 years and #1 out of the last 4.

The North American weather model guidance is indicating that a cool down may be in store for late April for areas of the Midwest.  Next week, April 24th – April 30th the northern tier of the U.S. is likely to see cold fronts move through bringing with it the likelihood of several rounds of severe thunderstorms.

 

The Weather Channel is forecasting a warm summer for the majority of the United States.  This map indicates the overall trend but there may be dips in the jet-stream or an upper level ridge of high pressure that may bring a brief cool down or warmer weather for a short period of time.  This forecast, if correct, would mean nearly perfect growing conditions for crops across the Midwest especially following our wet spring.

 

The Australian Weather Bureau has found indications in weather models they use for the potential for an El Niño to form sometime yet this year or early in 2018. In addition temperature readings in the eastern Pacific Ocean are beginning to increase which is an early indication of a forming El Niño weather pattern. At the start of 2017 forecasters around the world were united in regards to the 2017 forecast for neutral conditions.  Government forecasters in the United States and in Japan are also in agreement with the Australian Weather Bureau which puts the chances of an El Niño event at a minimum of 50%.

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