PLANTING PROGRESS & BRUTAL CHOP

Written By Sebastian Frost

MARKET UPDATE

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Overview

Grains lower across the board as soybeans lead the way lower giving back all of Fridays gains despite seeing a record NOPA crush number today.

The choppy sideways trade continues. It looks like the grains are going to be unable to sustain a trend higher or lower short term.  It appears that rallies will find sellers and sell offs will find buyers. For example, we rallied Friday only to sell off today.

The big news over the weekend was the war going on in the middle east. As Iran attacked Israel but was unsuccessful, as over 99% of the missiles were shot down by Israel and US defenses. Israel responded this afternoon saying that they will forcefully retaliate.

What does this mean for the grains?

Unlike the war between Ukraine and Russia, a war in the middle east is not directly supportive for grains. It could be supportive for crude oil, and if crude oil goes sky rocketing higher perhaps some of that strength leaks over into the grains. But no, overall this is not directly friendly for the grains.

US weather is going be the biggest market factor going forward heading into planting and growing season.

We got a lot of planting done over the weekend. Corn planting is a tad slower than was expected but still faster than usual.

Soybeans on the other hand are off to a very fast start. It is only 3% but this is a pretty fast starting pace for beans.

Here was the crop progress report released today:

Corn

  • 6% planted

  • 7% estimates

  • 3% last week

  • 7% last year

  • 5% avg

Beans

  • 3% planted

  • 2% estimates

  • 3% last year

  • 1% avg

Spring Wheat

  • 7% planted

  • 7% estimates

  • 3% last week

  • 2% last year

  • 6% avg

Winter Wheat

  • 55% good to excellent

  • 55% estimates

  • 56% last week

  • 27% last year


So the warm weekend got many states off to a quick start but we are expected to see some rains the next week which could slow things down slightly for a few days. However, after these rains it does look to dry out so that should offer a decent planting window. So there doesn’t look to be any real problems with getting the crop in the ground.

Many are expecting planting progress to soar the next 2 weeks.

Here are the forecasts.

7-Day Rain

14-Day Rain

Overall weather is mixed for the time being. First the western corn belt was dry, now they are expected to get some raini n states such as Iowa. While the eastern corn belt just got a lot of rain, but are now expected to dry out. Nothing too noteworthy yet. I expect planting to go along fairly smoothly and fast still.

The western corn belt is still dry, Iowa for example is extremely dry. While drought is virtually nonexistent east of the Mississippi river with the recent rains.

If planting progress starts to move fast, the market would take it as a negative sign at least short term.

I do not see planting getting slowed too far, but if it were to happen it would be a friendly factor for prices short term but negative long term.

Looking short term, this market could still face some pressure. The funds are still incredibly short. They are short -250k corn, -140k beans, and -85k wheat. Short term they are not in a real rush to cover these until we get past the end of the month.

There is no compelling reason yet as long as planting is smooth. We will be having all of these May basis contracts expiring at the end of the month as well, which could lead to some additional farmer selling. Similar to what we saw to end February with the March contracts.

Let's dive into the rest of today's update....

Today's Main Takeaways

Corn

Corn continues its brutal sideways chop. Since April 4th, we have not had back to back green days or red days. Meaning since then we have been higher one day, lower the next, and vice versa.

Also to show you just how brutal this chop has been, corn has not closed above the highs nor below the lows from the day of USDA report back on March 28th.

A break past those highs could bring more technical buying, a break below could cause technical selling. Until then expect sideways action like we have seen all April.


BASIS CONTRACTS RECOMMENDATION:

In regards to basis contracts for those of you that have a basis contracts against the futures and you have it delivered. You are……..

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In the rest of today’s update we go over basis contracts & DP, the effects of potential early planting, weather scares & more.

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sfrost@dailymarketminute.com

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Sebastian Frost
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