Special Market Update

Corn

Old crop corn prices erased Monday’s gains today with May corn (CK19) closing at 3.59. Down 3.75c. New crop corn (CZ19) closed at $3.875, down 3.25c.

Pressure today most likely stemmed from the crop progress report released yesterday which pegged U.S. corn plantings at 3% complete vs. 3% complete this time last year. However, that rating is behind the 5 year average of 5% complete for this timeframe. Following the flooding which devastated parts of Nebraska, Iowa, South Dakota, and Minnesota last month, many were expecting this crop progress report to reflect a planting delay in those key growing areas.  The top 5 corn producing states (Iowa, Illinois, Nebraska, Minnesota, Indiana) combined in yesterday’s report at 1% planted (Indiana), compared to a similar 1% this time last year (Nebraska). I think the bottom line is that it is too early in the growing season to panic much over planting delays. Weather over the next few weeks and especially the first half of May will be crucial to planting pace. As of right now forecasts have weather turning dryer over the next week or so in the western corn belt which should allow producers a chance to get in the fields.

In other news, the corn short is now being estimated at approximately 300 contracts. Between the bearish planting intentions report at the end of March which estimated 2019 corn acres at 92.8 million, and the April 9^th WASDE which saw the old crop carryout pushed over 2 billion bushels again (due to downward revisions to feed use, ethanol use, and export demand), the figures haven’t yet given managed money funds a bullish spark to trigger much of any short covering that would spur a rally in the corn market. As mentioned above, weather will be key over the next several weeks, and the Monday crop progress reports and Friday Commitment of Traders reports are just a couple of sources that should be focused on as we enter this planting season. Look for choppy range-bound trade to continue until weather dictates a longer term trend.

Soybeans

May soybeans (SK19) closed down 10.75c finishing the session at $8.88. New crop soybeans (SX19) finished the day down 10c, closing at $9.21.

The market today was pressured by disappointing export sales last week, and seems to be sticking to the downtrend that has been in effect since the end of 2018/beginning of 2019 calendar year. It will be interesting to see the impact on soybean prices from any potential planting delay in corn, as while a delay would be construed as bullish to corn prices, it would most likely mean a potential switch to soybean acres in an already incredibly oversupplied market.

Today’s trade serves as further proof that traders are tired of the “U.S. and China Reportedly Close to Deal” type headlines that have been very common for the past 4-6 months. President Trump said last week he foresaw an agreement within 4 weeks, and yesterday reports said both sides were “close”, but at this point the market will need to see facts, specifically in the form of solid export commitments to excite the market.

Technically, the 50 day moving average is on the verge of crossing below the 200 day MA (see chart below), this is one of the more heavily traded technical indicators and is nicknamed a “death cross”, so should we see no positive fundamental news and traders continue to grow their short, there seems to still be room to move lower. The next support points to the downside are $8.82 followed by $8.71 and $8.53.