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Erin Brown / Grand Vale Creative

Weather keeps planters on standby

Wheat

The wheat complex experienced very choppy back and forth trade this week. April 16 opened with heavy losses on improved prospects for rain in the Southern Plains. April 17 and 18 saw upward movement as those forecasts reduced rainfall amounts. April 19 trade saw a narrowing of the Minneapolis/Kansas City spread by over a dime as Minneapolis contracts declined and Kansas City contracts increased. Based on this price movement it appears the market is more concerned about the emerging shape of winter wheat than it is about delayed planting prospects for spring wheat.

Thirty-one percent of the winter wheat crop is rated good to excellent compared to 30 percent last week and 54 percent last year. Poor to very poor ratings increased to 37 percent versus 35 percent last week and 13 percent last year. Nine percent of the winter wheat crop is headed compared to 10 percent for the five-year average.

Spring wheat plantings are 3 percent compared to 15 percent for the five-year average, with progress limited to the Pacific Northwest. With recent snowfall events it is likely that planting for the primary spring wheat belt of North Dakota/South Dakota/Minnesota may not begin until May 5-10. The priority with that late start will favor a shift to row crops. Stats Canada estimates for intended acreage will come out April 27, and we would expect that number to have a significant impact on spring wheat futures price movement.

The U.S. Department of Agriculture ag attache to Australia forecasts a 24-million-metric-ton crop, which is an improvement over last year's 21.5 million metric tons. Australia encountered drought conditions last year, and as a result of reduced stocks, 2018-19 exports are only forecast to rise 1 million metric tons to 17 million metric tons.

German wheat output is expected to fall marginally to 24.29 million metric tons a 0.8 percent decrease. Rains earlier in the week improved soil moisture conditions in northeastern Germany and northwestern Poland..

Weekly export sales for all wheat totaled 6.4 million bushels with a 2.5 million bushel cancellation for the 2017-18 marketing year. This puts total marketing year sales at 844.1 million bushels, 17 percent below the previous marketing year. Marketing year shipments total 726.8 million bushels, 11 percent below the previous year.

For the week ending April 19, May contracts for Minneapolis wheat were down 3.75 cents at $6.1325, up 4.25 cents at $4.7675 for Chicago wheat, and down 0.25 cents at $4.9525 for Kansas City wheat.

Corn

The corn market held 50-day moving averages after its recent declines, with the July contract touching $3.885 before recovering. Although the market doesn't seem too concerned about the unfolding late planting scenario, there is plenty of speculation regarding potential large drawdowns in ending stocks for 2018-19. We caught a glimpse of that with data released April 18 regarding ethanol usage.

Weekly petroleum data showed gasoline demand surging to an all time record 9.857 million barrels per day, with stocks declining 2.97 million barrels versus expectations of unchanged. Crude oil stocks declined 1.07 million barrels, which was slightly less than expected. This sent crude oil futures surging over $2.30 a barrel higher in April 18 trade.

Ethanol stocks continued their impressive drawdown declining 502,000 barrels (21 million gallons) to 21.344 million barrels. Ethanol stocks have declined 12 percent over the last five weeks, which is by far the highest five-week stocks drop since the Energy Information Administration has been reporting weekly data since 2010. Previous high stock drawdowns have occurred during the summer driving season, which makes this drawdown impressive. Current ethanol stocks are now 7.3 percent below last year's same-week stocks, the largest year-over-year stocks decline since December 2016. With the summer driving season ahead of us and ethanol margins positive, one could expect stronger corn usage for ethanol in future USDA reports.

Japan announced that it is opening its market to the import of U.S. corn-based ethanol. Japan will allow U.S ethanol to meet up to 44 percent of their estimated 217 million gallon demand or 95.5 million gallons. The policy change comes from an update in Japan's air quality initiatives that currently only allowed sugarcane based ethanol as part of their fuel supply.

The weekly crop progress report has 3 percent of the U.S. corn crop planted versus 6 percent last year and 5 percent for the five-year average. Trade was expecting 5 percent. Texas and North Carolina are the only states near or above their normal pace. Heavy snowfall in the Dakotas and Minnesota the past week looks to further delay planting progress in the next few weeks. The National Weather Service six-to-10-day and eight-to-14-day forecasts call for continued below normal temperatures in the Midwest April 24 to May 2, which is providing underlying support.

Soybeans

Soybean futures gave back all last week's gains this week as pressure came from commercial selling in soybean meal and uncertainty in spring acreage. Soybeans continue to search for direction as the trade digests U.S./China relations, poor export demand and Argentina's soybean shortfall. It has been a slow week newswise, and the recent light trade volume and narrowing trading range is showing that. The U.S. export wire has been quiet this week with no announced sales.

The market couldn't find any support from strong National Oilseed Processors Association crush numbers on April 16. NOPA announced that the March soybean crush among members was 171.9 million bushels, above average market expectations of 168.2 million, 12.3 percent above last year's March crush of 153.1 million bushels. This is a new all-time record monthly crush, surpassing the previous record of 166.3 million bushels set in December 2017. NOPA March soybean oil stocks were at pre-report estimates, but up 7 percent from the same time last year. Oil stocks are up 7 percent versus last year, which is weighing on soy oil futures. Soy oil futures are sitting at lows last seen in June.

The forecast is once again shifting cooler and wetter for the Corn Belt in the six-to-14-day forecast. Temps are forecast below normal for virtually the entire Corn Belt for the eigh- to-14-day forecast, and that warm spell that was forecast to move into the Corn Belt has been delayed (or perhaps eliminated?).

More acres are expected to be planted with this late spring. The question that hasn't been answered is how many more acres. The USDA is at 89 million acres currently. Most analysts are expecting this number to get back over 90 million.

November soybean resistance is at the April 2 highs of $10.60. Support is the 20-day moving average of $10.345 and then $10.10. The CME Group will increase daily price limits starting May 1 for soybeans, moving from 65 cents to 75 cents. Commodity Futures Trading Commission data on April 10 showed the funds slightly decreasing their strong net long stance, moving from net long 181,000 contracts to net long 176,000 contracts.

Weekly export sales of soybeans showed a total of 78.3 million bushels with 38.2 million bushels for the 2017-2018 marketing year. This put total marketing year sales at 1.986 billion bushels, 3 percent less than the previous marketing year.

Canola

For the week ending April 19, May canola futures in Winnipeg were up $11.40 Canadian at $534.40 Canadian per metric ton. The Canadian dollar was down .0016 to .7903. This brings the U.S. price to $19.16 per hundredweight.

Canola futures have rallied back to levels last seen in early November on the Winnipeg Exchange. The Canadian dollar was trading at $78.50 levels in early November, and now it is trading at $79.30 levels, which improves U.S. prices. More significantly, the Canadian dollar has rallied $3 from its March 19 lows. The recent strength in the Canadian dollar brings the U.S. conversion before basis to over $19.10 per hundredweight.

• Velva, N.D., $18.95 per hundredweight, September at $17.71.

• Enderlin, N.D., $19.70 per hundredweight, September at $18.32.

• Hallock, Minn., $19.35 per hundredweight, September at $17.95.

• Fargo, N.D., $19.40 per hundredweight, September at $18.15.

Barley

Cash feed barley bids in Minneapolis were at $2.85, while malting barley received no quote. The Berthold, N.D., bid is $2.60 and the CHS Southwest New Salem, N.D., bid is $2.90.

Durum

Cash bids for milling quality durum are $6 in Berthold and at $5.50 in Dickinson, N.D.

Sunflower

Cash sunflower bids in Fargo were at $17.85, October at $18.50. For the week ending April 19, soybean oil was down 8 cents at $31.40 on the May contract.

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