Morning Grain Update

4/21/2015 6:50 AM CST

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The grain markets are lower across the board to begin Tuesday morning following mixed
closes yesterday. Traders eye mostly dry weather forecasts for much of the Corn
Belt. Still, many areas will remain cool and may have a tough time drying out prior to
further planting activity. Increased availability of South American corn and soybeans at
lower prices has hurt US export activity. Currency implications are particularly
negative for the wheat market; supplies out of the EU and Black Sea are much more
competitive due to the weak Euro currency.
Crop Progress
USDA released their weekly Crop Progress report yesterday after the close.

Corn Planting: 9% complete vs. 2% last week and 13% on average; Illinois 15% /
Iowa 7% / Indiana 1% / Minnesota 7% / Missouri 8% / Nebraska 4% / Ohio 1%
Spring Wheat Planting 36% complete vs. 19% on average
Winter Wheat: 42% good-excellent, unchanged from last week; 19% rated poor-very
poor
USDA did not release a national soybean planting number

The corn market sits 5-10 cents removed from multi-month lows this morning. Funds hold a
heavy short position ahead of the growing season. It was noted that Argentina authorized
additional corn exports, a move that had been rumored for a couple of weeks. South
American corn production estimates continue to rise. The marketplace will likely assume
a trend-line US corn yield until it has a reason to believe otherwise. Given a trendline yield, most assume that the market is only marginally overpriced and that cash corn
could average a price near $3.50 during the 15/16 marketing year. Changes will start to
occur when yield ideas deviate more than a few bushels per acre from trend-line, which is
near 165bpa this year. Price direction will be a function of US weather and production
potential during the next several months.
The soybean market is marginally lower this morning following a higher close on
Monday. News that China would implement new economic stimulus measures was seen as
supportive. In addition, the possibility of a Brazil trucker strike may have added
additional risk to the marketplace. Still, long term fundamental factors have not
changed. Burdensome global supplies paired with expanding acreage during the next couple
of major growing cycles are seen as being hugely negative. Still, its tough to gauge
what portion of this bearishness has been priced into the market, especially when
considering that most of these factors have been known for quite some time.
Wheat futures rallied yesterday but have moved lower again this morning. While wheat
ratings did not improve on yesterdays report, it is assumed that they will improve on
next weeks report as a result of recent rains across US HRW wheat country. Lack of
demand remains the major problem for the wheat market. The US has lost a significant
share of the export market for wheat since the 1980s; recent action in the currency
markets may help to exacerbate the situation. Some of US HRW wheat country will see
additional rainfall during the next 7 days. Funds hold a very large short position in
the Chicago wheat market.
The information contained herein is the opinion of the writer or was obtained from sources cited within the update. It should be noted that
the impact on market prices due to seasonal or market cycles and current news events may be reflected in market prices. Trading in futures
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