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Wheat tours predict most state yields above 2018

Wheat

The Kansas wheat tour concluded with a final estimate of 47.2 bushels per acre. This was more than 10 bushels per acre above last year's estimate and well above the five-year average of 40.2 bushels per acre. This would equate to the Kansas crop reaching 306 million bushels, 62 million more than 2018.

Overall yield potential looks good; however, scouts noted that maturity is a full week to 10 days behind normal which could lead to a higher percentage of grain fill during hotter periods. It was also noted that cool and wet conditions over the past month will lead to foliar diseases. Over the last two years, the U.S. Department of Agriculture average statewide yield has come within a couple bushels per acre of this tour's estimate. In 2016, the tour's estimates were 8 bushels below the final USDA yield.

The Oklahoma portion of the tour estimated a yield of 37.4 bushels per acre compared to 24.8 bushels per acre last year and the five-year average of 29 bushels per acre. This would put the Oklahoma crop at 119 million bushels versus 70 million bushels last year. Colorado scouts calculated a yield of 46.5 bushels per acre compared to 35 bushels per acre last year and the five-year average of 40 bushels per acre. The Nebraska tour calculated 44 bushels per acre compared to 49 bushes per acre last year and the five-year state average of 47 bushels per acre.

Weekly export inspections were 630,000 metric tons (23.2 million bushels) which was within market expectations. Inspections now total 785.8 million bushels, down 2% from last year versus USDA's estimate of a 5% increase. Inspections will need to run 23.5 million bushels for the next five weeks to meet USDA's 945 million bushels projection. Weekly export sales were a dismal 185,000 metric tons (7.3 million bushels) and well below market expectations of 200,000 to 500,000 metric tons. Total commitments of 936 million bushels are up 8% from a year ago with shipments running even with last year's pace.

Planting is 20% behind the five-year average and that gap looks to widen with cool, wet weather.

For the week ending May 2, July contracts for Minneapolis wheat were up 9 cents at $5.2075, up 1.5 cents at $4.44 for Chicago wheat, and down 2.5 cents at $4.05 for Kansas City wheat.

Corn

The corn complex finally saw a nice week of gains as a round of short covering finally came into the market. Corn futures saw six straight days of gains in this current winning streak and have gained 19 cents from the contract lows that were set on April 25.

There is still plenty of grain in the countryside, so there could be some farmer selling pressure if prices gain another 10-15 cents from the current levels. It may also be easy to assume the elevators will take some of the rally away by widening the basis.

South America having a huge crop again was the worst case scenario this spring that pushed us down to contract lows. This is on top of the trade war that has lasted way too long and a slow down in ethanol production due to EPA waivers to biofuel refineries and refinery shutdowns due to flooding.

It may still be too early to get excited about heavy planting delays, but it is something to keep an eye on. The next couple USDA crop progress reports on May 6 and 13 will be important as concerns will start to mount if we get to mid-May well behind schedule.

It is hard to find a better explanation about the current ag climate than what Reuters wrote in one of its articles: "Speculators are closing out April with their most pessimistic views of all time toward Chicago-traded corn and soybeans, and as futures decline, farmers are even more reluctant to sell off their large inventories. Commodity funds are likely more comfortable than usual in taking massive short positions in grains and oilseeds because of the ample stockpiles, particularly in the United States. They also know that the producers will eventually have to sell, potentially at unfavorable prices, but producers are hoping that funds will be forced to cover shorts first."

As of April 23, managed funds were a new record of 322,000 contracts net short, 14,000 more contracts than the week prior. The cool wet weather has still not scared the funds out of these positions, but maybe the next Commodity Futures Trading Commission contract positions report will show the funds starting to lighten up on the short side. If not much planting progress is completed in the next week or two, that might be the nail in the coffin that makes these funds start short covering more heavy.

There is major support at $3.43 on the front month contract ($3.515 July support). The recent run up to $3.8075 that we saw on March 22 is major resistance. July corn was up 10.75 cents for the week ending May 2.

Soybeans

Soybean futures have seen losses eight out of the last nine trading days and posted new contract lows May 2. November soybeans broke a penny below the old contract low of $8.6475 that was set on July 13. The low last summer was set when the tariff war was really heating up and when crop ratings were continuing to improve every week in the U.S. This all happened after a record production year in Brazil—the perfect bearish storm. November soybeans were down 22.75 cents for the week ending May 2. November soybeans have lost 66 cents in this current losing streak that started March 15.

The U.S. and China wrapped up negotiation meetings in Beijing on May 2, but a lack of details from the meetings is continuing to hold the soybean complex hostage. There is no more crying wolf to get the market's attention. Only an agreement in writing and an actual date for a signing ceremony can help this market out now, and that is only if China lifts their tariffs on U.S. grains. Both sides have come out and said that they may keep some tariffs on for awhile until they know that both sides are in compliance of the trade deal they agreed upon. I don't even want to imagine what could happen to these markets if an agreement gets delayed until mid-summer or later.

There is already talk of a million or more acres of spring wheat in the Dakotas (mainly South Dakota) that may not get planted or may get converted to soybeans if planting delays are much longer. Some corn acres may get switched too if we get to the end of May and fieldwork is slow. USDA extended the deadline to May 17 from May 1 for agricultural producers to certify 2018 crop production for payments through the Market Facilitation Program. Payments will be issued only if eligible producers certify before the updated May 17 deadline.

The U.S. dollar index continues to climb and is at a new two-year high. This does not help U.S. exports as our commodities are more expensive to foreign buyers. South American currencies continue to take a dive which makes their grain more competitive in the global market.

For the week ending April 25, the USDA reported a disappointing 11.5 million bushels of soybean export sales for 2018-19 and 900,000 bushels for 2019-20. Total commitments of 1.658 billion bushels in 2018-19 are down 18% from a year ago. Soybean export inspections for 2018-19 now total 1.159 billion bushels, down 28% from the previous year.

November soybeans broke through the old contract low of $8.6475 set in mid-July. The new low of $8.6375 is new support. The front month low of $8.105 that was set in July 2018 is the lowest futures price since December 2008. The technical charts are a mess, but major resistance if we get a trade deal done is looking like $9.3125 on the weekly charts. On the daily charts, resistance is $9.34 and then the 10-month high of $9.71 for new crop soybeans that was set on Dec. 12.

Canola

For the week ending May 2, July canola futures were down $13.20 at $433 Canadian per metric ton. The July Canadian dollar was down .00055 at 0.74375. This brings the U.S. price to $14.61 per hundredweight.

Velva, N.D., $14.57 per hundredweight, June at $14.17.

Enderlin, N.D., $15.18 per hundredweight, June at $14.84

Hallock, Minn., $14.64 per hundredweight, June at $14.43

Fargo, N.D., no bid, June at $15.

Barley

Cash feed barley bids in Minneapolis were at $3.25, while malting barley received no quote. Berthold, N.D., bid is $2.50 and CHS Southwest New Salem, N.D., bid is $2.55.

Durum

Cash bids for milling quality durum are $4.50 in Berthold and at $4.55 in Dickinson, N.D.

Sunflower

Cash sunflower bids in Fargo were at $17.40, with June bids at $17.50.

For the week ending May 2, soybean oil was down 34 cents at $27.50 on the July contract.

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