Winter weather hits Kansas

Wheat

Typically we get a Kansas frost fear event during the spring season. The wheat complex got that and more this week as a system dumped heavy snows over western Kansas and eastern Colorado the weekend of April 29-30. Kansas City contracts traded near limit up in May 1 trade with 29-cent gains. A member of the Kansas Wheat Commission stated, "We lost the western Kansas wheat crop this weekend."

Heavy snows lodged winter wheat that was ahead of normal growing pace. Thirty two percent of the crop was headed compared to 23 percent for the five-year average so concern remains that even the areas that escaped the heavy snow could have experience yield loss with temperatures that were well below freezing.

To make the situation more interesting, The Kansas wheat tour was conducted this week with various scouting reports and yield estimates. The tour completed May 4 with a 46.1 bushel per acre yield estimate putting total production at 282.7 million bushels. This is down 185 million bushels from last year.

This production estimate would mean roughly 20 percent of Kansas acres would be abandoned. It needs to be noted that scouts did not make yield estimates on fields that were under snow. A Kansas extension agent stated that he had not seen this much water standing in western wheat fields in his 40 years. An argument can be made that moisture in western Kansas is a good thing, but certainly the amount could lead to quality issues. We all know the Kansas crop was set back by the heavy snow, the real question is by how much? The answer will have to wait until harvest.

Spring wheat plantings are behind pace at 31 percent compared to 46 percent for the five-year average. This helped push July Minneapolis contracts to within 2 cents of the Feb. 15 winter high in trade on May 1.

The market broke heavy in May 4 trade in reaction to an "average" Kansas crop. Minneapolis, Chicago and Kansas City contracts gave up 13 to 19 cents of the weekly gains. The market is still struggling with burdensome old crop supplies so if anything the Kansas event makes the market "less bearish."

Corn

Corn followed the wild wheat complex this week. Weather forecasts call for the most troublesome area in a line from southern Missouri to southern Indiana. While a fair amount of corn is planted in this area it has experienced drenching rains last week with more in the forecast through May 8. Cool temperatures will accompany this front, so saturated soils will not dry out quickly. There will be plenty of talk of replant and prevent plant acres through this region, and prospects of 90 million planted U.S. acres are becoming less realistic.

The northern and western corn belt have received a break in the cool cold weather and planting is in full swing. The heavy rains have led to barge freight increasing on the Mississippi River. Closures between St. Louis and Cairo are contributing to a widening of an already poor basis.

Monday's planting progress report showed corn plantings are at 34 percent nationally versus the five-year average of 34 percent planted and 43 percent planted last year. Corn was 9 percent emerged versus 8 percent for the five-year average. These were bearish numbers considering the cooler, wetter pattern in late April. Corn contracts reacted to that trading lower May 3 and 4. For the week ending May 4, July and December contracts traded near unchanged.

Technically, the 50-, 100- and 200-day moving averages are all converging in the $3.69 to $3.74 level on the July contract. One would think that these levels could hold, but the danger in a high carry market is that May contracts are now in delivery. When May goes off the board, there will be a tendency as July becomes the front month to drift down to May trading ranges. Recent lows in the May contract were in the $3.52 to $3.55 area.

It was also concerning on Monday that open interest declined 13,220 contracts. May 1 was the big run in wheat, and what we saw was short covering rather than a reversal of the heavy net short positions that the funds hold. Non commercials were net short a whopping 196,257 contracts before May 1 trade.

For the fourth week in a row, a seasonal slowdown has ethanol production falling below 1 million barrels/day at 986,000. This is 6.83 percent higher than the same week last year. Ethanol stocks as of April 28 are 23.213 million barrels, 4.56 percent higher than last year. March ethanol corn crush numbers came in at 460.4 million bushels.

Soybeans

Soybeans jumped out of the gate early in the week as heavy rains and wet, cool weather across the Midwest added concerns to this spring's planting progress. We saw some short covering in soybeans as the funds are net short for only the third time in over a year. There were big moisture events in the Mid-south Corn Belt, Indiana, and central to southern Illinois over April 29-30. The trade may stay range bound until they see how many of these wet corn acres will need to be replanted and how many will get switched to soybeans.

Soybean meal led the way higher as commercial buying is keeping us near month highs. Soybean plantings are at 10 percent nationally versus the five-year average of 7 percent planted and 7 percent planted last year. For the week ending May 4, July soybeans were up 18 cents and November 2017 soybeans were up 11.5 cents.

Canola

As of May 4 close, canola July futures in Winnipeg were up $10.70 Canadian to $522.80 Canadian per metric ton. The Canadian dollar traded down to 0.7269. This brings the U.S. price to $17.24 per hundredweight.

• Velva, N.D., $17.23 per hundredweight for May through July

• Enderlin, N.D., $17.89 for May through July

• Hallock, Minn., $17.44 for May and $17.67 for June

• Fargo, N.D., $18.05 for May and $17.90 for June

Some local markets have switched to a basis that is neutral to positive for old crop canola, so consider fixing your basis. New crop has been firming on planting delay concerns and cold weather. Stats Canada stock numbers came out May 5, and showed total Canadian canola stocks were down 23.3 percent from the same day a year earlier to 6.6 million metric tons.

Barley

Cash feed barley bids in Minneapolis were at $2.05, while malting barley received no quote. Berthold bid is $2 and CHS Southwest bid is at $2.40 in New Salem, N.D.

Barley plantings are at 32 percent nationally versus the five-year average of 53 percent planted and 55 percent planted last year.

Durum

Cash bids for milling quality durum are $5.50 in Berthold and at $5.65 in Dickinson.

Sunflower

Cash sunflower bids in Fargo were at $15 for May and $15.10 for June. As of close on May 1, soybean oil was $1 higher at $32.45 on the May contract.