You need to be aware that as we approach next Tuesday, the 22nd of April, the CFTC will conduct open hearings with regards to the concern of divergence between cash and futures. This date could cause a minor cooling period by the funds as we approach the date.
Bullish to corn is the new Israel tender for 64 K tonnes of corn, the overnight Sunday purchase of 116 K tonnes of old crop corn by an unknown destination and 50 K tonnes of old crop and 50 K tonnes of new crop corn, all from the US. Weather delays remain a concern for corn planting progress. A small open window is provided Monday through Wednesday-Thursday of this week before 70% coverage of .20 to .80 inch rains cover the Midwest. Allendale suggests the present window is less than ideal in scope. Monday's 6 to 10 day forecast calls for above normal precipitation for the north central Midwest (April 20-24th) and a two week forecast calling for above normal precipitation for a much greater region of the Midwest (April 22-28th). If these forecasts hold true, they could be viewed as bullish to new crop corn futures.
For Soybeans, a weekend frost/freeze in the double crop soybean region of southeast Argentina and reports of weekend purchases of US soybeans and soybean oil by China catapulted futures higher despite corn planting delays, which could ultimately transition into additional soybean acres. Make note, the US Gulf CIF did not respond as it should if in fact China bought US soybeans, as it weakened on Monday by seven cents per bushel. For those monitoring the new crop soybean/corn ratio, Nov soybean futures are now 2.09 to 1 versus a ratio, which was positive to switch soybean acres over to corn. The present ratio has cooled a good deal of such discussion. Interesting to note, over the weekend, China has announced it will not permit any new soybean crushing facilities for "a very long time". According to China government sources, present capacity is greater than present demand. Could this suggest a capping of soybean imports for 2008 and lean more towards vegoil and soybean meal imports to respond to unexpected jump in livestock numbers? What do you think?
Negotiations as of late Monday afternoon showed there is no word regarding day two of the Argentine government/farm groups meetings. The latest discussion on last Friday between the two suggested, the farm groups were optimistic.
Fundamental news in the wheat is that Argentina has announced it will further delay re-opening its wheat export registry untl May 5th. Winter wheat conditions within the US are less than average, but globally doing well. China announced, even with its worst drought in decades for its wheat region, all wheat production is expected to be 2.5% greater than year earlier levels because of expanded acreage. Quit possibly, the US may manage its quality issues via a distinctive two-tier cash marketing scheme for milling quality versus feed wheat quality.
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