From: Terry Reilly
Sent: Friday, March 08, 2019 11:33:11 AM (UTC-06:00) Central Time (US & Canada)
Subject: FI Snapshot for USDA – additional thoughts
We eventually see new contract lows in Chicago and KC wheat, before price appreciation sets in for the 2019-20 crop-year. Our bias is to bear spread wheat. The reaction today is short-covering, in our opinion.
Support for May wheat $4.20-4.25 area
We like owning wheat over corn.
If we see the massive expansion in corn acreage, it will be difficult to see nearby corn prices back above $3.80 unless China buys US corn and/or spring planting delays force producers to plant more soybeans.
May corn range $3.55-$3.75
For the soybean complex, we remain neutral and leaning towards a bearish sentiment based on lackluster Chinese demand from the 10MMT import promise. USDA export sales on Thursday were poor and the USDA Friday morning reported a fraction of the China sales talked about during the trade on Thursday. World stocks are huge. We decided to lower our 2019-20 nearby crop rolling average for soybean futures to 9.50 from 9.75, with a bias to go lower if the US export demand structure does not improve.
May soybean support $8.75-8.80, rallies limited to $9.15
See attached FI snapshot and 4 USDA full reports
Soybean crush up 10, exports unchanged
Corn export down 75… “reflecting diminished U.S. price competitiveness and expectations of increased exports for Brazil and Argentina.” We think this was too aggressive
US corn for ethanol lowered 25 million bushels to 5.550 billion. The season-average corn price received by producers is lowered 5 cents at the midpoint to $3.55 per bushel.
All wheat exports down a large 35 million bushels, feed down 5. We agree with the feed reduction. Export revision was more than expected (we were looking for no change)
Brazil soybean production was taken down only 0.5MMT to 116.5MMT
USDA lowered wheat production for Kazakhstan and Iraq.
Terry Reilly
Senior Commodity Analyst – Grain and Oilseeds
Futures International │190 S LaSalle St., Suite 410│Chicago, IL 60603
W: 312.604.1366
AIM: fi_treilly
ICE IM: treilly1
Skype: fi.treilly
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FI0319f.pdf