Headlines:

  • The EPA and the U.S. Army Corps of Engineers are moving to rescind the 2015 Clean Water Rule, created under the Obama administration, to clarify which waters are federally protected from pollution under the original 1972 Clean Water Act
  • Spring wheat soars above $7 – even as bears fasten on sugar
    Spring wheat futures soared above $7.00 a bushel for the first time in three years, as the weather outlook deteriorated for the drought-hit northern US growing region. But sellers resumed pressure on sugar prices, driving New York futures to their lowest finish in 16 months. In Minneapolis, spring wheat for July delivery touched $7.13 a bushel at one point, the highest for a spot contract since July 2014, with the best-traded September lot hitting $7.17 ½ a bushel, a full three-year high for a nearest-but-one contract. The July lot settled at $7.04 ¾ a bushel, a gain of 3.4%, while the September contract ended up 3.2% at $7.08 a bushel.
  • Monsanto again lifts profits hopes, as soy seed sales surge
    Monsanto again nudged higher its earnings hopes, as the agrichemicals giant, facing a takeover by Bayer, reported better-than-expected profits, fueled by rising herbicide prices and the popularity among farmers of soybeans. The US-based group, which expects later this year to complete its $66bn purchase by Bayer, said that it expected to report earnings per share for the year to the end of August “at the high end” of a range of $4.09-4.55. That compares with a forecast in April of earnings per share coming in at the high end of a range of $3.95-4.44. That itself was an upgrade from previous guidance of earnings reaching $3.83-4.35 per share.

Summary:

The 2016-17 crops in South America are looking better than initial expectations and Brazil’s crops are looking particularly strong.  In light of softer pricing, South America producers are holding back on putting some of their inventory to market in anticipation/hopes of higher prices in the Fall. Conversely, US producers could be in for some unwanted price competition if South American producers are slow to bring their grain to market.

The big news for the week is the upcoming USDA reports this Friday that will release Acreage and Grain Stocks as of June 1st. The trade will be surprised if Friday’s USDA Report doesn’t show an increase in from the US March Corn and Soybean acreage estimates. We expect the report to move the market given that it is historically the most volatile report of the year for Corn and the 3rd most volatile report of the year for Soybeans. Once the report has come and gone we anticipate that the market will turn to focusing on growing weather versus plantings data and planting weather. Overall, investors are expecting little change with the US grain stocks in Friday’s report.

Spring Wheat continues to rise hitting new levels and it has been bringing Chicago Wheat with it. Today the December contract rose 3 ½ cents. November Beans has been bouncing off of support and added 3 ¼ cents to yesterday’s gains. Corn struggled some giving up 1 cent. Yesterday it surrendered all of its intraday gains and followed suite printing a seller’s bar today.