This Week in Grain - May 3, 2019

The United States and China are nearing a trade deal that would roll back a portion of the $250 billion in U.S. tariffs on Chinese goods, Politico reported after U.S. Treasury Secretar Steven Mnuchin said the two countries completed productive talks in Beijing. Talks are to resume next week in Washington, where some observers say a deal announcement is possible.

Crop scouts on the second day of an annual three-day tour of Kansas hard red winter wheat fields on Wednesday projected an average yield of 47.6 bu. per acre in the southwestern part of the state. This is above the Wheat Quality Council tour's prior five-year average for the same area of 39.3 bu. per acre and above the tour's prior year finding of 35.2 bu. per acre. The crop is continuing to fall behind in maturity, thus vulnerable to weather stress.

Managed funds are estimated to be net short 75,000 contracts of Soft Red Winter Wheat, net short 296,000 contracts of Corn, and net short 159,000 contracts of Soybeans. The market is beginning to show concern about weather and lack of planting progress. With the funds still short almost 300,000 contracts, this market is still oversold. Delays in planting look to continue as weather models showing cool and wet conditions prevailing.

Soybeans are weak versus corn and wheat prices, which are showing strength. Due to the wet conditions, corn acres possibly reduced, soybean acres increase. The U.S. is forcast to carry over 1.1 billion bushels of soybeans into next year. Brazil is offering cheaper soybeans than the U.S. before the tariff is considered, and Argentina is below all competitors on their offers to China. The African Swine flu situation is not improving in China, and that doesn't provide good news for soybean meal consumption.

Jim Gallagher
Grain Division Merchandising Manager

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