1 Closing Grain & Soybean Comments May 23rd, 2018. Corn futures rallied to their highest levels since July, 5/23/2018. finishing 2-4 cents higher on the day. The trend in corn Settle Change Low High remains unquestionably higher as it has since late January. RJO trader, Josh Patience, noted a huge spike in volume at CN18 1:14 pushing prices to new highs late. The corn spreads CZ18 were steady-firmer with the July-Dec settling at 18 cents SN18 carry (in from 18 ) and Dec-July '19 settling at 15 cents SX18 carry (in from 16). Generally higher ag markets, solid old SMN18 crop demand and seasonal May/June/July weather concern BON18 supported prices. WN18 Soybeans led the way higher most of the session and KWN18 finished 8-9 cents higher. Increased optimism that the MWN18 Chinese will again be buying US soybeans soon and strikes in South America supported prices.
2 SN8 has rallied nearly 50 cents in four sessions negating the recently established downtrend. Even with the higher prices, old crop spreads remain weak with July-Nov going home at 9. cents carry. The products finished higher with meal up $3-$5 and beanoil up almost 20 points. Wheat closed higher for the 5th time in the last 6 or 7 sessions. HRW futures were up 8-12 cents while SRW & HRS. futures were up 6-9 cents. Dry weather concerns in the US, Russia & Australia were supportive. Like corn, wheat is making higher highs and higher lows and has been doing so since the start of the year. The early May highs ($ -WN8, $ -KWN8) should be viewed as credible resistance. MWN8 has already violated its early May high. Call for Tonight: Steady-mixed. Highlights: The US produced 302 million gallons of ethanol in the week ending 5/18, down from 311 million in the week prior.
3 Production at that level uses nearly 107 million bushels of corn, just below the seasonal weekly amount implied by the USDA's bln bu corn-for-ethanol . estimate. Even with the lower production, stocks rose from 903 to 929 million gallons (21-day supply). Before today's session cash margins were estimated at 2-8. cents in the black. Ethanol futures are up nearly 2 cents per gallon while corn futures were up 3 cents ( cents per gallon) so margins remain solid. Sources report that Marathon Petroleum, one of the largest US refiners has asked for a hardship waiver that would exempt one of its facilities from complying with the RFS. The EPA has been granting such waivers at an increased rate this year following court ruling in August 2017. that ruled the agency was using too strong of a test in deciding to grant the exemptions.
4 Officials from the EPA, DOE, USDA and Trump Administration are scheduled to meet on Thursday to discuss possible changes to the US. biofuels policy. RJO'Brien Service is our trade 1|Page Reports out of China are that the government is directing importers to buy more US soybeans and Chinese Soybean Imports, % by Origin crude oil to reduce their current trade surplus with the United States. The Ministry of Commerce denies this. However, traders also report that Chinese buyers are showing interest in US soybeans for the first time since early April. The US share of Chinese soybean imports have been underweighted (vs. the 5-year average) since November due to big Brazilian crops and US-Chinese trade tensions. See chart. If China had given the US their normal share from Nov- Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug US 5 Yr Ave US 17/18 BRZ 5 Yr Ave BRZ 17/18.
5 Mar, it would have resulted in additional imports of mmt valued at over $ billion. President Trump added a wrinkle to the US-China story tweeting that any deal would probably need a different structure from what is currently being discussed. Cash: Gulf corn values were steady to a penny firmer with May still bid at +50 N. Midwest basis was mixed on Tuesday with Nebraska bids mixed-firmer but bids elsewhere steady-weaker. May & June bids for Gulf soybeans were mixed at +56 N and +47 N, respectively. Aug-forward bids were up 4-6 cents. In the Midwest on Tuesday, river values firmed 1-5 cents (following Gulf bids higher). Some processors also firmed with plants in Iowa particularly prone to upticks. The leading posted bid in the state is now -31 N. The leading bid in Kentucky also firmed a penny to +11 N.
6 Gulf SRW & HRW bids were unchanged at +55 N & +155 N, respectively. US railcar loadings of grain have fallen sharply from more than 25K two weeks ago to just over 22K last week, according to the Association of American Railroads. It was the first time since mid-April that loadings were below year ago levels. See chart. Brazilian truck drivers and government officials met this afternoon to try to find a way to end the current trucker strike and blockades. Truckers are upset over diesel prices that have risen sharply this year after their state oil company started pricing fuel vs. market conditions rather than government direction. Reducing taxes has been proposed to lower the total cost. Early indications following the meeting is that the strikes are to continue.
7 Other Headlines & Notes: The USDA announced option-origin sales of corn to Saudi Arabia totaling 70K tons each for 17/18 and 18/19. That could come from the US or another country (Ukraine is possibility). It was the first corn sale announced through the daily system since 4/26. Weekly export sales are due out in the morning. See estimate table below. RJO'Brien Service is our trade 2|Page Algeria bought an undisclosed volume of wheat at $228-$ per ton C&F after extending the tender a day to negotiate with Coming Up: sellers who had initially offered prices of $229-$230. Thursday, May 24th Argentine grain port workers will hold a 24-hour strike on Weekly Export Sales-7:30 AM. Thursday. Jordan passed on the one offer received in their latest wheat Friday, May 25th June Option Expiration-1:15 PM.
8 Tender (120K tons). They also passed on offers received in a Cattle on Feed-2 PM. barley tender earlier this week. CFTC Commitment of Traders-2:30 PM. Pakistan sold 160K tons for export. However, FOB prices of $215- Monday, May 28th $218 were viewed as high by traders. Their government has Memorial Day Holiday-No CBOT Trade or Govt approved the export of up to 2 mmt due to a bumper crop last Reports CBOT Electronic Trading Resumes-7 PM. year of which mmt has already been exported. Customs data showed China imported 640K tons of sorghum in Tuesday, May 29th Weekly Export Inspections-10 AM. April (mostly ahead of the short-lived 179% deposit requirement Weekly Crop Progress-3PM. that shut down imports). That was 87% higher than a year ago. Thursday, May 31st China sold 170K tons of wheat in a government auction (8% of Weekly EIA (ethanol) Report-10 AM.)
9 Offered). Their weekly corn auctions will be Thursday and Friday. Barley imports were also higher than a year ago and month ago. Friday, June 1st Weekly Export Sales/Shipments-7:30 AM. Fats & Oils, Grain Crushings Reports (April)-2. PM. CFTC Commitment of Traders-2:30 PM. *-all times given in Chicago time. Weekly Export Sales-Mil bu. As of: 5/17/2018. 17/18 18/19. Actual Estimates Last Week Actual Estimates Last Week Corn - Corn - Beans - Beans - Wheat - Wheat - Meal 100 - 400 Meal 0 - 100 Oil 8 - 30 Oil 0 - 0 *-corn, beans, wheat in mil bu. Meal and oil in 1,000 metric tons. Source: Reuters PIVOT POINTS FOR 5/24/2018. Daily Pivot Points CN8 CU8 CZ8 SN8 SQ8 SX8 SMN8 WN8 KWN8 MWN8. High Close Low R3 R2 R1 Pivot S1 S2 S3 RJO'Brien Service is our trade 3|Page THOMAS MEIEROTTO.
10 Commodity Risk Manager RJO'Brien 939 Office Park Road, Suite 225. West Des Moines, IA 50265. This material has been prepared by a sales or trading employee or agent of O'Brien and is, or is in the nature of, a solicitation. This material is not a research report prepared by O'Brien's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions. DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS. COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS.