1. Corn, Beans Little Changed as Investors Weigh Conflicting Fundamentals

Corn and beans were little changed overnight as investors weigh mostly weak fundamentals against bullish weather in South America.

Dry weather will persist for another week in areas of Brazil where farmers are growing the country’s safrinha, or second crop, of corn, according to a report from Commodity Weather Group. The area has been extremely dry for several weeks, putting stress on yield and production.

Extremely wet weather in Argentina likely reduced the country’s soybean crop by about 7.6%, but dry weather that’s lasted a week could persist for at least another seven days, the forecaster said.

Even with the ongoing problems in South America, global fundamentals may not warrant higher prices. Stockpiles of corn, soybeans, and wheat at the end of their respective marketing year are forecast at record levels by the U.S. Department of Agriculture.

Corn futures for July delivery added a penny to $3.74¾ a bushel overnight on the Chicago Board of Trade.

Soybean futures for July delivery rose ½¢ to $10.12¾ a bushel. Soy meal futures declined 10¢ to $336.70 per short ton, while soy oil rose 0.16¢ to 32.42¢ a pound.

Wheat futures for July delivery were unchanged at $4.63¼ a bushel in Chicago. Kansas City wheat was down 1¢ to $4.51¾ a bushel overnight.

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2. Mixed Export Sales Highlight the Tug-of-War Between Weak Dollar, Higher Prices

Another week of mixed export sales has left the market thoroughly confused about whether the declining value of the dollar through the end of last month is boosting purchases or if higher prices are keeping them on the sidelines.

Perhaps it’s a little of both, as sales of corn and wheat tumbled in the week that ended on April 28 while soybean sales surged.

Overseas buyers bought 178,900 metric tons of U.S. wheat for delivery in the current marketing year, down 49% from the prior week but up 1% from the dismal four-week average, the Department of Agriculture said in a report yesterday. Corn buyers bought 769,300 tons from U.S. inventories last week, down 64% from the prior week and 44% from the average. Sales for both grains missed expectations.

U.S. soybeans, on the other hand, flew off the shelves as overseas buyers snapped up 815,800 tons for delivery in the current marketing year, up noticeably from the prior week and previous four-week average, the USDA said.

The dollar had lost about 5.7% of its value vs. a basket of other currencies in the first four months of the year as the Federal Reserve continues with its dovish stance on interest rates. Market-watchers, however, have said it may have bottomed, and the currency has shown signs of life, rebounding in the past week.

A weaker greenback improves the appeal of U.S. goods, as it gives overseas buyers more purchasing power when buying dollar-denominated goods.

On the other hand, corn prices rose 9% in the first four months of the year, soybean futures jumped 19%, and wheat gained 3.8%. That may be keeping overseas buyers on the sidelines, only checking in and making purchases when they absolutely need supplies.

The marketing year hasn’t been great in terms of overseas sales, but they’ve seemingly come on strong as of late due to the weakened dollar. How the tug-of-war between the weaker greenback and higher prices will pan out remains to be seen.

Discuss export sales in Marketing Talk.

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3. Dry Weather, Flood Warnings Both Issued in Minnesota; Storms Set to Kick Off in Iowa

It’s uncommon to have both a dry weather warning and a flood warning on the same weather map, but that’s exactly what the National Weather Service issued this morning.

Strong winds, low humidity, and temperatures in the 90s in parts of central and western Minnesota led the NWS to issue a so-called red-flag warning, indicating that the possibility of a wildfire is high. Just south of the region, however, excessive rainfall last week led some rivers to overshoot their banks, leading to the flood warning in parts of extreme southern Minnesota and northern Iowa.

Isolated thunderstorms are expected in parts of eastern Iowa and western Illinois starting tonight, which could persist through next week, the NWS said in a report on Friday.

“An active and wet pattern will persist from Saturday through the middle of next week with several rounds of showers and storms through the period,” the agency said. “At this time, it appears the greatest chance for strong to severe storms will be Monday and Monday evening.”

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