El Niño has ‘eerie similarities’ to 2015There are 80% odds El Niño conditions will continue through spring and a 60% chance the pattern will linger through summer, the U.S. Climate Prediction Center (CPC) forecasts. CPC’s Emily Becker says the tropical Pacific has “eerie simi-larities to early 2015” when a strong El Niño developed. But she says it’s “far too early” to tell if that will happen this year.

In 2015, a wet spring delayed planting across large areas of the Midwest, but better weather later in the year helped crops to finish strong. Corn yields declined 1.5% from the 2014 record. Soybean yields notched a record at that time.

We have spring/summer weather outlooks from four weather forecasters on News page 4.

USDA ends August objective yield surveyUSDA is ending its objective yield (field) sampling for corn and soybeans in its August report, but will still do farmer surveys and use satellite imagery to produce the August crop estimates. It will collect objective yield samples in September, October and November — at about half of last year’s levels.Perspective: This likely has very little if any market

impact. But it means we will have the first “ground truth” data for corn and soybeans each year from samples pulled on the Pro Farmer Midwest Crop Tour.

Impacts of SREs... more ahead?Analysis by the University of Illinois’ Scott Irwin concludes that small refinery exemptions (SREs) to Renewable Fuel Standard mandates are far more damaging to biodiesel than ethanol. He says ethanol demand is largely immune to SREs (up to the “blend wall”) granted by EPA since it is priced cheaper than regular gasoline. However, biodiesel is not price-competitive with conventional diesel. He estimates biodiesel demand destruction at 2.5 billion gallons for 2016-19 from SREs.

More waivers for 2017 granted last week (see News page 3) were “leftovers” from former EPA head Scott Pruitt. The bio-fuels industry hopes there will be far fewer SREs granted by new Administrator Andrew Wheeler, though he told us EPA is “following court decisions” when issuing the waivers.

Trump/Xi won’t meet until at least AprilA meeting between President Donald Trump and China’s Xi Jinping at the end of March won’t happen. Both sides report ongoing progress in the trade talks, but there are still some major hurdles to clear. Trump gave a potential timeline, say-ing there will be news “one way or the other... over the next three to four weeks.” The scheduling of a Trump/Xi summit would likely signal a deal has been completed.

China buys huge amount of U.S. porkChina purchased 23,846 metric tons (52.5 million lbs.) of U.S. pork in the week ended March 14 — the third largest week-ly purchase ever by the country. China’s market hog inven-tory plunged 16.6% from year-ago in February and its sow herd plummeted 19.1%, so its need for pork is likely to increase. This could be the start of more aggressive pur-chases, despite hefty tariffs on U.S. pork.

Trump ready to take on the EU nextTrump warned the European Union (EU) on upcoming trade negotiations, saying if it doesn’t negotiate in good faith the U.S. will “do something that’s going to be pretty severe eco-nomically... tariff a lot of their products.” Agriculture could be the stumbling block that triggers a trade war between the two sides. EU officials say they won’t discuss ag matters in any trade talks, while the U.S. insists that must be part of any negotiations. Our best trade sources say they don’t expect Trump to put tariffs on EU imports, including autos, until a trade deal with China is close or more likely done. Metals tariffs part of USMCA passageTreasury Secretary Steven Mnuchin told lawmakers the Trump administration will work out a solution for steel and aluminum tariffs with Canada and Mexico as part of its efforts to get the new U.S.-Mexico-Canada Agreement (USMCA) through Congress. He did not say whether a metal tariffs solu-tion will involve, as most think, Canada and Mexico agreeing to quotas or other import restrictions. Mexico has threatened tariffs on U.S. corn and poultry if the metal tariffs aren’t lifted.

Funds short-covering supports grains — The drop to new contract lows in the corn and wheat markets and to the lowest levels since late January in soybean futures early last week failed to trigger followthrough selling. Instead, funds began covering some of their hefty short positions. It may take a fundamental catalyst or positive trade developments to spur sustained fund short-covering, but the aggressive speculative short positions suggest down-side risk should be limited into spring. Cattle futures pulled back from recent gains as traders took profits out of the long side of the market, but selling was limited by poor feedlot condi-tions and strong export demand for beef. Hog futures surged as funds covered shorts and traders priced in hopes of increased Chinese demand amid African swine fever reductions.

News this week...2 — South American corn crop estimates on the rise. 3 — Trump’s budget bad for ag, but it won’t pass.4 — El Niño’s influence on spring/ summer weather outlooks.

March 16, 2019 Vol. 47, No. 11

Go to ProFarmer.com

March 16, 2019 / News page 2

Follow us on Twitter:@BGrete@ChipFlory

@JWilson29@MeghanVick

@DavisMichaelsen@DoaneAg_Nelson

@RobHatchett1@DoaneAg_Vaught

China hog prices soar on ASF reductionsChina’s hog prices surged to their highest level in 14 months last week and are expected to keep rising as African swine fever (ASF) dramatically reduces hog numbers. The official data out of China says there have been around 110 cases of ASF, but the surge in hog prices says that’s understated — likely by a large degree.

China’s lower hog numbers will eventually increase its need for pork, which will open the door for more U.S. ship-ments — if hefty tariffs on U.S. pork are lifted. Pork short-ages haven’t kicked in yet, as fear-laden herd liquidation by many smaller hog farmers not hit by ASF has likely increased China’s immediate pork supply. Once the ASF impacts from smaller market hog numbers show up (reduced sow numbers and a smaller pig crop) — likely in late spring, about nine months from August when ASF was first detected — China’s demand for pork will rise.

Record U.S. beef, pork exports in 2018The U.S. exported 526.1 million lbs. of pork and 262.0 million lbs. of beef in December — both records for the month. The 2018 export totals of 5.870 billion lbs. of pork and 3.155 bil-lion lbs. of beef were each record-large, as well.

A major reason for the export growth was South Korea. It was the second-largest buyer of U.S. beef and the third-big-gest market for U.S. pork. South Korea’s purchases of U.S. beef jumped 35.0% and its U.S. pork imports surged 38.4%.

The U.S. ag attaché in South Korea forecasts U.S. beef exports to the country will climb more in 2019 due to lower duties from the reworked U.S./Korea Free Trade Agreement (KORUS). But the attaché expects South Korea’s imports of U.S. pork to slow this year as domestic production increases.

Record U.S. meat exports to continueUSDA cut its 2019 U.S. pork export forecast by 175 million lbs. (2.8%), citing “slower international demand for U.S. pork products.” U.S. pork exports are still expected to be record-large and rise 4.3% from last year.

USDA now calls for a 4.2% rise in U.S. pork production this year. The 2019 cash hog price was lowered to a range of $41 to $43, which would be down from $45.93 last year.

USDA lowered its beef production forecast, though it would still be up 1.6% from last year. Its export forecast was unchanged this month, but it is expected to rise 3.1% from a year ago. The department raised its cash cattle fore-cast to a range of $116 to $123, compared to $117.12 in 2018.

Brazil lowers bean crop peg, raises cornBrazil lowered its official soybean crop estimate to 113.5 mil-lion metric tons (MMT), down 1.9 MMT from last month’s forecast. Conab, the Brazilian supply agency, also lowered its 2018-19 Brazilian soybean export forecast by 1.5 MMT to 70 MMT, which would be down 13.6 MMT (16.3%) from last year.

South American Crop Consultant Dr. Michael Cordonnier kept his Brazilian bean crop peg at 113.5 MMT. He feels the crop will ultimately end in the 113 MMT to 115 MMT range, which would be down 3.8% to 5.4% from last year’s record.

Conab raised its Brazilian corn crop estimate to 92.8 MMT, up 1.1 MMT from February due to a higher safrinha crop forecast. Conab expects Brazil to export 31 MMT of corn in 2018-19, which would be up 25% from the previous year.

Cordonnier raised his Brazilian corn crop estimate 1 MMT to 93.5 MMT, citing a strong start for the safrinha crop.

Big 4 and Amaggi mull road, rail ventureADM, Bunge, Cargill, Louis Dreyfus and Brazilian rival Amaggi could make a joint bid to operate a stretch of Brazil’s “soybean highway” (BR-163) connecting the country’s grain belt to northern ports. Logistics business development firm EDLP, who conducted a study on the potential venture, says the firms are also considering an investment in a parallel rail-way. The plan would involve convincing the government to offer a 10-year contract on the road, far shorter than other projects currently up for bid by the Brazilian government.

Argentine meal exports remain record-lowArgentina exported only 1.4 MMT of soymeal in February, the lowest total for that month since 2016, and 29% below the three-year average, according to Refinitiv’s trade flow data. Argentine soymeal exports were record-low last year due to severely reduced production from the drought. However, Argentina’s soymeal exports are expected to return to more normal levels this year amid a production rebound. Cordonnier estimates the Argentine soybean crop at 54 MMT, which would be up 16.2 MMT (42.9%) from last year.

Consultant raises Argentine corn crop pegYields on early-harvested corn out of Argentina are “very good,” prompting Cordonnier to raise his crop estimate by 1 MMT to 44 MMT. The earliest maturing corn will have the strongest yields. Cordonnier says strong yields in central Argentina will more than compensate for any yield reduc-tions in southwestern areas due to dryness.

March 16, 2019 / News page 3

Shale boom to lead U.S. oil growthThe U.S. will drive global oil supply growth over the next five years, adding another 4 million barrels per day (bpd) to its output due mostly to “the second wave of the U.S. shale revolution,” the International Energy Agency (IEA) said in its five-year outlook report. U.S. crude oil is expected to account for 70% of the total increase in global production capacity by 2024, and 75% of the ex-pansion in liquefied natural gas trade.

Given the expected expansion of oil output, the U.S. is on track to become a net petroleum exporter by 2021 and will thereafter eclipse Saudi Arabia, currently the world’s top oil exporter, according to IEA.

IEA forecasts “no peak” in oil demand, as usage growth in the U.S. and Asia will more than offset a slowdown in gasoline consumption from improved fuel efficiency and electric vehicles. Global oil demand growth will rise by an annual average of 1.2 million bpd to 2024.

China data sparks deflation concernsChinese consumer prices rose 1.5% from last year during February, the slowest growth rate since January 2018. Food prices increased 0.7%, though that was down from January’s 1.9% increase. China’s factory-gate prices inched up 0.1% last month, signaling lackluster demand at the manufactur-ing level, driven largely by dwindling export orders.

Meanwhile, China’s industrial output growth for January and February slowed to its lowest level in 17 years and unem-ployment edged up to 5.3%. Plus, new home sales declined and infrastructure investment came in lower than expected.

The tepid inflation data is causing some concerns about deflation, and the sluggish data suggests the world’s second largest economy continues to slow. Pressure is growing for the Chinese government to take more aggressive actions to spark economic growth.

EPA proposes E15, RINs changesThe Environmental Protection Agency (EPA) officially pro-posed allowing the year-round sales of E15. It says the rule change “could help incentivize retailers to introduce E15 into the marketplace.” But EPA sees “very little change in costs” for retailers as the rule is not a mandate and those who choose to offer E15 would do so based on “market demands and individual business decisions.”

EPA will hold a public hearing March 29 on the plans and will take public comments on the proposed regulation until April 29. It has a goal of finalizing the rule before June 1.

EPA also proposed changes that would limit speculative trading of biofuels blending credits (RINs) that were in line with what we outlined on the front page of your March 9 newsletter. EPA noted there will be more record keeping costs for the proposed RINs reforms. However, it believes “the net benefit of this should help reduce undue costs and lower the risks for both obligated parties and renewable fuel producers.”

The American Petroleum Institute says it will pursue “all available legal remedies” to the proposed rule changes. That could delay the actual implementation.

EPA grants more 2017 hardship waiversEPA last week granted five small refinery waivers requested for 2017, bringing the total number of waivers to 37 for the year. Two requests are still pending. EPA has received 39 hardship waiver requests for 2018 compliance.

Brazil wants duty-free sugar exports to U.S.The new head of Brazil’s cane industry group Unica wants tariff-free access to the U.S. sugar market. If not, he says Bra-zil should tax all U.S. ethanol imports by a minimum 20%. Brazil currently gives the U.S. a tariff-free quota of 600 mil-lion liters of ethanol per year, limited to 150 million liters per quarter. Volumes above that are taxed by 20%.

Trump’s budget would hack USDA spending, but it’s dead on arrivalPresident Donald Trump’s fiscal year (FY) 2020 budget proposal seeks a 15% cut in USDA’s spending and a broader 5% reduction for all non-defense spending. The $4.7-trillion budget would reduce premium subsidies for crop insurance and make other sharp cuts for the program, tighten income qualifications, lower farm program payment limits, alter U.S. conservation programs, eliminate the forage disaster program and change nutrition programs. Trump wants to lower the cap on the adjusted gross income (AGI) level to qualify for commodity and conservation program payments from the current $900,000 mark to $500,000, which would save $63 million in FY 2020 and $1.3 billion over 10 years. He also wants to cap Marketing Assistance Loan payments at $125,000 and eliminate the use of generic certificates, which would save $34 million in FY 2020 and $114 million over 10 years. His budget would also limit all farms to one man-ager as qualifying for being actively engaged in farming, with estimated savings of $700 million over 10 years.

These provisions were all rejected by lawmakers in the 2018 Farm Bill (or prior), so the budget has virtually no chance of passing in the proposed form. But it shows where lawmakers eventually may look if they have no choice but to cut spending. House Ag Chair Collin Peterson (D-Minn.) called Trump’s budget request “a road map for how to make things worse for farmers, ranchers and those who live in rural communities.”

March 16, 2019 / News page 4

El Niño signals slightly smaller crop potential in 2019by Sr. Market Analyst Jeff Wilson

News alert and analysis exclusively for Members of Professional Farmers of America® 402 1/2 Main St. Cedar Falls, Iowa 50613-9985General Manager Joel Jaeger • Editor Brian Grete • Editor Emeritus Chip Flory • Sr. Market Analyst Jeff Wilson • Chief Economist Bill Nelson • Washington Policy Analyst Jim Wiesemeyer

Digital Managing Editor Meghan Vick • Inputs Monitor Editor Davis Michaelsen • Sr. Economist Dan Vaught • Sr. Economist Rob Hatchett • Sr. Economist Alan BarrettSubscription Services: 1-800-772-0023 • Editorial: 1-888-698-0487

©2019 Professional Farmers of America, Inc. • E-mail address: editors@profarmer.comFarm Journal CEO, Andrew Weber • Division President Grey Montgomery

Weather forecasters see elevated risks for planting delays and lower yield potential for corn and soy-

beans after four years of record or near-record output.

World Weather: Delayed planting followed by dry finishU.S. weather currently tops World Weather President

Drew Lerner’s list of agricultural production risks for 2019. The El Niño weather pattern strengthened recently, which

means a wetter bias into next month from the Southern Plains into the lower Mississippi River and Tennessee River Basins, with some bouts of heavy rain in the southern Midwest. The Northern Plains and Midwest should see less precipitation until the second half of April and May when rains will return. Temperatures will run near to below normal across the Midwest and Northern Plains, leading to a slow snow melt.

By the time drier weather returns to the South in the second half of April, it will be getting too late to seed some crops in a timely fashion. Much of the Midwest and Northern Plains will fight planting delays. Seeds will eventually get planted and the early summer growing season may prove to be about average with no widespread excessive heat. The bigger con-cern is for a dry finish that trims corn and soybean yields.

A weakening El Niño and colder Pacific Ocean tempera-tures off the West Coast by midsummer could trigger a dry pattern across parts of the Midwest and Northern Plains, cutting yields from the average of the past three years. The 18-year lunar cycle is also calling for a drier 2019 summer.

China is the second weather risk area to watch this sum-mer, Lerner said. Dry conditions already prevail in the North China Plain and the pattern may move into the northeast, raising corn, soybeans and peanut yield risks.

Radiant Solutions: Late planting but normal summerSeasonally rising temps and drier-biased weather in April

and May should allow farmers in the Midwest and Delta to complete planting after the initial delay from snow and satu-rated soils, says Don Keeney of Radiant. A wet April and May across the Central Plains will aid winter wheat crops.

Keeney forecasts an average or slightly cooler summer with near-normal rainfall in much of the central United States. Drier trends and lower yields may prevail in parts of Nebraska and Kansas and up into the northwest.

There are rising risks for dryness in west Europe and parts of Ukraine and Russia. Dryness may extend into the sum-mer, cutting corn, oilseed and spring wheat yield potential.

CWG: Slow planting, drier risk in northwest Corn BeltRecord precip across the Northern Plains and Midwest

from September to February and record cold in January and February guarantees planting will be delayed, says Joel Widenor at the Commodity Weather Group. Warmer temps are likely to return by late March and continue slightly warmer to near normal into April. Warmer temps may be accompanied by slightly drier weather for much of the Plains and Midwest the next 30 days, but it will stay wet across much of the South from Texas to the Carolinas.

The strengthening El Niño conditions will promote a slightly drier, warmer bias into the second half of April. If the equatorial Pacific Ocean temperatures begin to cool next month, leading to a weaker El Niño, that will likely mean a wet May and more significant delays.

Flooding is likely from the Red River Valley south to Louisiana as warmer temps melt snow and rains persist in April across the southern half of the central U.S. In 1993, the year of record widespread Midwest flooding, the El Niño strengthened into May before weakening and pro-ducing widespread flooding from June through August. This year, flooding will not be as severe, but it could be an issue depending on El Niño’s intensity/duration.

The summer does have a drier signal for Canada, the Northern Plains and into the western Midwest. Yield potential in 2019 will be down from the past three years, but there should be no widespread problems.

The biggest risks outside of the U.S. this summer will be dry weather in Russia, Ukraine and northeast China. Another month of dry, warm weather in North Africa could cut wheat yields at least 15%, Widenor says. WeatherTiger: Wet spring abates in Midwest, not Delta

The pattern that brought widespread snow and rain to the Midwest and Northern Plains is changing, according to Ryan Truchelut, president of Weather Tiger. Drier and warmer weather through April will allow planting prog-ress to get caught up by early May. However, farms from Arkansas to the Carolinas will stay wet, increasing delays.

The summer looks slightly warmer than normal with no extended periods of excessive rain or heat.

The excessively wet weather this winter across south-ern China and extremely dry conditions in northern China probably need to change by mid-April to reduce the chances for below-normal crop yield potential.

Feed MonitorFEED

Corn Game Plan: You should have all your corn-for-feed needs covered in the cash market through the end of May. We are targeting the $3.70 level in July corn fu-tures to extend coverage.

Meal Game Plan: On March 8, we advised extending meal coverage by two weeks through the end of April. Our target for fur-ther coverage is below $300 in May futures.

Corn I’19 100% II’19 67% III’19 0% IV’19 0%

Meal I’19 100% II’19 33% III’19 0% IV’19 0%

DAILY MAY MEAL

Analysis page 1

$300.30

DAILY APRIL LEAN HOGS

CASH HOG BIDS ($/CWT.)Position Monitor

HOGS - Fundamental AnalysisNearby futures rose to two-month highs while deferred contracts made new highs. Stronger cash bids and fresh pork prices rising to five-week highs were confirmed by record weekly export sales. Exporters sold more than 50,000 metric tons (MT) of pork, including 23,800 MT to China. Some analysts estimate African swine fever (ASF) cut the Chinese herd 20% or more as domestic pork prices surged to 14-month highs last week. A completed U.S./China trade deal could lead to a surge in Chinese pork, beef and chicken imports. The PEDV outbreak in 2014 cut U.S. supplies much less, and it feels like users are trying to get ahead of Chinese demand.

Game Plan: We want to let the price recovery run its course before hedging. The strongest seasonal pe-riod is ahead. We plan to wait for signs the rally is stalling before hedging.

DAILY APRIL LIVE CATTLE

CASH CATTLE BIDS ($/CWT.)Position Monitor

CATTLE - Fundamental AnalysisCattle fell from new contract highs last week as funds began to take profits on large net-long bets amid signs that high beef prices may be slowing demand. Wholesale beef carcass prices extended the 2019 rally to the highest since May. But daily movement was slow and weekly export sales dropped by 50% from a week earlier. Despite another major winter storm last week, cash bids fell about $1, the biggest drop since November. Still, weights are falling, down 3 lbs. from a week earlier and 10 lbs. less than a year ago. It will take weeks to improve feedlot conditions and that will limit cash cattle weakness. Feeder cattle replacement demand is improving.

Game Plan: Fed cattle p r o d u c e r s should carry all risk in the cash market. Be alert for possible new hedge advice if June fu-tures reach the $122 to $123 area.

Feds Feeders I’19 0% 0% II’19 0% 0% III’19 0% 0% IV’19 0% 0%

Initial resistance extends from the Jan. 16 high at $127.80 to the 40-day moving average (green line) at $127.90. Tougher resistance is at $129.475 and $130.10.

The Dec. 27 high at $126.675 is now initial support. The Oct. 2

high at $124.925 is stronger support.

A close above initial resistance at the Aug. 16 high of $65.925 would have bulls targeting the Aug. 21 high at $67.80.

Initial support is now marked by the Aug. 15 high at $63.275. Stronger support is at the Aug. 10 low of $60.875.

$58.225

$60.875

$65.925

$129.475

$127.80$126.675

$130.10

$67.80

$124.925

$63.275

ANALYSIS March 16, 2019

Lean Hogs I’19 0% II’19 0% III’19 0% IV’19 0%

The Aug. 28 low at $307.20 still represents initial resistance.

Initial support is at the September low of $303.70, followed by last week’s contract low at $300.30.

$303.70

$314.10

$320.70

$307.20

March 16, 2019 / Analysis page 2

DAILY MAY SRW WHEAT

WHEAT - Fundamental AnalysisSRW - Prices rebounded from 14-month lows on concerns too much rain from Arkansas to Ohio may damage crops and forecasts for drier, warmer weather in the Black Sea region in April. Much of the buying has been funds covering shorts. An extended rally must come from stronger exports.

Position Monitor

Game Plan: Wait to get current with sales. We are willing to wait for a rebound to the $5.25 level in May SRW futures for additional 2018-crop sales. Stay patient on making additional 2019-crop sales.

The Feb. 26 low at $4.63 3/4 remains initial resistance. Tougher resistance also persists at

the Feb. 20 low of $4.79 3/4. The Nov. 27 low of $5.09 3/4 is still key to a spring advance.

$4.79 3/4

$5.09 3/4

$4.63 3/4Initial support emerged at the March 1 low of $4.47 1/4 last week. Contract-low support comes in at $4.27.

$4.47 1/4

$4.27

CORN EXPORT BOOKINGS (MMT)AVERAGE CORN BASIS (MAY)

CORN - Fundamental AnalysisCorn futures rebounded from new contract lows as managed funds bought back near-record short bets. Trade rumors of China shopping for as much as 3 million metric tons (MMT) of U.S. corn and both sides reporting trade negotiations are making progress encouraged funds to reduce short positions. Crude oil rose to four-month highs, pulling ethanol higher ahead of seasonally stronger fuel demand. Weekly export sales were disappointing but a China deal that includes large new corn, DDG and ethanol purchases would quickly change sentiment. Export sales for 2019-20 season picked up, led by Mexican purchases. Concerns about late planting also have put a floor under prices.

DAILY DECEMBER CORN

Initial resistance at the Aug. 23 high of $3.98 aligns closely with the 40-day moving average (green line) near $3.98 1/4. Stiffer resistance is at $4.07 1/4.

$4.07 1/4

$3.91

$3.83 1/4$3.98

Last week’s rebound flipped the Aug. 23 low of $3.91 to initial support. Stronger

support persists at $3.83 1/4.

Position Monitor

Game Plan: You should have standing orders to sell 15% of 2018-crop supplies in the cash market if May corn futures hit $3.90. Be prepared to add to those sales heading into the planting season. We also have orders to sell 10% of expected 2019-crop output via hedge-to-arrive (HTA) contracts for harvest delivery when December corn futures hit $4.13. Prices are undervalued and have the potential to rally sharply on a China trade deal.

DAILY MAY CORN

The June 19 low at $3.76 1/4 now represents initial resistance. Tougher resistance is at the 40-day moving

average (green line) near $3.80. Key resistance is at the Sept. 5 high of $3.88 1/4.

Initial support is at the July 12 low of $3.69 1/4. The former contract low at $3.63 1/4 is stronger support.

$3.69 1/4$3.76 1/4

$3.88 1/4

$3.63 1/4

’18 crop ’19 crop

Cash-only: 25% 0% Hedgers (cash sales): 25% 0% Futures/Options 0% 0%

’18 crop ’19 crop

Cash-only: 55% 15% Hedgers (cash sales): 65% 15% Futures/Options 0% 0%

March 16, 2019 / Analysis page 3

HRW ‑ Futures surged on March 12, forming a bullish outside day reversal as funds decided prices were below fair value ahead of the Northern Hemisphere growing season. Dry weather is already threatening North Africa and Australia. Funds still hold a large short position and fresh exports would trigger buying.

HRS ‑ Spring wheat rebounded from new lows amid a major new winter storm across the Northern Plains. Snowcover will take time to melt and that may curb spring wheat planted acreage after U.S. winter wheat plantings fell to the lowest level since 1909. Exports should improve on signs of price bottom.

DAILY MAY HRS WHEATDAILY MAY HRW WHEATInitial resistance persists

at the Feb. 26 low of $4.40 1/4.

The 40-day moving average (green line) puts initial

resistance near $5.65.

$4.40 1/4

$4.95 1/2

$6.17 1/2

$5.93 3/4

$5.71$4.57 1/2

$5.50 1/2Initial support is at the Dec. 27 low of $5.50 1/2.

The March 11 low at $4.18 3/4 is now initial support.

DAILY NOVEMBER SOYBEANS

$9.61 1/2

$9.71

$9.41

$9.25 3/4

$9.10 3/4

$4.18 3/4

Last week’s action confirmed the Aug. 20 high at $9.41 as initial resistance. Stronger resistance is at the 40-day moving average (green line) near $9.50.

The July 26 high at $9.25 3/4 emerged as initial support last week. Stronger

support is at the Nov. 26 low of $9.10 3/4.

SOYBEAN EXPORT BOOKINGS (MMT)AVERAGE SOYBEAN BASIS (MAY)

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (MAY)

SOYBEANS ‑ Fundamental AnalysisSoybean futures fell to the lowest level since November and rebounded as U.S. and Chinese officials said trade talks were making progress (see News page 1). China increased purchases of U.S. beans but more are needed to sustain a rally and grab market share away from Brazil. Much of the buying last week came from funds covering large short positions. Still, the buying does mark a shift from focusing on big crops in South America to potential U.S. weather problems. Conab cut the Brazilian crop estimate to 113.5 MMT from 119.3 MMT a year ago and also reduced its export forecast. Soybean meal demand remains strong and should lead any further price recovery.

Initial support persists at the June 19 low of $8.90. Key support is at the Aug. 28 low of $8.71 3/4.

$9.50

$9.31$9.05 3/4

$8.71 3/4$8.90

DAILY MAY SOYBEANSPosition Monitor

’18 crop ’19 cropCash-only: 40% 20% Hedgers (cash sales): 40% 30% Futures/Options 35% 0%

Game Plan: You should have orders to sell 10% of 2018-crop at $9.50 in May futures and to sell another 10% if May futures reach $9.74. You should have two separate orders to sell 10% of expected 2019 production via hedge-to-arrive contracts for harvest deliv-ery if November futures hit $9.75 and $10.00. Maintain the 2018-crop hedges in short July futures as downside protection.

The June 26 low at $9.05 3/4 is initial resistance.Tougher resistance is layered from the

40-day moving average (green line) near $9.19 3/4 to the July 31 high of $9.50.

March 16, 2019 / Analysis page 4

r ’18 crop ’19 cropCash-only: 50% 0% Hedgers (cash sales): 50% 0% Futures/Options 0% 0%

Track Fuel & Fertilizer PricesOur Inputs Monitor is included with your

Pro Farmer Membership visit www.profarmer.com/map

USDA Cold Storage ReportRed meat and poultry inventories.

FRI 3/222:00 p.m. CT

5

USDA Cattle on Feed ReportU.S. feedlot inventory on March 1.

FRI 3/222:00 p.m. CT

4

USDA Export Sales ReportUpdate for the week of March 14.

THU 3/217:30 a.m. CT

3

U.S. January Factory OrdersDid new orders slow with world?

TUE 3/199:00 a.m. CT

2

USDA Export Inspections ReportWheat rebounds, soy active.

MON 3/1810:30 a.m. CT

1

WATCH LISTLast week, the $3.80 calls were trading

near 30¢ and the $4.30 calls were near 15¢. Each spread covers 5,000 bushels. December futures were near $3.95, so the $3.80 call is 15¢ in the money. Your net cost, less commis-sions, for the call spread is 15¢, locking in a floor at $3.95, or in line with futures. This hedge will protect you up to $4.30 where the short call begins to lose money.

Last Tuesday’s reversal-up pattern is a bottoming signal. A growing season weather scare or a completed U.S./China trade deal could spark a sustained rebound. Rumors of Chinese shopping for corn last week might be the start of Beijing fulfilling ag purchase agreements reportedly including 280 million bu. of U.S. corn and 790 million gallons of ethanol to finalize a trade deal.

Increasing market volatility and price uncertainty for corn buyers is just ahead. Livestock producers may consider an alter-native hedge strategy against higher costs.

We have officially advised purchasing 100% of corn needs through May in the cash market as prices declined in the past month. We will continue to look to extend cash cov-erage on further weakness in July futures.

After recent aggressive fund selling, there is little or no weather-risk premium at current prices with the entire planting sea-son ahead. If you are comfortable using options, then consider covering more of your summer corn needs with a December call option spread. One hedge to study would be to buy December $3.80 calls and sell December $4.30 calls.

By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN

Commodities: Stocks are the most over-valued relative to commodities in his-tory, topping the 1999 peak.

The Reuters Constant Commodity Index of 17 futures markets peaked in April 2011 and dropped nearly 50% to a low in January 2016. Since then, com-modities have moved sideways as stock prices have surged to record highs.

Commodities have been an outcast asset class since the 2008 financial crisis

because historically low interest rates boosted investment in stocks and bonds.

However, money managers are con-stantly looking for an asset class that can outperform long-term. With stocks over-valued relative to commodities, there could soon be a shift in their money flow. But that hasn’t happened yet. Commodities will need a recovery in world demand and a U.S./China trade deal to usher in a new price boom.

GENERAL OUTLOOK

DAILY MAY COTTON

Game Plan: Enter a standing order to sell 20% of 2018-crop in the cash mar-ket if May futures hit 77.40¢. We may also increase sales ahead of March 29.

Position Monitor AVERAGE COTTON BASIS (MAY)

COTTON - Fundamental AnalysisFutures touched the highest point since Jan. 31 before slipping back on worries about delays in finalizing a U.S./China trade deal. Still, exporters sold 49,300 bales to China in the week ended March 7. Money man-agers are holding the largest net-short posi-tion for this date since this data began.

S&P 500/COMMODITY INDEX RATIO

COTTON EXPORT BOOKINGS (’000 BALES)

The Jan. 31 high at 76.14¢ represents initial resistance. Key resistance is

marked by the Oct. 1 low at 77.44¢.

Initial support now extends from the 40-day moving average (green line) at 73.87¢ to the Dec. 24 low at 73.69¢. Stronger support is at 71.01¢.

73.69¢

76.14¢

77.44¢

71.01¢

U.S. stocks are at a record compared with commodities.