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March 28, 2019

© 2018•Trilateral

Trilateral Grain and Market Weather Update

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© 2019 •Trilateral 2

Corn on page 3 Soy Complex on page 4Wheat on page 5 Related Market News on page 6 Weather Update on page 7 Feedstuffs on page 8

Contents

Commodity Month Last ChangeCorn May 3.7375 (0.25)

Soybeans May 8.8925 2.00 Soybean Meal May 305.00 0.80 Soybean Oil May 28.7500 (0.07)

Chicago Wheat May 4.6275 (6.25)KC Wheat May 4.3975 (4.75)

MPLS Wheat May 5.6725 (1.50)

Commodity Month Last ChangeCrude Oil May 58.35 (1.05)

Natural Gas May 2.783 0.014 Gold Apr 1292.30 (18.00)

S&P Futures June 2812.50 2.25 Dollar Index Cash 97.22 0.441

Overnight Trade

Sep

Market Summary Highlights

Morning Trading

• Corn futures • Soybeans • CBOT Wheat

USDA, Government & Industry Reports

Market Headlines

Corn:

Soybeans:

Wheat:

U.S. corn export outlook a bit less sunny as S. American crops rebound

Steady after slide as market awaits USDA data, trade news

Retreats after 1-month high

• Dow Jones: Higher• U.S. Dollar Index: Higher• Gold: Lower• Crude Oil: Lower•

LowerLowerLower

• USDA Weekly Export Sales • Egg Products • Hogs and Pigs• GDP• JoblessClaims• CorporateProfits• PendingHomeSalesIndex• EIANaturalGasReport

© 2019 •Trilateral 3

CornSources: DTN and Reuters

• Corn futures are weaker Thursday morning, attempt-ing to close lower for the third session in a row after prices failed at the 50-day moving average.

• Many have taken note of the size of the record man-aged fund short position in corn, but up to this point, no one has been certain whether funds would cover their position or defend it if pressed. Based on the first test of the 50-day moving average since the end of February, it would appear they are willing to defend that position.

• Adding to corn’s bearishness is the dismal ethanol market which has solid margins but not enough plants grinding to hit the USDA’s forecastsLast week’s total was 6.2% below the same week a year ago and run rates over the last several weeks clearly illustrate the need for an-other cut to USDA’s forecast. At this juncture, a 100 million bushel (mb) cut to USDA’s forecast would not be out of line.

• U.S. corn remains $4-10 per metric ton (mt) premium to Argentine and Brazilian FOB offers from spot through September. U.S. corn landed in China without tariffs was said to be roughly a $16 per metric ton (mt) premium to Brazil and $17/ton premium to Argentine corn. If ad-ditional demand cuts are made to ethanol and exports, one has to ponder what a carryout closer to 2.00 billion bushels (bb) means for spot prices.

• The sharp fall in both the Brazilian real currency and the Argentine peso at a new low fostered increased farmer selling from there, pressuring both corn and beans on Wednesday.

• Friday’s USDA stocks and seeding report is typically a big market mover, and this should be no exception. Since 2007, corn futures have moved an average of 4% on the day following the report, according to Ag Resource, and has moved higher in 8 of the 12 weeks following.

• Weather in the U.S. will continue to present a planting challenge as storms are projected to hit KS, MO and IL with some pretty good totals the next two days and will likely exacerbate flooding issues. Longer range also appears to be wetter into April and May.

© 2019 •Trilateral 4

Soy ComplexSources: DTN and Reuters

• Soybeans are higher, bouncing back from yesterday’s double-digit losses. Wednesday’s lows were the lowest prices for the May contract since the end of Novem-ber as the rejection of the 200-day moving average on 3/21 and 3/22 appears to be carrying a fair amount of weight.

• Contributing to the selloff were fresh record lows in the Argentine peso against the U.S. dollar. The fall in both the Brazilian and Argentine currencies on Wednesday fostered a pick-up in farmer selling from South Amer-ica, and that, coupled with little demand for U.S. soy-beans, pummeled futures values Wednesday. The U.S. Gulf barge values for Wednesday were down 17 cents to just 18 cents over May futures, while at the PNW, there are reportedly no soybeans bids until June.

• In addition, export analysts continue to point out Eu-rope and China both are buying cheaper priced Brazil-ian soybeans as opposed to those from the U.S.

• Even with the recent Chinese business, there is no guarantee we meet our export forecast, drawing into question the current supply situation in the U.S. If 2018/19 soybean carryout is closer to 1.00 bb than 900 mb, does that change perception about futures being below $9.00?

• An expanding old crop buffer in a year which soybeans desperately need to shed acres to clear supply is not constructive. The average trade guess for Mach 1 soybeans stocks is 2.683 bb which would clear last year’s record by 21.2%.

• Friday’s soybean stocks report is expected to reveal a record large stocks number, likely in the range of 2.7 to 2.8 bb.

• U.S. soybean ending stocks without a China trade deal could be headed for 1 bb as both sales and shipments remain well behind year ago levels and USDA projections.

• The outlook for soybean seeding if the wet forecasts come to fruition would suggest higher than expected soybean acres at a time when we don’t need that

Soybeans

Meal

Oil

© 2019 •Trilateral 5

WheatSources: DTN and Reuters

• Wheat markets are trading lower but have mainly oscil-lated inside the range dating back to mid-March. Friday’s stocks report is likely to confirm U.S. wheat demand, as DTN Lead Analyst Todd Hultman exclaims, is “among the worst in recent history”.

• A few bullish factors to watch on wheat are developing EU and Black Sea dryness, and the better than average chance that Australia’s climate remains too dry.

• While this week’s sale of U.S. SRW to Egypt, though small, was encouraging as U.S. wheat was the cheapest by far on a FOB basis, the 4% lower shipping pace versus last year suggests the real possibility of a burdensome 1.1 bb U.S. carryout.

• Even if U.S. exporters continue selling wheat as evidenced on Thursday’s sales report, we can’t efficiently move it out of the country thanks to the record flooding. This idea will probably prompt USDA to make another cut to their export forecast, pushing wheat ending stocks towards or above 1.1 bb.

• Expected storm activity is likely to further enhance U.S. crop prospects, with most key hard red winter (HRW) states condition ratings moving higher, and subsoil mois-ture levels already being plentiful to surplus.

• After the Brazilian-U.S. announcement on potential duty lifting toward U.S. HRW, offers of Argentine wheat have moved back to the lowest hard wheat FOB offers in the world. In ad-dition, the political spat between China and Canada has Canadian offers at a discount to U.S. off the PNW.

• Glencore Agri’s CEOI states that Russian export capacity is likely to increase by 10 mmt by 2025, with 6-7 mmt of that capacity likely to be used for wheat exports.

HRW

SRW

HRS

© 2019 •Trilateral 6

Related Market News

RJO• USDA Weekly Grain Export Sales Recap

• Soybean sales sharply below expectations• Wheat sales better than expected• Corn sales as expected• SBM/SBO sales treading water

• Grains Morning Comments• Brazilian soybean/safrinha corn crop estimates stabilize• US/China trade talks advance• Indonesian palm oil stocks tick lower in Feb, solidly below year ago• USDA Hogs and Pigs report this afternoon• USDA reports HRW sales to Iraq, SRW to Egypt

REUTERS• U.S. corn export outlook a bit less sunny as S. American crops rebound: U.S. corn exports have

been very healthy since about one year ago, when the harvest of competitor Argentina shrank 22 percent from a year earlier due to historic drought. Unfavorable weather had also reduced Brazil’s total corn crop by 17 percent on the year. But South America’s crops are not struggling this year. Over the next few months, South American countries are predicted to have at least 26 million more tonnes of corn on hand than a year ago. That is more than 1 billion bushels. The U.S. Department of Agriculture predicts U.S. corn exports in 2018-19 will fall about 3 per-cent from the previous year’s record, though the agency sees shipments topping 60 million tonnes for just the sixth time in history.

• Stocks of breeding pigs in a major Chinese hog producing region plunged 41 percent in the seven months to February, provincial authorities said, underlining fears about a hit to pork supplies from an epidemic of deadly African swine fever.

• Brazil center-south sugar output to rise 11 pct -INTL FCStone • The dollar rose on Thursday as other currencies struggled, following more dovish soundings

from central banks and renewed expectations that the European Central Bank will keep rates low for longer.

• The U.S. economy slowed more than initially thought in the fourth quarter, keeping growth in 2018 below the Trump administration’s 3 percent annual target, and corporate profits failed to rise for the first time in more than two years.

© 2019 •Trilateral 7

Weather UpdateDTN AG WEATHER BRIEF

NORTHERN PLAINS/CANADIAN PRAIRIES: A heavy snowpack in the eastern Dakotas will lead to ma-jor flooding on the Red River this spring. Rainfall is expected to be limited during the next 7 days allowing for a more orderly snow melt.

MIDWEST (SOFT RED WINTER WHEAT, TRAVEL and TRANSPORT): Major flooding in the northern and western Midwest due to heavy rains early in March and melting snow. A new moderate to heavy rain event appears likely for the Midwest at the end of this week. This is expected to impact southern areas of the west and most of the east. Renewed flooding for south, central and east areas appears likely.

CENTRAL/SOUTHERN PLAINS (WHEAT/LIVE-STOCK): Adequate to surplus soil moisture for win-ter wheat as it breaks dormancy.

© 2019 •Trilateral 8

Commodity IndicesFeedstuffsLinks to weekly USDA feedstuffs reports:

• National Weekly Feedstuffs Prices • Corn Belt Weekly Feedstuffs

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