Brazil weather to stay mostly favorableRains are expected to continue across much of Brazil into mid-March. That’s good for late-maturing soybeans and saf-rinha corn, but the rains are causing transportation problems on the BR-163 “soybean highway” through central Brazil. This hasn’t caused shipping delays from Brazilian ports yet, but it could if the rains persist. In Argentina, dryness in the southwestern growing region is the lone area of concern.

Wheeler confirmed as EPA administratorThe Senate last week confirmed Andrew Wheeler to lead the Environmental Protection Agency (EPA). Wheeler said his agency hopes to have a draft proposal for year-round sales of E15 out sometime this month and have the rule finalized by the June 1 start of the summer driving season.

Tentative farm bill timelines outlinedUSDA Secretary Sonny Perdue said you may have to wait until Sept. 1 to enroll in Agriculture Risk Coverage (ARC) or Price Loss Coverage (PLC). Other tentative farm bill time-lines Perdue noted: • End of April: USDA will issue premium refunds to dairy farmers. • June 17: Dairy Margin Coverage signup opens. • Dec. 1: General enrollment in the Conservation Reserve Program. • 2020 planting season: Hemp regulation announcements.

IRS extends tax filing deadline for farmersThe Internal Revenue Service (IRS) extended the deadline for qualifying farmers and ranchers to file taxes from March 1 to April 15. Those wishing to request the waiver must include Form 2210-F with their 2018 tax return.

Participate in our annual acreage surveyYou should have received an email from us last week asking for your input on planting intentions for the 2019 growing season. Please take a couple minutes to fill out the survey. We’ll analyze the results and share our survey-based plant-ed acreage estimates ahead of USDA’s March 29 Prospective Plantings Report. You can access the survey at: https://app.keysurvey.com/f/1390869/13b3/?LQID=1&FRID.

Lighthizer: Get going on a China trade dealU.S. Trade Representative Bob Lighthizer is pushing U.S. negotiators to wrap up final details on a trade deal with China. Plus, U.S. and Chinese officials are saying any agreement would be a huge win for both countries. That signals a “his-toric deal” is close. But President Donald Trump could still walk away from a deal at the last minute like he did in talks with North Korea’s Kim Jong Un last week — as could China’s Xi Jinping. See News page 4 for more on U.S./China talks.

U.S. share of China soybean buys plunges China imported 25 million metric tons (MMT) of soybeans during the October to January period, which is normally the strongest soybean shipping period for U.S. soybeans. But only 1% of shipments came from the U.S., while Brazil provided 84% of China’s soybean imports during the four-month span. Shipments of U.S. beans to China should be stronger than normal during the remainder of 2018-19, as purchases increased since December, but there’s too much ground to make up after the very slow start to the marketing year.

U.S. scores WTO victory against ChinaA World Trade Organization (WTO) dispute settlement panel ruled China provided trade-distorting support to domestic wheat and rice producers well in excess of its commitments under the global trade rules. For corn, however, Beijing changed its policy in 2016, which kept the panel from ruling its 2012-15 support was in violation of WTO rules. The deci-sion on corn underscores the problem with the WTO. An authoritarian Chinese dictator can simply adjust the parame-ters of a program, making existing WTO challenges obsolete.

China’s factory sector contracts furtherChina’s official purchasing managers index (PMI) dropped to a three-year low of 49.2 in February, the third straight month of contraction. Export orders shrank for a ninth straight month to the lowest level since February 2009.

The independent Caixin/Markit PMI rose to 49.9, though that’s still below the 50.0 expansion threshold.

Wheat market is an anchor — Winter wheat futures plunged to new lows as traders priced the market as feed instead of food in search of better demand. Selling in spring wheat futures was limited as that market tries to hold onto or buy acres. Pressure from the wheat market and mostly favorable South American weather weighed on corn. Funds added to their net short position in the corn market, dropping futures to their lowest level since September. Soybeans weakened on pressure from Brazilian weather, taking out the February lows to start March. Cattle futures pushed to new highs on support from weather and rising cash cattle prices. April hogs firmed amid corrective buying after an early week price drop failed to produce a new contract low. The hog market may finally be working on a low.

News this week...2 — Perspective on USDA’s corn, bean acreage projections.3 — U.S. cattle herd nearing its cycle peak.4 — Updates on a bevy of trade, farm policy issues.

March 2, 2019 Vol. 47, No. 9

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March 2, 2019 / News page 2

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Brazilian crops may trend higherRecent rains have stabilized crops in Brazil and forecasts signal favorable weather is likely across much of the coun-try’s main growing regions into mid-March. South American Crop Consultant Dr. Michael Cordonnier kept his Brazilian soybean and corn crop estimates at 113 mil-lion metric tons (MMT) and 91.5 MMT, respectively, but he now has a neutral to slightly higher bias toward both crops.

For soybeans, he says the areas to watch are the southern and northeastern growing regions, where soybeans mature later than in other areas of the country. If late-season rains continue in these areas, he could increase his soybean esti-mate 1 MMT to 2 MMT.

Rains have enabled a strong start to the safrinha corn crop that has been planted, but March to May weather will determine yields for the crop.

Argentine corn crop estimate may also riseDry areas of southern and southwestern Argentina missed most of the rains last week and are expected to remain dry in early March. Dryness will continue to stress crops in this region, but the impacted area accounts only for about one-quarter of the country’s corn and soybean acreage. Conditions are favorable across the remaining areas and yield potential is strong. Cordonnier is comfortable with his Argentine soybean estimate at 55 MMT, but he says his corn crop estimate of 42 MMT may move higher, especially if the drier areas get some rains.

Russia unofficially restricts wheat exportsRussia reportedly has put unofficial quotas on grain (pri-marily wheat) exports amid fears of quickly declining stocks and rising domestic prices. But the country’s ag ministry reiterated it has no plans to officially cap wheat shipments. This appears to be a game of semantics.

A trade source told Reuters there is still 4 MMT to 5 MMT of old-crop Russian wheat that could be exported by June. But much of that surplus is located outside of southern areas near the Black Sea, where the bulk of Russia’s exports originate.

Ukraine raises grain export forecastUkraine exported 32.3 MMT of grain in the first eight months of 2018-19. Corn exports at 15.8 MMT are up 65% from the same period last year, while wheat exports are down 5%. The country’s ag ministry raised its grain export forecast to a record 49 MMT for 2018-19.

Perspective on USDA’s acreage projectionsAs we reported on the front page of last week’s Pro Farmer newsletter, USDA initially projects corn and soybean plant-ings at 92 million acres and 85 million acres, respectively. Following is analysis of how USDA’s initial acreage projec-tions have stacked up against March planting intentions over the past 10 years (2009-2018):Corn: It’s a 50/50 split — five years too high and five years

too low. USDA’s initial projection on average has been 312,000 acres too low over the 10-year span, though the range is from 3.6 million acres too low in 2016 to nearly 2 million acres too high in 2018.Soybeans: The initial acreage projection has been too high

six times and too low four times, with an average of just 59,000 acres too low over that span. The range is 2 million acres too low to 1.4 million acres too high.Perspective: Prices and weather are the two main factors

that will influence acreage decisions this spring. The spring crop insurance prices of $4.00 for corn (up 4¢ from last year) and $9.54 for soybeans (down 62¢) equate to a new-crop price ratio of 2.39, which is neutral. But the second install-ment of Market Facilitation Program payments for 2018-crop could swing some acres to soybeans for this year.

Heavy snowcover and likely spring flooding across the upper Midwest suggest there will be planting delays. Plus, fall fieldwork was slowed by a wet and lengthy harvest sea-son. That suggests some corn acres may switch to soybeans.

USDA is proabably about 1.4 million acres too light with its initial combined corn and soybean planting projections. Our current corn and soybean acreage projections are 92.3 million acres and 86.1 million acres, respectively.

HRW conditions decline less than normalState-level crop conditions showed the hard red winter (HRW) wheat crop was rated 48% “good” to “excellent” as of Feb. 24, down 10 points from USDA’s last national ratings from late November. The biggest declines were in Montana (down 28 points), Oklahoma (down 18 points), South Dakota (down 11 points) and Texas (down 10 points). The “good” to “excellent” ratings Kansas, which accounts for over 40% of the HRW crop, increased five points since late November.

When those crop ratings are plugged into the weighted Pro Farmer Crop Condition Index (0 to 500 point scale; CCI), the HRW crop slipped 5.37 points to 344.35. However, that was far less than the 10-year average CCI decline of 29.96 points from the end of November to late February.

March 2, 2019 / News page 3

Cycle high in U.S. cattle herd appears to be close USDA’s Cattle Inventory Report showed there were 94.760 million head of cattle in the U.S. as of Jan. 1, up 462,000 head (0.5%) from the previous year. The num-

ber of beef cows at 31.766 million head was up 300,000 head (1.0%). The 2018 calf crop was revised down 93,000 head from the preliminary July figure to 36.4 mil-lion head, which was still up 645,000 head (1.8%) from the previous year.

Heifers retained for beef cow replace-ment fell 183,000 (3.0%) to 5.925 million head, while the milk replacements slipped 66,800 (1.4%) to 4.702 million head. Despite the rise in the beef cow population, the numbers suggest the

cyclical increase in the U.S. cattle population may be peaking. Cattle prices dur-ing the coming months will probably determine if herd contraction begins.

ACTUAL DOANE FORECASTS*YearAgo

LastWeek

ThisWeek April April-

JuneJuly-Sept.

3/2/2018 2/22/2019 3/1/2019 (Monthly & quarterly avg.)CORN Central IL, bushel 3.55 3.52 3.42 3.60 3.65 3.70 Omaha, NE, bushel 3.57 3.70 3.59 3.70 3.75 3.80 Dried distillers grain, IA, $/ton 145.00 144.38 -- -- -- --SOYBEANS Central IL, bushel 10.10 8.62 8.58 8.70 8.85 8.90 Memphis, TN, bushel 10.52 9.00 8.95 9.00 9.15 9.20 Soymeal, 48% Decatur, IL, ton 398.70 306.40 306.00 310 312 315WHEAT Kansas City, HRW, bushel 4.83 4.62 4.46 4.90 5.10 5.25 Minneapolis, 14% DNS, bushel 7.57 7.03 7.14 7.20 7.45 7.35 St. Louis, MO, SRW, bushel 4.96 5.17 4.91 5.20 5.45 5.55 Portland, OR, soft white, bushel 5.57 6.27 6.27 6.35 6.50 6.40 Northeast MT, durum, 13%, bushel 5.95 4.45 4.00 4.60 4.75 4.65SORGHUM, Kansas City, cwt. 5.78 5.98 5.78 6.00 6.05 6.10COTTON, 11/16 SLM, 7 area, ¢/lb. 79.38 68.33 66.68 66.50 68.00 69.00RICE, nearby futures, cwt. 12.39 10.21 10.28 10.75 11.00 11.10BARLEY, Montana, malting, cwt. 8.12 8.55 8.62 8.60 8.65 8.70OATS, Minneapolis No. 2 heavy, bushel 2.95 3.22 3.07 3.30 3.35 3.25ALFALFA, NW Iowa, lg. sq. prem., ton -- 155.00 -- 165.00 162.50 160.00SUNFLOWERS, Fargo, ND, cwt. 17.30 17.17 17.15 17.35 17.50 17.40HOGS, Nat’l basecost cwt. 51%-52% 62.38 46.37 45.27 63.50 76.50 77.50FEEDER PIGS, 40 lbs., nat’l avg., head 85.86 69.58 67.32 72.00 67.50 65.00CHOICE STEERS, NE feedlots, cwt. 126.78 126.33 -- 127.50 122.00 118.50FEEDER CATTLE, Oklahoma City

Steers, 700-800 lbs./cwt. 147.40 140.49 143.66 142.50 145.50 147.50Steers, 500-550 lbs./cwt. 184.14 180.69 180.69 179.00 181.00 178.50Heifers, 450-500 lbs./cwt. 166.43 151.46 159.04 154.00 155.50 152.50

COWS, utility, Sioux Falls, SD, cwt. 65.37 62.50 61.87 61.00 63.50 61.00MILK, Class III, CME spot MO, cwt. 14.02 14.00 15.31 14.75 15.00 15.75LAMBS, Slg., San Angelo, TX, cwt. 135.70 128.51 134.25 -- -- --ENERGY

Ethanol, IA, gallon 1.41 1.23 -- -- -- --Farm diesel, U.S., gallon 2.36 2.39 2.29 2.32 2.39 2.44

*Average prices expected for the indicated time periods based on available information. Forecasts will be revised as necessary to reflect changing market conditions. Diesel prices are from Inputs Monitor.

USDA TradeCattle Inventory actual expected (percent of year-ago)

All cattle and calves 100.5 100.1Calf crop 101.8 101.6 Cows/heifers that have calved Total 100.5 100.0 Beef 101.0 100.0 Milk 99.2 99.1Heifer inventory500 lbs. & up 100.1 99.2 Beef replacement 97.0 95.7 Milk replacement 98.6 97.7 Other 102.8 102.2Steers 500 lbs./up 100.6 100.9Bulls 500 lbs./up 100.5 100.2Calves under 500 lbs. 100.8 100.7

Jan. 1 feedlot supplies slightly less than expected USDA’s Cattle on Feed Report showed the Jan. 1 feedlot inventory up 1.7% from the prior year at 11.690 million head but 55,000 head lower than the average pre-report estimate implied. The smaller-than-expected feedlot supply was driven by a 1.8-percentage-point decline in placements during December. Marketings slipped 0.6 point from December 2017 levels.

Steer numbers in feedlots were down 55,000 head (0.7%) from Jan. 1, 2018. Heifer numbers were up 256,000 head (6.2%) from the previous year.

Zone defense against ASF China plans to divide its hog industry into five zones and to encourage the trade of pigs within each region as part of its efforts to stop the spread of African swine fever (ASF). Each zone will contain one of China’s top pig-producing provinces, ensuring that it is self-sufficient in pork, which should help stabilize supply. China’s ag ministry proposes piloting the new system in its “central south” region.

Meanwhile, two more provinces in Vietnam reported ASF outbreaks last week.

Fed plan to end balance sheet reduction coming ‘soon’Fed Chair Jerome Powell told two congres-sional panels the central bank is close to announcing a plan to end its balance sheet runoff. However, Powell has said the Fed plans to maintain a larger balance sheet, which currently stands at $4 trillion, than it did prior to the financial crisis. He reiter-ated that the Fed will take a “patient approach” to monetary policy adjustments, while closely monitoring global risks.

U.S. GDP slows modestly in Q4 U.S. gross domestic product (GDP) rose 2.6% in the fourth quarter of 2018, down from 3.4% growth in the third quarter. But the gain was bigger than the 2.3% growth economists anticipated. For 2018, GDP rose 2.9% — the best performance since 2015.

March 2, 2019 / News page 4

Bonanza of trade and farm policy developmentsby Washington Policy Analyst Jim Wiesemeyer and Editor Brian Grete

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

Many important trade, farm and regulatory issues are confronting the ag sector. There is upside price

potential if solutions are found, but there is also the chance for price-crushing impacts if these issues are not completely resolved.

Progress with China, but hurdles remainU.S./China trade talks are happening faster and are better

defined. Pens are meeting paper, with remaining issues to be settled before another summit between President Donald Trump and Chinese Leader Xi Jinping in mid- to late-March.

Additional Chinese purchases of U.S. goods and commit-ments to buy an expanding list of U.S. farm products will not be enough to ensure a trade deal is reached, U.S. Trade Representative Bob Lighthizer and USDA Secretary Sonny Perdue made clear in separate appearances before Congress. Reason: The U.S. continues to push for “significant struc-tural change” to the Asian nation’s economy via intellec-tual property rights and technology transfers, Lighthizer said. Will Beijing concede to the requests?

Timing of a final U.S./China accord still fuzzyLighthizer said it was unclear whether the U.S. and

China could resolve trade disparities. Trump said the two sides are “very, very close.” As for timing, Lighthizer said he was “not foolish enough to think that there’s going to be one negotiation that’s going to change all the practices of China or our relationship with them.”

Enforcement is key, but both sides need to signA triple-tiered enforcement mechanism in a U.S./China

trade deal is being pushed by the Trump administration, backed by the threat of unilateral U.S. punishment. Any agreement would allow the U.S. to use tariffs to enforce the deal, but only after a series of consultations with Beijing. Lighthizer did not say if China was receptive to the idea.

U.S. farmers want purchase commitment detailsWe’re told to be cautious of market chatter about specific

dollar and tonnage commitments of Chinese purchases of U.S. farm products. Reason: They can (and have) change(d) as the talks unfold. Pressed for specific amounts, Perdue said, “I am not going to enumerate levels. We made propos-als.” China came back with its proposals, he added, but it is not appropriate to discuss those kinds of details in public.

If a comprehensive trade agreement with unambiguous

enforcement can be reached, it would be an adrenalin shot for the U.S. ag sector. Trump tweeted, “If a deal is made with China, our great American Farmers will be treated better than they have ever been treated before!“ But things could still change in a seemingly Etch-A-Sketch Washington if hurdles trip up the path to a final agreement.

Updates on farm policy, other trade and regulatory issues• Farmer-friendly farm bill timelines. Perdue revealed

signup dates for implementing the new farm bill. Most important: He said it could be Sept. 1 before you can sign up for Ag Risk Coverage or Price Loss Coverage.

• Japan FTA. Lighthizer wants negotiations with Japan in March. Trump wants progress in the talks ahead of his May summit in Japan with Prime Minister Shinzō Abe.

• Metal tariffs on Canada and Mexico. Lighthizer assured lawmakers the administration wants to minimize the tariffs. Perdue believes a resolution is near — possibly reasonable quotas for Canada and Mexico in exchange for the removal of their retaliatory tariffs.

• USMCA (NAFTA 2.0). Trump wants congressional approval of a new U.S.-Mexico-Canada Agreement this year, something Lighthizer described as his “top priority.” He noted, “There is no trade program in the U.S. if we don’t pass USMCA.” If it doesn’t pass, “you have no credibility at all with China and you will have no credibility on any deals with your other trading partners,” he said. Perdue signaled an April push, but an actual vote will come later.

• Ag disaster aid. If Congress approves disaster aid, Perdue said USDA can get the help to farmers quickly.

• Immigration reform. The White House is working on a comprehensive immigration reform proposal with the help of a USDA adviser, Perdue said. USDA is working on a web portal to aid farmers to apply for H-2A foreign labor.

• Internet connectivity. While the shutdown forced a delay in the broadband connectivity efforts to May 1, Perdue said this has “the potential to be one of the most transformative things to bridge the urban/rural divide.”

• Vaccine bank for livestock diseases. Perdue thinks “more appropriations” will be needed and “will recom-mend” required levels to Congress.

• No more shutdowns for FSA? USDA’s Commodity Credit Corporation is being eyed by House Ag Chairman Collin Peterson (D-Minn.) to keep USDA’s Farm Service Agency (FSA) working in any future government shutdown.

Feed MonitorFEED

Corn Game Plan: On Feb. 27, we advised extending corn-for-feed coverage another two weeks in the cash market through the end of April. Be prepared to add to cover-age on further weakness.

Meal Game Plan: You should have all soy-bean meal needs covered in the cash market through March. Our target for extending April coverage is $305 in May meal futures.

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

Meal I’19 10% II’19 0% III’19 0% IV’19 0%

DAILY MAY MEAL

Analysis page 1

DAILY APRIL LEAN HOGS

WEEKLY PORK EXPORTS (MMT)Position Monitor

HOGS - Fundamental AnalysisAfter retesting contract lows to start last week, nearby futures slowly marched higher as early-session weakness found light underlying demand from fund short-covering. The recent wide intraday price swings are a bottoming pattern, reflecting increased optimism that slaughter has peaked. Declining hog weights signal marketings are current. Pork prices are weak, improving domestic demand. U.S. weekly export sales jumped to 28,911 metric tons, including 5,400 MT sold to China. With African swine fever spreading to Vietnam, December futures rose to new highs on speculation exports to Asia will rise in the second half of the year.

Game Plan: Trad-ers have already priced a worst-case scenario into futures. That sets up the market up for an eventual price rally once slaughter rates slow seasonally.

DAILY APRIL LIVE CATTLE

WEEKLY BEEF EXPORTS (MMT)Position Monitor

CATTLE - Fundamental AnalysisApril and June futures scored new contract highs on rising open interest. The slow, steady gains reflect a market realization that demand is strong and cattle supplies are already in a seasonal retreat. The wintry weather may exaggerate the seasonal cattle weight decline into May, further tightening beef supplies. Increased forward sales of beef suggest export demand remains strong. The market also found support from USDA’s monthly Cattle on Feed Report showing more heifers moving into feedlots, a sign of herd contraction. Higher prices may be needed to encourage a new rebuilding phase.

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 now that April reached our $130 target.

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

Psychological resistance solidified at $130.10 last week. That’s backed by the February 2018 continuation chart high at $130.525.

Initial support is provided by the Jan. 31 high at $129.475. Key support

is at the Jan. 18 high at $127.80.

Initial resistance at the Feb. 19 low of $56.525 is backed by the Aug. 2 low at $58.225.

The Feb. 20 contract low at $52.25 remains initial support. Key support is at $51.50 on the weekly continuation chart.

$58.225

$60.875

$56.525

$129.475

$127.80$126.675

$130.10

$52.25

ANALYSIS March 2, 2019

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

Last week’s losses flipped previously stout support at the Aug. 28 low of

$307.20 to initial resistance.

Initial support is now at the Sept. 18 low of $303.70.

$303.70

$314.10

$320.70

$307.20

March 2, 2019 / Analysis page 2

DAILY MAY SRW WHEAT

WHEAT - Fundamental AnalysisSRW - Prices collapsed on massive fund sales at the end of February. Spot cash wheat premiums to corn fell to the lowest level since early 2017, a sign the market is now pricing wheat as feed rather than food. That means it will likely take a major new supply shock to rally prices.

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.

Former support at the Feb. 20 low of $4.79 3/4 is now acting as initial resistance. Tougher

resistance is layered from the Nov. 27 low at $5.09 3/4 to the July 11 low of $5.20 3/4.

$4.79 3/4

$5.09 3/4$5.20 3/4

The $4.50 level is likely psychological support in the near term. Long-term support resides at $4.35 from the continuation chart.

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

CORN - Fundamental AnalysisCorn futures followed wheat lower last week as fund sales expanded when chart support failed to hold and cash corn pricing against the expiring March futures increased. Concern the export window may close in a few months after recent rain increased crop outlooks in Brazil and Argentina offset a week of better U.S. exports. Ethanol producer margins improved as EPA moved to get E15 approved for the summer driving season. Funds probably hold the largest net-short position for this time of year since 2016. That could be fuel for a rally when a China deal is signed and details of purchases of ethanol, DDGS and corn are announced. The cold, wet weather forecast may cap U.S. planted area.

DAILY DECEMBER CORNInitial resistance is now at the Aug. 23 high of $3.98. The 40-day moving average (green line) marks stiffer resistance at $4.00 1/2.

$4.13 3/4

$4.07 1/4

$3.91

$3.83 1/4$3.98

The Aug. 23 low at $3.91 now represents initial support.

Contract-low support is 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 with the poten-tial for a sharp rally from a China trade deal.

DAILY MAY CORN

Last week’s decline flipped support at the June 19 low of $3.76 1/4 to initial resistance. Tougher resistance at

the 40-day moving average (green line) near $3.84 1/2 is backed by the Sept. 5 high at $3.88 1/4.

A drop below initial support at the July 12 low of $3.69 1/4 would have bears targeting the contract low of $3.63 1/4.

$3.69 1/4

$3.97 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 2, 2019 / Analysis page 3

HRW ‑ Futures dropped to new contract lows on concern export competition will increase into 2020 amid few major weather problems at this time. Russia once again denied that there were any plans to restrict exports. Mills are quiet as prices drift lower despite U.S. farmers planting the smallest area since 1909.

HRS ‑ Spring wheat futures continue to gain relative to winter wheat on increasing speculation U.S. planted acreage will be smaller. The spring crop insurance price of $5.77, down 54¢ from a year ago, gives little incentive for more planted area. Protein premiums remain strong on export demand.

DAILY MAY HRS WHEATDAILY MAY HRW WHEATInitial resistance is now

at the Feb. 20 low at $4.57 1/2.

The 40-day moving average (green line) near $5.69 3/4

is still initial resistance.

$4.40 1/4

$4.95 1/2$5.25 1/4

$6.17 1/2

$5.93 3/4

$5.71$4.57 1/2

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

The Feb. 26 low at $4.40 1/4 is initial support.

DAILY NOVEMBER SOYBEANS

$9.61 1/2$9.71

$9.41

$9.15 1/4

The 40-day moving average (green line) now places initial resistance at $9.53 1/2.

Stiffer resistance is at $9.61 1/2.

Initial support is marked by the Aug. 20 high at $9.41. Key support is at the June 20 low of $9.15 1/4.

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

WHEAT EXPORT BOOKINGS (MMT)

AVERAGE WHEAT BASIS (MARCH)

SOYBEANS ‑ Fundamental AnalysisSoybean weakness was less pronounced than what was seen in the grain markets last week, in part because of the confirmed new Chinese buying of U.S. soybeans. The return of China to the U.S. market was evident in rising prices at export terminals. However, U.S. soybean prices are now slightly above Brazilian export offers for the first time in several months. The cash market is showing more optimism for a China deal that results in better demand for both old- and new-crop U.S. supplies. Traders with short positions will wait for an actual deal before lifting positions. Domestic crush continues at a record pace to meet improving feed demand for meal and record soyoil use in biodiesel.

DAILY MAY SOYBEANS

The June 26 low at $9.05 3/4 is now initial support. Key support is at the June 19 low of $8.90.

$9.50

$9.31

$9.05 3/4

$8.71 3/4$8.90

Position Monitor ’18 crop ’19 crop

Cash-only: 40% 20% Hedgers (cash sales): 40% 30% Futures/Options 35% 0%

Game Plan: You should have orders to sell 10% of remaining 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 produc-tion via hedge-to-arrive contracts for harvest delivery if November futures hit $9.75 and $10.00. Maintain the 2018-crop hedges in short July futures as downside protection.

Initial resistance extends from the 40-day moving average (green line) near $9.25 1/2 to the Oct. 15 high of $9.31. Key resistance

remains at the July 31 high of $9.50.

March 2, 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 March WASDE ReportWorld supply & demand updates.

FRI 3/811:00 a.m. CT

5

U.S. February Jobs ReportNon-farm payrolls for last month.

FRI 3/87:30 a.m. CT

4

U.S. December Trade DataYear-end totals for 2018.

THU 3/710:00 a.m. CT

3

USDA Export Sales ReportUpdate for the week of Feb. 28.

THU 3/77:30 a.m. CT

2

USDA Export Inspections ReportImproving wheat, soy shipments.

MON 3/410.00 a.m. CT

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WATCH LISTthe highest since May 21 and the strongest for this time of the year since 2014.

While some of the strength is from higher shipping costs, much of it reflects underlying export demand. The strong Gulf bid for corn also boosted Midwest cash basis above the three-year average.

Global corn trade is forecast at a record 167.36 million metric tons this year, double the total just a decade earlier with trade expected to expand further in 2019-20 amid rising global meat and dairy demand.

The bottoming process in corn is begin-ning as the calendar turns to March and widespread wet, cold and snow-covered fields suggest a delayed planting season. A China deal that includes corn and ethanol purchases would turn the trend higher.

When futures markets fail to correctly align price discovery with supply and de-mand fundamentals, the cash market has to do the heavy lifting.

March corn futures fell last week on heavy fund selling as prices dropped to the lowest level since September. Part of that selling was absorbed by commercial repurchases of short hedges tied to the expiration of March basis contracts.

Now, funds likely hold the largest net-short corn position for this time of the year since 2016 — a year when prices rose more than 80¢ from early April to late June amid adverse early-season weather.

Amid the weakness in futures, basis for corn delivered at export terminals near New Orleans jumped to 88¢ over futures,

By Sr. Market Analyst Jeff WilsonFROM THE BULLPEN

Chinese Yuan: The value of the Chinese currency against the U.S. dollar rose to the highest level in seven months last week. World markets cheered after U.S. Presi-dent Donald Trump said he would delay an increase in tariffs on Chinese goods as the two biggest economies worked to produce a trade deal.

China has pledged to not engage in competitive devaluations and to be trans-parent in terms of its intervention in the

markets as part of any deal to end the trade war. The American Chamber of Com-merce said last week its members favored the U.S. retaining tariffs on Chinese goods until a trade deal is negotiated. China’s economy is slowing and the government announced new measures last week to curb credit risks for banks.

A stronger yuan would help to keep U.S. farm goods competitively priced in the Chinese market.

GENERAL OUTLOOK

DAILY MAY COTTON

Game Plan: We intend to make addi-tional old-crop and new-crop sales on a price recovery near 76.00¢ in May futures. Stay patient.

Position Monitor AVERAGE COTTON BASIS (MAY)

COTTON - Fundamental AnalysisFutures rose the past two weeks on in-creased mill buying. Exports sales were a disappointing 85,500 bales because China canceled 65,600 bales. But China did buy 11,000 bales of new-crop cotton. Exports would benefit from a completed U.S./Chi-na trade deal after recent dollar weakness.

MONTHLY CHINESE YUAN

COTTON EXPORT BOOKINGS (’000 BALES)

Initial resistance is marked by the alignment of the Dec. 24 low at 73.69¢ and the 40-day moving average (green line) at 73.74¢.

The Feb. 12 low at 71.01¢ is again initial support. Psychological support is at 70.00¢.

Initial resistance was established at 0.160 last March.

The December 2016 low at 0.144 marks initial support.

73.69¢

76.14¢

77.44¢

71.01¢

0.144

0.160