Afternoon Soybeans: July beans close their gap.

The soybean market extended its recovery with July beans closing their gap today before settling back off the session highs but defending the higher close.   From low to high, July beans have recovered 57 cents so far this week and the weekly chart at this point is potentially going to print a key reversal which the percentages would say is good for a bottom, despite our fundamental woes, for the near term at least.   The products held up their end of the bargain which rallied board crush margins to new highs for the move at $1.24/bushel.  

Fund short covering is the key, that is the fuel here in an otherwise burdensome supply scene for beans that is likely to get worse before it gets better unfortunately. We estimate the fund short at about 170k in beans after covering about 5k today, along with 3k meal and 2k oil. Short covering rallies can take you further than you think (sometimes) but producers should remember that particularly in the case of beans, this is a short covering rally in an oversupplied market. Don't forget, we are lugging around a 995 mb carryout. Don't forget, we don't have the China market. Don't forget, China is likely to cancel 6 mmt of unshipped US soybean purchase at some point due to the apparent breakdown in trade negotiations. Don't forget, African Swine Fever is uncontained.

The weather outlook is not encouraging for planting where the maps return to a wetter pattern after a brief window of dryness. Weekend rains will focus on the western belt up into the Dakotas. Above normal precip will set up across the entire corn belt and it appears to stay that way into June. This outlook can change of course with the next model run, but for now, this is increasingly becoming a bigger problem for new crop corn acres and yield potential and it will impact bean yield potentials too.

NOPA April Crush - 159.99 mb was 1.7 mb below the avg. trade guess of 161.6 mb despite an improving margin environment during that time. This compares to 170.01 mb in March and 161.02 mb in April of 2018. Avg. daily rate of crush 5.33 mb down from 5.48 mb in March and the lowest avg. since August. Oil stocks 1.787 bln lbs vs. 1.780 bln lbs avg. trade guess and 1.761 bln lbs in March. Oil yield 11.69 vs. 11.76 in March. Meal exports 763 tmt vs. 844 tmt in March.

5 Day Precip Forecast - recent drying trend ends with storms centering over the WCB and Plains through the weekend:

6-10 Day and 8-14 Day Forecast - stays wet for all:

Elsewhere in the news, Brazilian soybean exports to China from Jan through April were down 13% at 20.07 mmt compared to 23.08 mmt last year. African Swine Fever is cited as a reason for the slowdown in demand but remember also, Brazil was running on pipeline supplies coming into this year having swept bin bottoms last year thanks to extreme basis and cash values. Brazil planted beans early this year that brings new crop availability earlier than normal, but the absence of carry in stock this year need to be acknowledged as a contributing reason for the year over year decline.

The second aid package for US farmers of up to $15 billion reportedly will feature a purchasing and direct payments program through USDA's Commodity Credit Corporation, a Depression-era program created to support farm income, rather than going through Congress to approve the funds. To those familiar, it is said that soybean and pork producers were likely to be prioritized. An official announcement and further details could be released next week.

For tomorrow's weekly export sales report the range of trade estimates for corn is 300-900 tmt, wheat 150-600 tmt, bean 300-1.0 mmt (unless China cancels?), meal 125-400 tmt and oil 5-25 tmt.

Spot basis: CIF bids at the Gulf up 1 to +35. Barge freight is steady and holding premium due to river logistics/high water. Interior processor bids mostly steady. Brazilian fob offers very firm. Argy fob offers up 10 to +60.