CORN
Corn futures made new highs overnight on technical momentum ahead of this morning’s USDA Weekly Export Sales numbers. May corn hit 7.67-1/2 after tacking on 14-1/4 cents before backing off to 7.59. July reached a new high of 7.22-1/2 on gains of 12 cents. Dec peaked at 6.18 on gains of 12-1/4 cents. Trade estimates for this morning’s sales are 200,000 to 900,000 tons for old crop, 100,000 to 600,000 tons for new crop. Overnight, the dollar dropped 27 basis points while building a base of support at the contract’s 100-day moving average. In overnight tender activity, South Korea seeks 276,000 tons of optional-origin corn. Yesterday, Informa dropped their estimate on 2021 Brazil corn crop 9 mmt to 95 vs USDA 109. This could eventually add 550 mil bu new U.S. 2021/22 corn exports putting USDA in tough spot estimating the U.S. 2021/22 corn balance sheet. Informa raised Argentina corn crop 1 mmt to 47. There is talk that Argentina may have oversold their corn supply and drop in Parana river water levels could force exports to short load vessels. Concern about dryness in Safrinha corn areas of Brazil remain and dryness is likely to continue across most of this area through at least the next ten days to two weeks. Conditions in Argentina will continue to be very good for late season crops.
SOYBEANS
Beans were up overnight. May beans are up 17 cents to 15.99 while running into resistance at the contract highs at 16.08-3/4. July beans were up 20-1/4 cents to 15.64-1/2 versus the contract high at 15.74-3/4. Nov beans advanced 14 cents to a new high of 13.96-3/4. Bean oil was up and into new highs beyond the nearby July contract. Chinese Ag futures for (September) settled up 124 yuan in soybeans, up 24 in Corn, up 84 in Soymeal, up 362 in Soyoil, and up 352 in Palm Oil. Malaysian palm oil prices were up 143 ringgit at 4,187 (basis July) at midsession, a 13 year high amid supply concerns. Matif new crop rapeseed futures are higher mid-week on concern over the EU 2021 crop. Canada rapeseed futures also traded higher on concern about Canada 2021 crop. Sunoil is already trading higher on concern about Ukraine’s 2021 crop. Trade estimates for today’s U.S. old crop soybean sales are (minus) 100,000 tons up to 200,000 tons for old crop; 100,000 to 600,000 tons for new crop. While exports are slowing, the trade is factoring in an export estimate of 2.280 bil bu vs 1.682 last year. This could suggest a final U.S. 2020/21 carryout falling below USDA’s 120 mil bu figure. The USDA’s latest forecast is for U.S. soybean exports to be about 600.0 million bushels higher than last year, but a slowdown in the U.S. export program offers resistance. Crushing margins remain good and U.S. soybeans crushed in March totaled 188.2 mil bu. Contract highs remain bullish targets for the market as traders adjust to expanded limits enacted on Monday moving forward in the grain and oilseed markets.
WHEAT
Winter wheat futures were choppy overnight and are weaker this morning led by Chicago contracts. July is down 6 cents to 7.38, near the low end of last night’s trading range between 7.54-3/4 and 7.38-1/4. July KC wheat is down 2 to 7.15; and, July Mpls is unchanged at 7.82. The markets have been buoyed by strength in the corn market has fueled good money flow into wheat. Less-than-ideal U.S. and Canada summer weather concerns translate to weather premium. On twitter, Reddit is calling for $14 dollar wheat. Managed funds were net buyers of 12,000 contracts of SRW wheat and are net long an estimated 15,000 contracts of SRW wheat. Trade estimates for this morning’s Weekly USDA old crop sales are zero to 250,000 tons. New crop is estimated from 100,000 to 500,000 tons. Informa raised Canada 2021 wheat crop 1 mmt to 32.8. Russia 2021 crop 3 mmt to 80, Ukraine 1 mmt to 28 and Australia 1 mmt to 26; and, estimates the U.S. 2021 winter wheat crop at 1.307 bil bu vs 1.171 last year. Statistics Canada is scheduled to release its estimates of Canadian crop stocks as of March 31, 2020, tomorrow, May 7 at 7:30 a.m. CDT. World food prices increased for an 11th consecutive month in April, hitting their highest level since May 2014, with sugar leading a rise in all the main indices, the United Nations food agency announced today. The Food and Agriculture Organization’s food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 120.9 points last month versus a revised 118.9 in March. The March figure was previously given as 118.5.
CATTLE
Cattle calls: steady/higher. Cattle finished with solid gains on Wednesday as some value buyers stepped into the market and drove prices to triple-digit gains across the board. The cattle market is searching for a bottom, and despite Wednesday’s strength, prices were more in consolidation off Tuesday’s break lower. The demand tone in the market stays supportive as carcass values trend higher. Choice carcasses crossed over the $300 level Tuesday, gained an additional 3.56 yesterday to 304.78, and Select carcasses were 2.27 higher to 286.18 on moderate demand of 121 loads. We’ll get weekly export sales this morning which could be supportive. The cash market continued to develop yesterday, and the trend has been steady to slightly higher versus last week. Most trade this week has been $118-119 cash and $190 dressed. The cash market has failed to support the market overall, but June is trading at $114, holding a $4-5 discount to the cash market.
HOGS
Hog calls are for steady to higher trade on follow-through. Futures finished with new contract highs as buyers stayed active in the market. July-October contracts led the market higher, closing with triple digit gains. The story remains the same on a daily basis as the fundamentals stay supportive. The cash hog index gained an additional .27 to 107.37. Pork carcasses closed firm, gaining .73 to 111.91, on moderate movement of 274 loads. The product movement has been the key, despite strong overall production, pork product has been moving to meet the demand tone. At the end of March, Pork supplies in storage were at their lowest totals since 2004, reflecting the strong product movement. Weekly export sales could set the tone for the end of the week with the market still in search of a top, fueled by persistent buying and strong fundamentals.
Author
Matthew Strelow