Morning Commentary 3/26/21

CBOT Little Changed Overnight Amid a Lack of Fresh News; Positioning for March 31st Reports to Key Direction; Cattle Called Higher on Bullish Hog Report

6:30 AM CT CBT Prices: May soybeans are down 2.00 cents $14.125, May corn is unchanged at $5.465 while May Chi wheat is unchanged at $6.1225.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! This week’s trade has been about positioning for the March 31st Stocks/Seeding Report. The US dollar has rallied on Europe’s erratic vaccination program with Germany locking down again, but what looms large in the future is the new Northern Hemisphere growing season and liquidation into the end of the month/quarter and the USDA report. This has been the pressuring price point of the CBOT.

Tightening 2021/22 US/world corn/soybean balance sheets show that record large, combined seeding is needed as supply is not forecast to keep up with demand. The US corn balance sheet can use seedings of 94 Mil acres plus, but soybeans cannot withstand a fall too far below 89 Mil acres. US wheat seedings will be down as Northern Plains farmers see greater profits in summer row crops. In a broad sense, it will be difficult for the NASS Seeding report to cast a sustained bearish pale across the CBOT.

It is March 1st US corn and soybean stocks that are the big NASS numbers on Wednesday. Finding or losing US corn/soybeans with 2020/21 export sales at 98-99% of the WASDE annual forecast with 5 months left in the crop year is huge.

Sept-November US corn feed use was shockingly (record) large and its unknown whether that feed use trend carried forward into the Dec-February quarter?  And will all the soybeans in transit in early December for export to China cause NASS to find back supply in terms of a negative residual on March 1st? 

The summer US soybean crush will only be slowed by the pure lack of supply amid record large biodiesel demand for soyoil that keeps margins strong.

The one item that ARC argues that the industry is overlooking is the arid/warm weather for Brazilian winter corn with the dry season starting in May. The world demands USDA’s forecast of 109 MMTs total Brazilian corn crop. Late seeding and the coming dryness raises yield risks. This is something that could loom large in world corn price direction on April 1st.

In world ag markets, Paris May wheat futures is up €.50 at €214.50/MT while Malaysian April palmoil futures lost 145 ringgits to close at 3,386 RM/MT following Thursday’s limit down close in soyoil futures. China’s Dalian corn and soymeal futures settled mixed to higher. May Dalian corn lost 1 cent/Bu to $10.58/Bu while May DCE soymeal rose $1.90/MT to $612.90. The Chinese soymeal market has put in a solid performance this week on increasing feed demand.

A high-pressure Ridge will continue to block rain from the winter corn areas of Brazil for the next 10 days. Soil moisture is in sharp decline and warming temps will speed the arrival of crop stress in March planted corn.  The 11-15 day forecast offers a few lite showers, but our confidence this far out stays low.

It is all about position excesses into the USDA number – long oil/short meal & short wheat/long corn has been extremely popular. An unwind started Thursday and could continue. Amid record large export/crush demand, the real surprise would be if 2nd Q corn feed use were higher, or the soy residual was positive!

South American Weather Pattern Discussion: A Ridge of high pressure holds across C Brazil for the next 10 days. The upper-level Ridge blocks moisture from the southern half of Mato Grosso and southward into Parana. The lack of rain and coming heat accelerates the decline of Central Brazilian soil moisture. This will become increasing important to the 2021 winter corn crop. The 11-15 day forecast offers lite showers, but our confidence this far out is low.

A potent storm system is producing rain and strong wind across NE Argentina this morning while lite showers fall across S Santa Fe and Buenos Aires. The rain is helping to stabilize yield potential. Its too late in the growing season to add back bushels.

The Argentine forecast is drier than prior runs with near to below normal temps. An increase in the harvest occurs in April.

The attached 10-day rainfall forecast is from the European model. The Central Brazilian high-pressure ridge is forcing upper air humidity southward into Argentina and RGDS in Southern Brazil. Under the C Brazilian high-pressure Ridge, high temps will be in the 80’s to the mid 90’s, about 7-9 degrees warmer than normal. The hot/dry risk in the S American forecast is for the Brazilian winter corn crop into mid-April.

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