3/31/21

Morning Commentary 3/31/21

Traders Await NASS Stocks/Seeding Report at 11 AM CT; Soyoil Open Interest Rises on Tuesday's Limit Price Slide; Post Report Market Volatility Ahead

6:30 AM CT CBT Prices: May soybeans are up 8.00 cents $13.7475, May corn is up .75 a cent at $5.40 while May Chi wheat is up 2.50 cents at $6.0425.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning and welcome to the last day of March – and the NASS Stocks and Seeding Report Day! Low volume and slightly higher CBOT prices are being reflected this morning with May soyoil and May soybeans leading the upside charge. The volume of trade has improved from recent overnight trading sessions.

CBT open interest totals were mixed on Tuesday’s slide. Corn open interest was down 6,454 contacts, while soybeans rose 1,645 contracts and wheat rose 2,477 contracts. The faster moving funds are adding to their net short wheat position. The surprise was soyoil open interest which rose 4,098 contracts on Tuesday’s limit down settlement? The sharp soyoil price decline was expected to be fund liquidation, which is not confirmed by open interest data. The rise argues that end users or importers are adding to their coverage on the decline

To review, the average trade guess is for March 1st corn stocks of 7,767 Mil Bu, with wheat 1,272 Mil Bu, and soybeans at 1,534 Mil Bu. Such corn stocks would be down 185 Mil Bu, wheat down 143 Mil Bu, and soybeans 691 Mil Bu from last year. Combined, March US major grain stocks are down 1,019 Mil Bu!

March US seeding intention estimates are 93.21 Mil acres of corn, 90.0 Mil acres of soybeans and 45.0 Mil acres of wheat. The US combined corn and soybean seeding area is estimated at a record large 183.2 Mil acre, 1.2 Mil acres more than the February USDA Outlook Forum.

ARC Research argues that with US sorghum, cotton and barley seeding also up, it will be difficult to reach 183.5 Mil acres or more of combined US corn and soybean seedings. ARC’s lean is that traders/analysts are overstating US 2021 US soybean seedings.

 In overnight world ag market trade, Paris May wheat futures is up €.75/MT at €210.50 while Malaysian April palmoil futures rose 42 ringgits to settle at 4,061 RM/MT. March Malaysian palmoil exports rose 27% from February to 1.3 MMTs which is keeping end stocks historically tight. China’s Dalian corn and soymeal futures settled lower. May Dalian corn lost 10 cents/Bu to $10.29/Bu while May DCE soymeal fell $1.00/MT to $507.80. Dalian corn values have declined sharply on record large imports and nearly 25 MMTs of feed wheat sales from China’s reserve. It remains highly profitable to import US corn into China and US sales are likely to ship to China on a timely basis.

 Good Luck with today’s NASS Stocks and Seeding Report! WASDE will be out on Apr 9th with updated US/world balance sheets with any extra old crop supply absorbed by enlarged US corn and soybean export exports/crush. 2021/22 balance sheets demand near record large US soybean and corn seedings, any price fall in December corn futures below $4.50 will be purchased by anxious end users. And record large US corn exports loom thru August. A new Northern Hemisphere growing season is ahead with considerable market volatility through July.

South American Weather Pattern Discussion: The US and the EU weather models agree that showers will return to Central Brazil during April 8-10t. The EU/Canadian models have remained ardently dry for Central Brazil for the next 6-7 days before showers start to fall in the last half of next week. The location and the amount of rain from this system will be important following 3-4 weeks of dry weather. An arid weather pattern looks to return in the 11-15 day period.

A flash drought is developing across the winter corn areas of Brazil that must be closely monitored. Sometime in the first 10 days of May, the dry season normally starts across Brazil, and this year’s dry season will likely be ushered in by the ending of La Nina. The need for rain in the last 20 days of April is increasing.

And the Argentine forecast is dry also with limited rain over the next 10 days. Near normal temps are forecast. The dry weather will speed the onset of harvest.

The attached 10-day rainfall forecast is from the European model. The dry trend is an increasing threat to the winter corn areas of Brazil. High temps range from the 80’s to the mid 90’s, 5-8 degrees warmer than normal. The forecast is slightly wetter than what was offered in prior days.

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