4/15/21

Morning Commentary 4/15/21

Spot CBOT Corn Above $6.00 for the 1st time since July 2013; NOPA March Crush Due Out at 11 AM CT; Funds Pile into more CBOT Length on Wednesday

 

6:30 AM CT CBT Prices: May soybeans are up 8.50 cents at $14.185, May corn is up 6.00 cents at $6.00 while May Chi wheat is up 5.50 cents at $6.535.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBT grain futures marched higher overnight with spot CBT corn trading at $6.00/Bu for the first time since July of 2013 – 8.5 years ago! Corn’s rise above $6.00 sets an immediate upside price target of $6.25 with adverse Brazilian/Central US weather and tightening US old crop stocks offering the bullish inertia.

Weekly CBOT Corn Chart- 8.5 Year High for Corn- Next Stop $6.25 May!

Wheat/soybean values have followed corn, but neither have been able to exceed their March highs. Yet, both corn/wheat have traded in an extended sideways price range – which is not a sign of a top - but a continuation pattern. Corn has been the bullish CBT stalwart since the March Stocks/Seeding Report, but at some point, old crop soybeans/soyoil will play catch-up.

Wednesday’s CBT preliminary open interest data showed corn up 19,282 and soybeans up 11,198 contracts, while wheat down 1,852 contracts. There was a big gain in soyoil open interest of 8,797 contracts for the 2nd day in a row. Managed money is adding grain and soy length on Wednesday’s CBT rally.

US equity futures are higher and back either testing or scoring new all-time highs as earnings for both European and US banks come in stronger than expected. The US dollar is weaker – except against the Russian ruble.  The Biden Administration is likely to announce new sanctions against Russia for their misconduct in recent US elections and the hack against SolarWinds. The US looks to bar US financial institutions from buying Russian Gov’t debt which sent the ruble 1.5% lower to 77:1 USD. Yet, at the same time there was talk of a Biden/Putin Summit as Russia amasses troops along the Western Ukraine border. Any Russian annexation of W Ukraine would be seen as bullish to the grains on the political uncertainty of Russian wheat/oilseed exports.

Today is a day for US demand data. FAS will release their weekly export sales report at 7:30 AM CT with any net old crop US soybean or corn sales viewed as bullish. And NOPA will be out with their March crush estimate at 11 AM CT. It is expected that NOPA will report a record March crush of 182-184 Mil Bu – a record for March (181.3 Mil Bu set the record for March last year).

Malaysian palmoil futures rallied with gains of 71 ringgits in May futures to 4,103 as palm followed the soaring price of canola, rapeseed and sunoil.

May Paris wheat is trading up €1.50 at €222.25/MT on drier than desired weather for Northern and Western Europe with well below normal temperatures.

May Paris Wheat Continuation Chart with Upside Price Target at 230 Euros:

China’s July Dalian corn rose 13 cents/Bu to $10.63/Bu while July soymeal fell $8.10/MT to $503.60/MT. Feed use meal support is forecast below $495/MT.

It is too dry in Central Brazil and too cold across the Midwest with US end users pushing basis bids to prod farmers to sell old crop grain. There is no room for 2021 US yield error with the expanding N Plains dryness worrisome to US/Canadian crop production this summer. Managed money wants to bet on an inflation theme and feel compelled to be long the CBT just in case a summer Central US drought develops. CBT breaks are buying opportunities!

South American Weather Pattern Discussion: The 3 primary weather models agree that a below normal rainfall trend will hold across Central Brazilian winter corn areas. There are clear indications that the tropical rains are seasonally retreating north that will usher in the dry season in early May. Any rain that falls in the next 2-3 weeks will be extremely important to sustaining winter corn into the reproductive period that runs from late April into June. 

The attached 10-day rainfall forecast is from the EU model. There will be a few showers on Sunday/Monday across Mato Grosso, but any widespread activity holds off until Wednesday-Friday of next week. Each run keeps pushing back the prospect of rain, which is a concern. Next week’s late week system looks to produce .25-1.25” of rain which is some 30-70% of normal. A deepening Central Brazilian flash drought is developing. High temps hold in the 80’s/90’s – accelerating the draw down in soil moisture. The time for rain is immediate or crops will struggle into May.

Some Rain for Brazilian Corn - Just not Enough With Seasonal Totals in Fast Retreat:

80's to lower 90's for Winter Brazilian Corn Fan Crop Stress: 

Central US Weather Discussion: A cold/dry weather pattern holds across the N Plains and the Midwest for another 10-12 days. Overnight low temps will fall into the 30’s repeatedly with hints in the 12-15 day period of moderation. Corn establishment will be retarded by the outright 10-12 day chill.

Limited Rainfall for the N Plains or Canadian Prairies Next 10 Days; Midwest Dryness Widespread: 

Bold Cold for Central US for the next 11-12 Days; Warming Trend for early May?

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