Emotional High Volume Overnight CBT Trade Leads To Talk of Exhaustion Top; Lowest Offer to GASC is Romanian Wheat; Stats Canada Seeding Awaited
6:30 AM CT CBT Prices: May soybeans are up 23.75 cents at $15.99, May corn is up 32.50 cents at $7.13 while May Chi wheat is up 24.50 cents at $7.64.
AgResource Morning Grain/Soy Comment & Analysis: Good Morning! A sharply higher overnight session has May corn pushing to an expanded limit gain of 40 cents while May soyoil is bid up the 2.50 cent limit. Wheat and soybeans have followed in active volume as the market has become emotional on liquidation before 1st notice day on Friday. Margin stress and end users that are capitulating looks produce a “trading top” in the next 48 hours.
CBOT preliminary open interest for Monday showed a decline of 27,626 contracts of corn, 16,153 contracts in soybeans, and 8,883 contracts in wheat.
In May futures specifically, there was 128,412 contracts of corn, 77,596 contracts of soybeans, and 19,940 contracts in Chi wheat still open. There was nearly 25,000 contracts of soyoil still open. The large net May open interest in corn/soyoil was a big contributor to the overnight limit gains.
AgResource doubts that the CBT high in the next 48 will be the final top and that a decline will not be sustained until large 2021 Northern Hemisphere crops are confirmed. Yet, any break could be abrupt as the bulls bank profits as US weather appears to be improving with US seeding pushing strongly ahead with adequate rain in the forecast over the next 2 weeks.
The Brazilian weather forecast is arid for the next 2 weeks as hope fades for winter corn yields. Brazilian corn will enter its reproductive phase starting later this week and continue into late May under a dire flash drought. A sub 100 MMMTs 2021 Brazilian total corn crop is forecast due to drought stress.
Stats Canada will be out with their 2021 grain/oilseed seeding intentions this morning. Canadian farmers are suffering with acute dryness and in need of rain. Canola seeding will be the most closely data point followed amid exhausted end stocks.
The cheapest wheat offered to GASC was Romanian at $268.47/MT. Russian and EU wheat offers were higher. It is expected that GASC will secure Eastern European wheat for mid-August at an average price of around $270/MT.
In world ag futures trade, June Malaysian palmoil futures rose 183 ringgits to 4,265 RM/MT amid the sharp rise in competing vegoil prices and strong export demand. September Paris wheat is up €4.25/MT at €251.00/MT. China’s July Dalian corn rose .50 of a cent/Bu to $10.995/Bu while Dalian July meal rose $6.50/MT to $552.95/MT. China’s demand for feed has been rising.
Emotions are high as end users and shorts scream “uncle”. A CBT top just before May’s 1st notice day on short covering is logical. Thereafter, it all comes down to Northern Hemisphere weather during the 2021 growing season.
North American Weather Pattern Discussion: A progressive weather pattern is offered for the US over the next 10 days. The forecast is wetter from both the EU and the GFS models this morning. Several spring storm systems will transverse the Central US over the next 10 days to produce near to above normal rain. The rainfall even makes it into the drier areas of Nebraska and Iowa, but misses most of the Dakotas. There are signs of the jet stream shifting northward so there will be rain chances for the Dakotas during the 11-15 day period. Whether the rains fall in the locations and quantities forecast will be closely followed. For now, improved warm/wetter weather is offered for the Central US.
The attached 10-day rainfall forecast is from the EU model. Mostly dry weather will prevail across the Central US before showers break out Thursday/Friday across the SE Plains with the system trekking NE into the Ohio Valley. Rainfall totals along this path will range from .4-2.00”. Dry and warming weather follows with just a few lite rains across the Eastern Great Lakes. A new system takes a more northerly track late next week. The warm temps will allow for considerable seeding progress with the rain helping to moisten topsoil.