CBT Mixed Awaiting US Export Sales Report with 1st Notice Day Against May Futures Being Friday; Funds Likely To Post Record Long Corn Position Friday
AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBOT futures started lower following Wednesday’s rally failure, but May futures short covering lifted the CBT to modest gains this morning. This is final day of May trade for traders before they can be delivered upon on Friday. Most trading firms will be pushed to July futures trade based on the delivery possibility.
CBOT preliminary open interest for Wednesday showed a decline of 26,822 contracts of corn, 28,347 contracts in soybeans, and a gain of 999 contracts in wheat. In May futures open interest specifically, there is 27,917 contracts of corn, 19,261 contracts of soybeans, and 8,432 contracts in Chi wheat open.
May futures contracts are virtually liquidated with short covering being the theme for most of the past 5 days of CBT trading. Whether commercials want to buy $7.00 May corn and $15.75-16.00 May soybeans will be closely watched. The weekly CoT report showed that commercials were the big old crop corn/soybean shorts on cash related hedges.
FAS will be releasing its weekly export sales report this morning with limited US old crop sales based on its stout price premiums to other world exporters. Argentine fob corn is $.90/Bu cheaper than the US.
US wheat/corn/soybeans are all expensively priced vs other world exporters as the CBT rally has priced the US out of the world export arena. Once May futures are deliverable and the short covering is largely completed, traders will have to understand the noncompetitive position of US prices.
Midwest farmers tell ARC that they have been able to speed ahead with planting prior to Wednesday’s rain. US corn seeding will likely near 40% through Sunday with spring wheat over 50% and soybean seeding nearing 20%. The coming weather pattern favors emergence and additional seeding progress. Our only concern is the acute dryness that is located over N Dakota as indicated by this week’s US Drought Monitor.
The Brazilian weather forecast is arid for the next 2 weeks as hope fades for winter corn. Brazilian corn has entered its reproductive phase with half of Brazil’s corn area in a flash drought. Mato Grosso corn yield prospects are still near average which accounts for half of Brazil’s winter corn production.
In world ag futures trade, June Malaysian palmoil futures were closed for a national holiday. September Paris wheat is down €3.50/MT at €223.25/MT on improved rainfall for the entire EU. China’s July Dalian corn fell 5.0 cents/ Bu to $10.935/Bu while Dalian July meal fell $7.40/MT to $541.15/MT.
President Biden indicated to the US Congress that the US should start paying farmers to seed cover crops to sequester carbon. The details are not known. but a push continues by the Biden Administration on the crop carbon front.
Extreme CBT choppiness will continue with record long fund positioning adding to price volatility. The Midwest new crop is being quickly seeded & is off to a favorable start. Adverse Central US weather is needed for the next bull run.
North American Weather Pattern Discussion: A progressive weather pattern is offered for the US over the next 10 days. The forecast is like prior runs with enough rain to fall to spark seed germination – outside of the Dakotas.
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/Iowa, but 10-day totals here will be in a range of .5-1.50”. 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, a favorable weather pattern is offered for the Central US.
The attached 10-day rainfall forecast is from the GFS US model. Showers are falling from the E Plains into Ohio this morning. Additional rainfall is estimated in a range of .3-1.50”. Midwest rains increase late Sunday and into Tuesday with a 3rd chance of rain late next week. None of the rain looks exceptionally heavy and seeding progress will continue around the showers. Central US high temps range from the 50’s to the lower 80’s – a few degrees warmer than normal and warm enough for seed emergence.