4/5/21

Morning Commentary 4/5/21

CBOT Mixed Overnight With Old/New Crop Spreading Featured; US Weekly Corn Export Inspections Could Set Another Record Week; SAGO Buys Wheat

6:30 AM CT CBT Prices: May soybeans are up 10.25 cents $14.1225, May corn is down .50 of a cent at $5.5925 while May Chi wheat is up 2.0 cents at $6.13.

AgResource Morning Grain/Soy Comment & Analysis: Good Morning! CBOT values are mixed to start the week as much of the world is still on holiday. Europe is celebrating Easter Monday while China is off for its Spring Festival. The result has been a mixed and low volume CBOT overnight trade with any strength occurring in new crop futures based on last week’s bullish NASS US seeding area estimates for corn and soybeans. Old/new crop bear spreading has been featured as a carryforward from Thursday’s trade.

US equity markets pushed higher in early futures trade on Friday’s strong US Jobs report. The report showed that US employers added back the most employees in 7 months with the gains occurring in the hotel/hospitality area. The US dollar is slightly lower while crude oil futures weakened on OPEC’s decision to slightly increase production and on a spike in Covid-19 cases in India. Traders are returning slowly from the Easter holiday, but volume is expected to increase later this week as fund managers position for the new quarter.

Malaysian palmoil futures closed higher with the most active May futures closing 20 ringgits higher at 3,967 on strong export demand. Seasonally, SE Asian palmoil production starts to expand in May and persist into September. China’s and Europe’s commodity trading bourses are closed via holidays with any new direction coming from the US.

USDA reports and weather forecasts will provide the fundamental push for CBOT valuations this week. NASS will release its 1st seasonal report on US winter wheat conditions later today while WASDE will be out with its April Crop Report on Friday. The WASDE report will feature a cut to 2020/21 US corn end stocks through an upward revision in exports, feed/residual use and the US ethanol grind. And USDA’s FGIS should release a near record export total for US corn inspections today of 80-90 Mil Bu. US corn is being exported aggressively to China and others.

Saudi’s SAGO purchased 295,000 MTs of option origin wheat at an average price of $271/MT for May and June. Its difficult to work back the fob sales price based on not knowing the origin of supply.

The Central US weather forecast offers warm temperatures and limited rainfall for the next 2-3 days with any showers occurring along the US/Canadian border. An increase in rain chances develops on Wednesday with a cold front to slide southward across the NC US while a new system forms in the Delta. A wet forecast is offered for the Lake States and the Delta later this week. The wet weather will further delay Delta corn seeding. Temps seasonally cool starting Friday with a near to slightly above normal temp trend noted into mid-April.

Brazil is offering soybeans and Argentina corn well below the US Gulf. This is pressuring nearby CBOT corn/soy futures on the prospect of imports. Its new crop Nov soybeans and Dec corn that hold the upside price potential as fund managers position long in coming weeks - buy any modest new crop correction.

South American Weather Pattern Discussion: The forecast is drier for Brazilian winter corn areas while Argentina returns to a wetter upper air flow with fresh shower chances offered for the last half of the week.

The ongoing South American weather concern is a developing flash drought across Parana, Mato Grosso Du Sol and the Southern Mato Grosso. The week 2 EU model pulls back on rain totals for Mato Grosso which would return soil moisture shortages to this key crop area. ARC’s worry stays elevated for Brazil’s winter corn crop into May.

The attached 10-day rainfall forecast is from the EU model. Rain chances will occur nearly daily this week across Mato Grosso/Goias while other corn areas will be short changed. There are clear indications that upper air tropical moisture will be in retreat beyond mid-April. This would place importance on new storm systems in the last week of April and early May when Brazilian corn will be in the sensitive reproduction phase.

The Argentine weather forecast offers a new chance of rain in the last half of this week with totals of .5-2.00”. The rain will slow the summer row crop harvest but boost soil moisture for winter wheat seeding. High temps will hold in the 80’s to lower 90’s.

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