Corn: Up 1 to 3 cents
Soybeans: Up 4 to 7 cents
Wheat: Up 2 to 4 cents
GENERAL COMMENTS: The grain and soybeans markets were firm overnight, heading for higher weekly closes with a cold U.S. weather lingering into the end of April, slowing the start for a crucial growing season to rebuild tightening carryover supplies amid good global demand. U.S. futures also were supported by stronger corn and soybean futures on China’s Dalian Commodity Exchange overnight. Corn futures are heading for a third consecutive weekly gain. Soybeans are poised for their biggest weekly advance in over a month, while wheat was up for a second week in a row.
Prices also finding support from the best weekly advance in oil prices since early March and a weakening trend in the U.S. dollar. U.S. stock index futures rose overnight, and global stocks hit all-time highs on Friday as record growth figures from China added fuel to bets on the economic recovery. Along with healthy corporate earnings, China’s first-quarter gross domestic product numbers are giving fresh impetus to the reflation trade. In the U.S., Thursday’s retail sales and weekly jobless claims data signaled an accelerating recovery in the world’s biggest economy.
Rising commodity costs are fueling a surge in China’s producer prices. That’s fueling concerns that the level of inflation consumers feel could also be moving higher soon, and not just domestically. Because China is such a huge exporter, higher prices charged by Chinese businesses could trickle down to consumers around the world. The evidence of increasing global inflation has helped to attract fresh money flows from investors looking to bet on the reflation trade.
However, high prices are prompting farmers to sell ahead of the planting season and may be curbing demand. Chinas wheat feeding to pigs and poultry has dented demand for alternate feeds and clouded the market outlook for soybean meal and other key ingredients used by the countrys massive feed sector, analysts and traders said. Chinese feed producers have sharply raised wheat purchases in the past several months to replace corn, which has rallied by more than a third in the past year to a rare premium over wheat following a drop in corn output and state stockpiles last season.
The U.S. soybean crush rebounded in March from a 17-month low the previous month, but the processing pace fell short of most trade estimates, according to data released yesterday by the National Oilseed Processors Association. The slower crush has helped to put a floor under meal prices this week as record crushing to meet soybean oil demand in biofuels has led to ample meal supplies.
Before the reopening USDA did not announce any daily private exporter sales.
Widespread rain and snow fell across much of the HRW wheat producing region overnight, with moisture expected to continue today. The snow is not expected to harm crops, rather, the event will boost soil moisture across the region, except for the Texas Panhandle and the western Oklahoma Panhandle, reports World Weather Inc. A follow-up system is expected the latter half of next week, ensuring abundant moisture for crop development. Meanwhile, the weather watcher continues to monitor the chance for a storm system on the Northern Plains April 26-28; that area is in desperate need of moisture. Cool, dry weather for the Midwest is likely to restrict early crop development. But the possibility of temperatures down into the 20s Fahrenheit next week for the nation’s midsection should be monitored.
In Brazil, erratic shower and thunderstorm activity is expected through April 24 leading to some areas receiving meaningful rainfall with an increase in soil moisture and some pockets missing out from getting much. The model kept “some” rain in Brazil through the end of April; though, it showed less rain in northern areas and greater rainfall near Paraguay April 28 -30. A general decline in rain near the end of the month will be possible due to withdrawing summer monsoonal moisture. In Argentina, conditions will still be mostly good; though, rain Monday into Thursday of next week will cause some temporary fieldwork disruption.
CORN: July futures were mixed overnight failing to make a run at yesterday’s contract high at $5.86 1/2. December futures touched a new high Thursday at $5.17, a key monthly and quarterly resistance level. A weekly close above this level would target resistance at $5.32 and $5.45.
SOYBEANS: Soybeans and soybean meal need robust late-week strength to suggest some form of bear pauses are not forming. July soybean futures are trading just below last week’s high at $14.23 1/2 this morning and a close above that levels would be a positive technical signal. Members of the National Oilseed Processors Association (NOPA) crushed 177.984 million bu. of soybeans during March, which was a bit lighter than the 179.179 million bu. analysts polled by Reuters anticipated. The March crush was the second highest figure on record for the month, following last year’s record-high crush of 181.374 million bushels. Malaysian palm oil futures surged 3.3%, paring its weekly drop to 1.7% Meanwhile China’s Dalian soyoil gained 1.7% white its palm oil futures rallied 3.2%.
WHEAT: Rebounds in winter wheat appear corrective but the trend is higher and high-range weekly closes today would be positive amid the beneficial rains across the Plains today.
CATTLE: Steady to weak
CATTLE: It will be important to see cattle futures rebound today to avert larger price slides and suggest a trading cycle low was set this week. Cash cattle trade got underway yesterday at mostly steady prices. Trade ranged from $123 to $124 in the Iowa and Nebraska markets, with Colorado, Kansas and Texas reporting trade in the $120 to $121 vicinity. After setting back earlier in the week, Choice climbed another $3.71 on Thursday, with the grade now up more than $6 for the week. Select rose $1.12 yesterday, for a weekly gain of $4.60. Movement tapered to 103 loads.
HOGS: Disappointing pork exports triggered heavy selling and steep losses in hog futures on Thursday. After closing limit down in several contracts, the daily trading limits will expand to $4.50 today. The market has posted a very impressive rally, but recent price action signals a top may be forming. A disappointing showing in the weekly export sales report yesterday added to such ideas, with USDA reporting pork sales of just 17,200 MT the week ending April 8, a new calendar-year low. However, the domestic market was more encouraging, with the pork cutout value shooting $3.28 higher and movement coming in at a moderately 339 loads. Cash hog bids also climbed an average of $1.43 on Thursday. China’s first quarter pork production shot 31.9% higher vs. year-ago to 13.69 MMT, marking the highest quarterly volume in two years, according to its National Bureau of Statistics. China has been working to rebuild its hog herd that was nearly halved by African swine fever in 2018 and 2019, with a resurgence of the virus hindering rebuilding efforts over the winter. However, cash hogs are sharply higher this week in China.
Corn: Up 2 to 5 cents
Soybeans: Up 2 to 5 cents
Wheat: Up 1 to 3 cents
GENERAL COMMENTS: Corn continues to lead higher with May futures topping $6 for the first time since July 2013 for the lead contract and December extending gains above $5.00 resistance overnight. End users are reaching for tightening supplies which is spurring nearby and summer basis gains for both corn and soybeans. This is seen as demand rationing rally in old-crop corn and soybean to assure adequate stocks and stimulate imports of soybeans or products. U.S. futures also were supported by stronger corn and soybean futures on China’s Dalian Commodity Exchange overnight.
U.S. 2021 production has yet to get off to a strong start with cold temperatures likely to slow emergence for at least another week. But a pattern changed is offered in the forecasts after April. 23 with warmer temperatures and an increase in shower activity and that may slow new buying. Brazilian rains fell in far north and northern showers will increase somewhat into next week, though second-crop corn dryness concerns will continue to grow across the key central and southern areas. Forecasters are still talking about a dry Brazilian outlook for May as patterns already point to the monsoon withdrawing this month. A crop shortfall in Brazil could reroute demand back to the U.S.
Wheat futures have advanced on talk of reduced offers by Russian exporters. APK reports that large exporters of Russian wheat including Dreyfus, KZP, Bunge and Sierentz Merchants have left the cash market citing the uncertainty of the Russian export taxes and their risk. Moreover, Cargill and Gemcorp have also suspended cash purchases. Most are waiting for the €50 euro duty to end on June 2 to sell stored purchases. Prices are also supported by concerns about dry soils limiting U.S. and European production prospects and cold weather in the U.S. wheat belt overnight with a second cold blast forecast next week. But today’s focus is on the rain and snow across the Great Plains the next two days. Forecasters are predicting a dry spell in coming weeks on the European continent. However, timely rains are forecast for Ukraine and showers are expected in Russia the next week.
Before the reopening USDA did not announce any daily private exporter sales.
USDA reported disappointing corn, wheat and soymeal sales for the week ended April 15 with soybean sales in line with trade estimates. Wheat sales last week showed a net reduction of 56,600 MT for old-crop delivery while new-crop sales were 274,400 MT, below the low end of trade estimates and included 130,000 MT of net reductions to China. Net corn sales last week fell to 327,700 MT, down 81% from the prior four-week average and well below trade estimates for 500,000 to 900,000 MT. New-crop corn sales were just 52,600 MT. However, sales of sorghum jumped to 656,700 MT, a new marketing-year high and 601,700 MT reported sold to China on “late reporting.” Old-crop soybean sales last week were a net 90,400 MT, compared with trade estimates ranging from a drop of 100,000 MT to a gain of 200,00 MT. New-crop soybean sales were 265,500 MT with China buying 264,000 MT last week. Soymeal sales fell to a marketing-year low of 71,500 MT.
CORN: May futures extended yesterday’s rally overnight, touching $6.01 ½, the highest for the nearby futures since July 2013. December futures touched a new high at $5.17, a key monthly and quarterly resistance level. A weekly close above this level would target resistance at $5.32 and $5.45. U.S. gasoline consumption is only down 5% from 2019 and as more the economy reopens, it will reach or exceed pre-pandemic levels by summer.
SOYBEANS: Soybeans and soybean meal need robust late-week strength to suggest some form of bear pauses are not forming. May soybean futures closed above resistance at $14.08 yesterday and extended gains overnight. Strong resistance remains the March contract high at $14.60. Members of the National Oilseed Processors Association (NOPA) will likely report they crushed 179.179 million bu. of soybeans during March, according to analysts polled by Reuters. That would be up notably from February when cold weather slowed processing to a 17-month low of 155.158 million bu. but down from last year’s March record of 181.374 million bushels. Malaysian palm oil futures finished up 2.1%, supported by stronger exports and tightening supplies. Meanwhile China’s Dalian soyoil gained 0.6% white its palm oil futures rallied 2%.
WHEAT: Rebounds in winter wheat appear corrective but the trend is higher. Spring wheat may be completing five-wave advances. Late-week weakness would suggest the rally may have run its course. But high weekly closes would demand respect. It all depends on rainfall the next 48 hours across the Plains and the extent of cold temperatures early next week. Volatility is likely to rise.
CATTLE: Steady to weak
CATTLE: A case can be made for corrective breaks may be nearing completion, but it all depends on a firming tone into the weekly close on Friday or firming prices to start next week. Everything has been pretty quiet on the cash market front, with the exception of some light trade in the dressed market at steady prices. Lighter slaughter tallies this week paired with futures’ lack of premium to the cash market signals traders expect a steady cash trade this week. Choice boxed beef pushed $2.80 higher at midweek and Select rose 77 cents, with movement only moderate. USDA reported beef sales in the week ended April 15 slowed to 15,700 MT, down 23% from the prior four-week average. China did buy 3,300 MT last week and beef shipments last week rose 3% above the prior four-week average.
HOGS: Summer hog futures have marked turns around or shortly after mid-April in seven straight years. Some of those turns were modest, but other were more important. With contracts sporting key reversal down on Monday, the rally is beginning to look tired. U.S. pork export sales last week tumbled 60% from the prior four-week average, USDA reported this morning. Just 17,200 MT of pork were sold last week, a new marketing-year low with no new sales reported to China. The export data will put initial pressure on the market. Daily slaughter tallies have been relatively light this week, but cash hog bids have continued to climb, a possible indication that packers are encountering tightening supplies in the aftermath of last spring’s processing debacle. Cash hog bids did slip 20 cents on Wednesday, after a stretch of higher prices. Meanwhile, the pork cutout value fell $2.40 yesterday, erasing the midday gains. Sales slowed yesterday.
Corn: Up 5 to 8 cents
Soybeans: Up 7 to 10 cents
Wheat: Up 6 to 9 cents
GENERAL COMMENTS: Corn continues to lead higher with December futures hitting new contract highs overnight. The rally has pushed the November soybean/December corn ration down to 2.49 this morning, the lowest in four months and down from 2.67 on March 31 when USDA’s planting intentions report showed both corn and soybean plantings about 2 million acres below pre-report trade ideas. That’s not going to get more soybeans planted and should provide underlying support to soybean and soy product futures into May. U.S. farmers will be able to quickly seed the 2021 crop, but cool, dry weather will slow germination. New-crop balance sheets require record US corn and soy yields for prices to sustain a decline–which cannot be confirmed until August.
Chicago wheat futures gained for a second straight session on Wednesday, with prices underpinned by concerns about dry soils limiting U.S. and European production prospects and cold weather in the U.S. wheat belt overnight. Forecasters are predicting a dry spell in coming weeks on the European continent. The water deficit is already in place in U.S. and Canadian spring wheat growing regions.
Before the reopening USDA did not announce any daily private exporter sales. There has been some chatter about new Chinese buying or shopping for U.S. grains the past week but only some new-crop soybeans were reported Monday by USDA.
U.S. futures also were supported by stronger corn and soybean futures on China’s Dalian Commodity Exchange overnight. Chinas imports of soybeans, as well as grains like corn and wheat, soared in the first quarter, boosted by strong demand from the livestock sector, data from customs showed on Tuesday. Soybean imports almost doubled in March alone year-on-year, according to customs data, as cargoes of beans from top exporter Brazil cleared customs after delays. Meanwhile, first-quarter corn and wheat shipments jumped on elevated domestic corn prices amid a supply shortage, the data showed. Commercial grain sources signal China will significantly accelerate shipments of U.S. corn purchases during the May-August timeframe. If so, World Board’s assumption that around 6 MMT in U.S. corn sales to China will be rolled forward/canceled, limiting China’s corn imports to 24 MMT will again prove wrong.
Weather leans a slightly price negative this morning. An important precipitation event is still expected across much of the southern Great Plains Thursday into Friday which will help increase topsoil moisture with a possible exception in part of the Texas Panhandle. The precipitation will lead to improved conditions for crop development. In Brazil, some erratic shower and thunderstorm activity through Monday should provide some relief from recent dryness. Some increase of soil moisture will occur, especially locally, and more rain will be needed. Mato Grosso and western Rio Grande do Sul will likely receive the greatest rain into early next week. Additional erratic showers may continue into late April but much of Brazil’s production region dry in this timeframe, increasing stress for the late-planted safrinha corn crop.
CORN: May futures extended yesterday’s rally overnight, climbing within a nickel of last week’s contract high at $5.95. December futures touched a new high at $5.10 1/2 overnight after yesterday closing above $5.00 for the first time. Brazilian production of ethanol from corn rose 58% in the newly passed year as dozens of recently built plants in the countrys grain heartland ramped up production, and analysts see an annual increase of around 25% in the new season. Crude oil prices rallied overnight on revised oil demand forecasts on Wednesday despite concerns over rising coronavirus cases and vaccine rollouts. The IEA forecast a significant rise in global oil demand in the second half of the year. This, in turn, will increase demand for ethanol fuels for blending. Corn traders will closely watch the weekly EIA ethanol production and inventory report later this morning amid forecasts for stronger output and slightly smaller inventories.
SOYBEANS: May futures are back testing initial resistance near $14.00 with much strong resistance at $14.00. November futures are well contained inside of yesterday’s range and well below the March 31 contract high at $12.85. Malaysian palm oil futures finished little changed, paring an earlier 1.6% gains as rising production offset stronger exports. Meanwhile China’s Dalian soyoil gained 1.6% white its palm oil futures rallied 1.7%. Ukraines government is considering imposing curbs on sunflower seed exports in the 2020-21 September-August season but sees no need for a ban on sunflower oil sales, deputy economy minister Taras Vysotskiy said on Wednesday. However, a draft government resolution seen by Reuters shows that the government is considering establishing a license requirement for sunoil exports and could impose quotas. Neighboring Russia has already imposed an export duty for sunflower seeds at 30%, but not less than 165 euros MT, between Jan. 9 and June 30.
WHEAT: Wheat leadership has moved from the SRW market to HRW and spring wheat. May HRW futures touched $5.94 ¼ overnight, the highest since March 18. This morning, Paris wheat futures extended yesterday’s rally above the 100-day moving average, touching the highest since March 24 on worries about drier forecasts. Higher duties have dramatically slowed Russian wheat exports Refinitiv trade flow data shows Russian exports of wheat slowed dramatically after the country hiked its tax on exports to 50 euros per metric ton on March 1, with just 1 MMT of wheat shipping during March, a 72% dive from February and a 66% drop from year-ago. Exports have remained weak into April, with just 330,000 MT shipped through April 12 and another 330,000 MT scheduled for shipments. If the current slow pace of exports persists, Refinitiv warns the country’s total wheat exports could come in around 35 MMT, well below USDAs 39.5 MMT projection.
CATTLE: Steady to weak
HOGS: Mixed to firm
CATTLE: Fund long liquidation continued in the cattle market Tuesday, with feeders pressured by the renewed rally in corn futures. Nearby live cattle contracts are now trading in line with last week’s cash action, with most expecting steady to higher trade this week. So far, all is quiet on the cash market front. Choice boxed beef values have slipped this week, but Select has continued to climb, trimming its discount to the premium grade to less than $4. Movement has remained solid despite the lofty price levels. It increasingly likely that live cattle are indeed sliding into a weekly cycle low by early May and a setback would be healthy for a long-term bull move.
HOGS: Lean hog futures opened lower after forming key reversal down on Monday and then closed mixed to slightly higher Tuesday. But that was a bit disappointing considering an impressive surge in the pork cutout value mid-morning. For the day, the pork cutout shot $2.39 higher and 375.27 loads changed hands. Meanwhile, the CME lean hog index continues to climb and is projected another 48 cents higher tomorrow to $102.37. April lean hogs settled at roughly a $1 premium to the index yesterday. Tuesday’s kill slowed 6,000 head from week-ago to 476,000 head. Cash hog bids climbed an average of $1.01 yesterday. From April 6 to April 9 the average pork price index tracked by China’s ag ministry dropped 13.1% to 27.05 yuan ($4.10) per kilogram. The index is down 37.8% from year-ago levels. Given renewed reports of ASF and global inflation concerns, Chinese pork prices are again garnering more attention.
Corn: Up 2 to 4 cents
Soybeans: Up 4 to 7 cents
Wheat: Steady to up 4 cents
GENERAL COMMENTS: Corn and soybeans opened lower overnight and firmed through the session before ending slightly higher at the break this morning on worries cold temperatures may slow early planting progress across the Midwest. U.S. temperatures have turned cold at the exact wrong time, but few problems are seen going forward with mostly dry Midwest conditions remaining. Key producing states in the Midwest and up to the border with Canada are categorized as abnormally dry or in moderate drought and may limit the capacity for U.S. farmers to plant. Both markets probably need to hold on to stronger prices heading into the spring to secure every acre possible. Old-crop values also working on their own jobs to slow demand amid tightening supplies.
U.S. stock futures turned lower, and Treasuries erased losses after a report that the U.S. will seek to pause Johnson & Johnson vaccines amid health concerns, potentially dealing a blow to efforts to reopen the world’s largest economy. Federal health agencies on Tuesday called for an immediate pause in use of Johnson & Johnson’s single-dose coronavirus vaccine to investigate safety issues over rare blood clots. Until this morning, fund managers across the world now see inflation, a slowdown in Fed bond buying and higher taxes as bigger risks than Covid-19, according to the latest Bank of America Corp. survey
Before the reopening USDA did not announce any daily private exporter sales. On Monday, USDA reported daily sales of 132,000 MT to China for new-crop delivery and 110,000 MT sold to Bangladesh, evenly divided between old- and new-crop delivery.
China’s trade jumped in March, a sign that the global recovery from the Covid-19 pandemic was well on track as vaccine rollouts around the world pick up pace. Exports climbed 30.6% in dollar terms in March from a year earlier, customs data showed Tuesday, albeit lower than the 38% median forecast in a Bloomberg survey of economists. Imports jumped 38.1%, beating expectations and leaving a trade surplus of $13.8 billion for the month. The World Trade Organization last month raised its forecast for global trade growth to 8% this year, which would be the fastest pace since 2010.
China imported 7.77 MMT of soybeans during March, an 82% surge from year-ago, according to Chinese customs data. The surge was in part driven by the clearance of Brazilian shipments after delays. For the first three months of the year, China has imported 21.18 MMT of the oilseed, a 3.39-MMT (19%) jump from the first quarter of 2020. Customs data shows China also imported 6.727 MMT of corn during the first quarter, a more than fivefold increase from the previous year, and quarterly wheat imports more than doubled last year’s tally at 2.925 MMT. A monthly breakdown for these grains won’t come until later this month.
China’s yuan is unlikely to escape its recent weakening trend, even with help from U.S. Treasury Secretary Janet Yellen. While Yellen’s decision not to name China as a currency manipulator removes a flash point, the tension between the two countries have moved to strategic issues such as technology leadership. The yuan is also weighed down by other factors including slowing capital flows and a narrowing yield spread with the dollar. China hasn’t used its exchange rate as a tool to address external influences such as trade disputes, Zhao Lijian, a spokesperson with the Ministry of Foreign Affairs said at a briefing on Tuesday. The move doesn’t suggest any improvement in China-U.S. bilateral relationship and/or a lowering of bilateral tariffs. It likely reinforces the new strategy of the new U.S. administration to work with U.S. allies to contain China in joint efforts instead of dealing with China matters bilaterally.
CORN: May futures pushed down to support at the limit-up close on March 31 at $5.64 1/4 and rebounded last night. A close above $5.72 today would suggest the two-day retreat was corrective. But until the contract closes above last week’s contract high at $5.95, the market may continue its nearly four-month sideways trading range. As of Sunday, 4% of the U.S. corn crop had been planted, an advance of just 2 percentage points versus the 4-point gain analysts surveyed by Reuters anticipated. The five-year average is for 3% of the crop to be seeded at this point in the season. Planting got started in the Midwest over the past week but will move forward now that insurance planting dates have passed.
SOYBEANS: Futures opened mixed and pushed below yesterday’s low before recovering into the break. The May futures will need to rebound back above resistance at $14.08 to signal potential rally to stronger resistance at the contract high From March 8 at $14.60. Malaysian palm oil futures rose 2% on Tuesday, snapping a three-session decline. Meanwhile China’s Dalian soyoil gained 0.4% white its palm oil futures declined 0.3%. Malaysian Palm oil inventories at the end of March jumped more than expected to a four-month high as rising production offset better exports. On Friday, Brazil announced it would lower the amount of vegetable oil blended into petroleum diesel from 13% (B13) to 10% (B10) due to the high cost of biodiesel, and specifically soybeans and soyoil. Biofuel groups criticized the intervention. The industry has already invested in upping the blend percentage to 15% by 2023, since that had been the government’s goal. If that results in a slower crush in Brazil, that will also cut production of soybean meal at a time when global supplies are beginning to tighten.
WHEAT: Wheat futures also bouncing back from Monday’s losses this morning. USDA once again rated 53% of the winter wheat crop “good” to “excellent” (G/E), which was in line with expectations. But it should be noted that a percentage point shifted from the “good” to the “excellent” category. But it’s also worth noting the amount of crop USDA rates “poor” to “very poor” edged a point higher to 17%. Last year at this point, 62% of the crop was rated G/E, with 10% falling in the lowest two categories. Spring wheat planting advanced eight percentage points the week ended April 11 to 11% complete; analysts polled by Reuters expected just a 5-point advance. The five-year average puts planting progress at 6% complete for this point in the season.
CATTLE: Steady to weak
China imported a record amount of meat in March on supply concerns as hog herds in the world’s biggest pork consumer struggled to recover from African swine fever. Total imports, including offal, topped 1 million tons, up 44% from February, after new strains of the deadly virus hurt hog numbers, particularly in the north. Shipments have been high for months, with ports unloading a record 10 million tons in 2020, 60% more than a year earlier, to augment local supplies.
CATTLE: Cattle futures retreated from new highs last week and turned lower, extending weakness Monday. Cash cattle traded at an average price of $122.01 last week, up roughly $4 from the week prior. Traders are optimistic more gains could be had this week given historically elevated boxed beef values. Choice did set back 76 cents on Monday, but Select rose $2.09, narrowing its discount to $5.25. Movement was moderately active considering elevated prices. Packer profit margins climbed to within $1.40 of the $600 a head mark. Feeder steers traded for steady to $1 higher prices at an Oklahoma City feeder cattle auction Monday.
HOGS: Lean hog futures pushed to new contract highs early on Monday, then turned lower, forming an important key reversal lower. That is a warning sign that the rally has reached its upside objective. But without follow-through weakness into Friday, the market remains in an uptrend. The market had stretched well into overbought territory and funds already were taking profit last week as prices rose to new high and shorts were covering. The pork cutout value tumbled $3.07 to start the week, with bellies dropping $19.22 and butts sliding $7.31. Movement was light at 289.15 loads. But cash hog bids edged 33 cents higher.
Corn: Steady to up 2 cents
Soybeans: Down 6 to 8 cents
Wheat: Down 4 to 9 cents
GENERAL COMMENTS: Corn jump higher overnight the bullish USDA Report on Friday but has pared gains while the rest of the complex sunk into the red this morning. Cold and windy conditions will slow super-early planting this week, but conditions and forecasts look favorable for a timely 2021 planting campaign. Strong demand, tightening stocks, and acreage needs should keep corn and soy supported until those crops move through key development later summer.
Corn rose near Friday’s session high overnight but failed to clear that resistance, with prices paring gains into the break this morning. Wheat fell on forecasts of a large crop in Russia. Consultancy Sovecon on Friday raised its forecast of Russias 2021 wheat crop by 1.4 MMT to 80.7 MMT and IKAR on Monday raised its forecast to 81 MMT. Prospects for large South American crops weakened soybeans. The USDA raised its forecast of Brazil’s soybean harvest to 136.0 MMT on Friday, up 2.0 MMT from its March forecast. USDA forecast Brazil’s marketing-year soy exports at 86.65 MMT, up 1.55 MMT in from last month. For Argentina’s soybean crop, the USDA retained its March forecast of 47.50 MMT, at the high end of analyst forecasts of 44.50-47.50 MMT.
Before the reopening, USDA announced private exporters sold 132,000 MT of U.S. soybeans to China for new-crop delivery. USDA also reported 110,000 MT of soybeans sold to Bangladesh, equally divided between new-crop and old-crop delivery. The new sales should lend light support to the soybeans this morning.
Much of the rainfall reported across Iowa and neighboring areas of both southeastern Minnesota and southwestern Wisconsin during the past two weeks was not nearly as great as it was in the upper Midwest and from Missouri to western Illinois. The milder weather is expected to prevail through the next ten days, but the lighter than usual precipitation will prevail as well and that raises some concern for soil moisture in these areas when warmer temperatures arrive late this month and in May. For now, though, conditions are still mostly very good and weighs on buying interest in corn and soybeans.
The trade is concerned over spring wheat seeding amid dryness across the U.S. Northern Plains and Canadian Prairies. Portions of North Dakota, Saskatchewan and Manitoba will get welcome moisture this week easing long term dryness, although more moisture will be needed. U.S. hard red winter wheat areas will receive significant rain Wednesday into Friday of this week, although the far southwest may not get a large amount of moisture. The precipitation will bring some needed relief after recent net drying, reinforcing good yield potentials. Additional timely rain must continue through the spring.
Dryness is also expected in the southeastern United States where the ground is already becoming marginally short of topsoil moisture. The fear is that dryness in the southeastern states will fester and slowly creep into the lower eastern Midwest during the next few weeks as storm systems are more significant to the west and north, according to World Weather.
Argentina is still viewed as being mostly good, although there may be a little more rain falling a little more often than desired in the far north this week. Net drying in central Argentina this week will be very important for firming the soil after recent excessive rain. Fieldwork will be slow resuming in the wettest areas. Returning wet weather April 18-23 in the heart of summer crop production areas may slow down harvest progress.
Brazil was mostly dry during the weekend with temperatures warm in much of the nation, but not excessively warm. Some showers will occur briefly Friday into Saturday but resulting rainfall will not change dry topsoil moisture in a significant manner. World Weather, Inc. believes additional showers and thunderstorms will occur in Brazil into the last days of this month, but the intensity and coverage of rain will not be much better than that noted for next week leaving a need for greater rain as May approaches. Safrinha corn conditions will be most stressed through Friday and then some relief is expected thereafter into late month, but the improvement will still be erratic.
Funds reduced their net long in corn futures and options by nearly 9,000 contracts to 386,619 contracts as of April 6, CFTC data on Friday showed. That was a surprise relative to the 30,000 to 50,000 contracts increase traders expected after the USDA reported March 31 that farmers planned fewer acres than traders were expected. But funds are not selling with gross shorts the fewest since October 2012. Funds’ corn net long last topped 400,000 in January 2011, and the record is 429,189 futures and options contracts in September 2010. Money managers lifted their net long in CBOT soybean futures and options to 154,305 contracts during the week from 141,880 a week earlier, lighter buying than expected considering the USDA planting intentions data showed about 2.4 million fewer acres planned for 2021. Through April 6, money managers sold soybean oil for a sixth consecutive week, reducing their net long to 77,037 futures and options contracts from 80,840 in the previous week. They increased their net long in soybean meal by just over 3,000 contracts to 61,345 contracts. In the week ended April 6, money managers cut their CBOT wheat net short nearly in half to 7,583 futures and options contracts. However, they reduced their net long in Kansas City wheat by more than 7,000 futures and options contracts to 14,510, their least optimistic since September.
In another sign of rising and possibly problematic price inflation from the world’s major economies, reports say China is considering implementing price controls due to rising commodity prices. Reports also say China’s central bank wants to tighten lending standards. Global equities are not getting the week off to a great start, with gauges giving up some ground. Overnight the MSCI Asia Pacific Index slipped 0.7% while Japans Topix index closed 0.3% lower. In Europe, the Stoxx 600 Index is also trading lower this morning with U.S. stock index futures pointing to a lower Wall Street opening. The key outside markets today show the U.S. dollar index slightly lower and oil price slightly higher. With Fed Chairman Jerome Powell sticking to the script on maintaining accommodation even as the U.S. economy improves, support for the bond market seems likely to remain strong for now. There is a test of that today with the sale of $58 billion of three-year notes and $38 billion of 10-year bonds. Tomorrow, after the much-anticipated consumer price inflation, there is a sale of 30-year debt.
CORN: Futures left behind buying exhaustions on Friday after surging to new high and closing lower in May futures and paring gains in December. It will take fresh closes above last Friday’s high to renew uptrends or prices could be trying to form an interim top.
SOYBEANS: Futures moved sideways last week but have moved lower overnight touching the lowest since March 31 overnight. The momentum is turning lower as Brazil ramps up exports as U.S. shipments slow seasonally. Malaysian palm oil futures plunged 3.3 % overnight, falling for a third straight session and the most sin nine session on higher-than-expected March inventories and slowing demand from India. Meanwhile China’s Dalian soyoil dropped 1.9% and its palm oil futures declined 3.1%.
WHEAT: Markets finished the week with strong gains as bulls have quickly regained momentum shaking off a near $1 slide from contract highs. The wheat complex posted their first week of gains since mid-February as values held last week’s lows spurring buying support with Minneapolis leading the way. Spring wheat posted a strong week putting in a massive bullish engulfing pattern erasing the past four weeks of losses amid the lingering drought in the Northern Plains and Canadian Prairies. There was large buying in options from some large commercials. Meanwhile, China raises the price floor for wheat auctions. The new price floor for an absolute majority of wheat put up for weekly sale from China’s state reserves was raised to 2,350 yuan ($359) per metric ton, a 60 yuan increase from where it was set in 2019, according to a notice from the National Grain Trade Center. Demand for wheat at these auctions has faded since the start of the year, with wheat trading at an average price of 2,363 yuan last week and 2,354 yuan the week prior. Russian wheat export prices rose last week, with higher U.S. prices helping to halt a five-week decline, the IKAR agriculture consultancy said on Monday. The weather has been favorable for the upcoming crop in Russia and Ukraine in recent weeks, with additional healthy rains expected to come to Russias south this week, Sovecon said. Both Sovecon and IKAR raised their estimates for Russias 2021 wheat crop in recent days.
CATTLE: Steady to weak
HOGS: Steady to mixed
CATTLE: Cattle futures tumbled Friday as funds cut long positions after prices rose near key overhead resistance, ignoring strong fundamentals. Boxed beef values rose another $1.67 for Choice and 24 cents for Select on Friday, pushing their weekly gains to $19.32 and $17.10, respectively. Anticipation of rebounding restaurant demand and a strong summer grilling season have shot beef prices dramatically higher. The price surge has shot packer profit margins all the way up to $595.10 a head as of Friday, according to HedgersEdge.com. That has given packers plenty of incentive to keep slaughter expanding. Last week’s kill was up 5.3% from year-ago, with beef production up 5.2%. Of note, average steer weights dipped 2 lbs., but they are still 18 lbs. above year-ago. Cows make up more of the slaughter mix than they did a year ago on trimming and hamburger demand.
HOGS: Futures continued to notch fresh contract high, further extending an overbought condition. The market could continue to run but some seasonal studies are suggesting a high may be arriving earlier this year. The pork cutout value jumped $2.17 on Friday and movement strengthened to 329.66 loads. Loins led the charge. The cutout climbed $3.88 over the past week. Cash hog bids continue to climb with bids rising 80 cents on Friday. Packing margins have faded, but they remain in the black at $$7.75 a head, according to HedgersEdge.com. Last week’s kill was up 3.9% from year-ago and average weights held steady at 291 lbs., up 3 lbs. from year-ago, according to USDA’s weekly update.
Corn: Up 2 to 4 cents
Soybeans: Up 1 to 2 cents
Wheat: Up 4 to 7 cents
GENERAL COMMENTS: Selling interest was limited overnight with the trade is still waiting to see how the USDA handles strong export paces and a tightening corn and soybean supply stories. While the agency may decide to wait to make changes until May’s update, the smaller corn and soybean planting intentions reported last week will keep the markets supported until USDA rolls its new-crop supply and demand forecasts next month.
Corn is on track for its second week of gains on rising cash bids amid rising exports and ethanol production. Soybeans are set for their biggest weekly rise in a month as expectations of higher plant-based fuel in the United States underpinned prices. Wheat is heading for the first weekly gain in six weeks. World food prices rose for a tenth consecutive month in March, hitting their highest level since June 2014, led by jumps in vegetable oils, meat and dairy indices, the United Nations food agency said on Thursday.
Scattered rains remain in the Northern Plains and Midwest this morning after decent coverage over the past 24 hours. Rains will shift to the east tomorrow with most of the Midwest dry into next week. A couple of cold surges in the next 10 days will raise frost and freeze concerns in the Plains and Midwest. Argentine rains fell in the heart of the crop belt yesterday and continue through the next five days, with a drier outlook next week aiding crop dry down and harvesting. In Brazil, rains remain confined to fringe crop areas over the next ten days, likely allowing dryness concerns to continue build for the safrinha corn crop. The forecast is drier than it was earlier this week and increases concerns as soil moisture declines heading into the drier season and key development.
Before the reopening USDA did not announce any daily private exporter sales.
China’s ag ministry hiked its 2020-21 corn import forecast from 10 MMT to 22 MMT, an overdue increase considering its purchases and imports to date. Soaring domestic corn prices have made Chinese traders and feed users voracious buyers of corn and other feed ingredients like barley, sorghum and even wheat to help rebuild its hog herd. In response to African swine fever, China no longer allows the feeding of swill to pigs, amplifying its feed needs. USDA projects China will import 24 MMT of corn this marketing year and some analysts forecast the country could bring in more than 30 MMT of the grain. Another notable chance to China’s balance sheet was it raised its cotton import projection by 2000,000 MT, with imports now projected at 2.4 MMT. There has been speculation corporations’ shunning of cotton from Xinjiang region over forced labor allegations would boost Chinese imports. China made no changes to its soybean balance sheet, with imports still projected at 98.1 MMT.
Argentinas 2020-21 soy crop is expected at 43 MMT, the Buenos Aires Grains Exchange said on Thursday, citing lower-than-expected yields caused by dry weather earlier this year for cutting its previous 44 MMT estimate. In Thursdays crop report, the exchange kept its 2020-21 corn crop estimate unchanged at 45 MMT. It said 12% of Argentine corn area had been harvested so far. Argentine farmers are shrugging off high soy prices and hanging onto all the beans they can this season in a bid to avoid exposure to the countrys anemic peso currency. The trend hits just as Argentina needs export revenue to help dig itself out of recession while COVID-19 cases spike and uncertainty abounds ahead of October congressional elections. Farmers fret that the vote might set the stage for increased government intervention in the agricultural markets. The official peso rate has meanwhile swooned 29.6% in the 12 months through Thursday to 92.4 per dollar. With this kind of currency volatility, Argentine farmers have decided a bean in the bag is better than a peso in the bank. Farmers were jolted early this year when the agriculture ministry proposed an increase in export duties and a clampdown on shipments of some grains. It backed off the plan after an outcry from exporters. Argentina currently slaps a 33% export tax on soybeans, 31% on soymeal and soyoil, 12% on corn and 12% on wheat.
Global stock markets were mixed overnight. U.S. stock indexes are pointing toward narrowly mixed openings when the New York trading session begins. Risk appetite remains generally keener at present, with no major geopolitical flare-ups spooking the marketplace. Overnight the MSCI Asia Pacific Index slipped 0.4% while Japans Topix index closed 0.4% lower. In Europe, markets were also little changed this morning with no real catalyst existing for moves in either direction. The 10-year Treasury yield moved up to 1.68%, crude oil was slightly lower and gold fell back from a six-week high yesterday. Bitcoin was trading near $58,500, below the record last month at more than $61,700.
At a recent event, billionaire entrepreneur Peter Thiel said that Bitcoin could be characterized as a "Chinese financial weapon" warning that it could be used in some way to displace or undermine the dominant status of the U.S. dollar. Theres been a lot of talk in the air lately about this kind of thing. That Bitcoin or the yuan or some China-backed central bank digital currency could somehow pose a threat to the dollar, with negative ramifications for the U.S. However, the dollar is popular globally because its stable and Americans have a lot of wealth and buying power. And if theres any economic system that Bitcoin poses a threat to, its the one with high surveillance and tight capital controls -- not the one where people are largely free to do whatever they want with their money.
CORN: May corn is gaining on December futures for a fourth day. After touching more than $1.02 premium on March 31, the May futures’ premium fell near 61 cents on Monday and this morning it is near 86 cents. May corn is sitting just below contract highs hit last week and December futures are making new highs today.
SOYBEANS: Futures have been moving mostly sideways this week and a strong close to finish the week would be positive. More important may be how the meal markets finishes as it tried to confirm trading lows last month. Malaysian palm oil futures reversed earlier gains and closed down 0.6% on Friday, paring a week gain on tightening supply and renewed Chinese purchases of palm this week. Meanwhile China’s Dalian soyoil dropped 1.2% and its palm oil futures declined 1.8%.
WHEAT: Wheat futures are building a base of support with spring wheat leading higher. The market is also supported by colder weather and possible freezes next week in part of the central Plains. It is unlikely temperatures get cold enough to lead to widespread crop damage, but the threat will be how far south the freezes reach and the coverage of cold temperatures. Meanwhile, as of April 5, 87% of France’s soft wheat crop was in good to excellent condition, unchanged from the previous week, according to the country’s farm ministry. This was up sharply from 62% good to excellent last year at this time. The ratings update preceded this week’s cold snap that may have clipped some crops. World Weather Inc. downplayed the event, saying “Frost and freezes continued over southern and central France through central Germany and northern Italy and into eastern Europe Thursday morning.
CATTLE: Steady to firm
HOGS: Steady to weak
CATTLE: Cattle futures retreated from new highs to close mixed to lower on Thursday. Traders were encouraged by higher cash cattle trade ranging from $120 to $124, but futures already had even bigger gains baked into prices. While historically high beef prices point to more cash market strength ahead, especially with reports of cow culling on the Northern Plains, market bulls took a breather and booked some profits on Thursday. Boxed beef values extended their surge higher on Thursday, with Choice shooting $4.19 higher and Select rocketing $8.64 higher. Movement was solid at 110. The renewed rally in corn limited buying interest in feeder cattle on Thursday.
HOGS: The pork cutout value slipped 31 cents, but movement slowed to 279.52 loads after strong load counts the two days prior. Cash hog bids edged 22 cents higher on Thursday, and the CME lean hog index continues to hold above the 100.00 mark, the highest since October 2014. This paired with optimism about Chinese and domestic demand has helped power one of the strongest bull moves in hog futures in their 51 years of trading, with prices still on the rise. Weekly pork export sales were disappointing, with Chinese purchases slowing to 1,200 MT.
Corn: Up 3 to 6 cents
Soybeans: Steady to weaker
Wheat: Up 7 to 12 cents
GENERAL COMMENTS: Wheat is leading higher today, providing support to corn and soybeans. Suddenly the trade is concerned over spring wheat seeding amid dryness across the U.S. Northern Plains and Canadian Prairies. Cold temperatures in Europe this week also raises production concerns and there are some drier forecasts developing for parts of Europe and the Black Sea region. Wheat prices have been in extended downtrends since February on perceptions of favorable conditions for most crops across the Northern Hemisphere.
The April USDA Supply & Demand Report is on tap for Friday morning, with corn and soybean stocks seen steady to lower versus the agency’s March estimates for both domestic and world balance tables. The trade will have to wait until next month for the government to officially integrate new-crop acreage estimates from last week, new usage projections and carryover forecasts. It will be a quiet session with a focus on commodity index funds rolling out of May futures beginning today.
Brazil’s Conab raised its estimates for both corn and soybean crops this morning. Brazil will harvest 108.966 MMT, up from 108.069 MMT estimated in March and above the 102.586 MMT. Soybeans production estimated at 135.540 MMT, up from 135.132 MMT forecast in March and up sharply from 124.845 MMT last season.
Some relief from dryness has already begun in a part of the eastern Prairies and the Red River Basin and after April 20 World Weather says rain potentials will improve for other areas in the northern U.S. Plains and Canada’s Prairies as well. However, relief will be temporary with returning dryness later in the summer especially in the southeastern Prairies, the northern Plains and upper U.S. Midwest. There is a higher than usual potential for a blocking ridge of high pressure to evolve this year over central North America, but it is not likely to evolve during the spring and that leaves several weeks of opportunity for rain to fall before the blocking ridge evolves, the forecaster said in a note today.
Before the reopening USDA did not announce any daily private exporter sales.
The weekly export sales report showed old-crop U.S. wheat and corn export sales slowed last week and soybeans were a net reduction. USDA reported a marketing-year low for wheat sales last week, down 75% from the prior four-week average and included China reducing prior sales by 56,700 MT. New-crop sales jumped to 529,900 MT, topping trade estimates for 50,000 to 200,000. China was the top buyer of 260,000 MT last week. Net corn sales slowed 54% from the prior four-week average with USDA reporting 757,000 MT sold, in the middle of trade estimates for 500,000 to 900,000 MT. New-crop sales were just 50,000 MT and at the low-end of trade estimates. Old-crop soybean sales slowed a net reduction of 92,500 MT last week. But new-crop sales were 338,600 MT with China buying 264,000 MT. Traders were looking for 50,000 to 200,000 MT.
Global food prices climbed 2.1% from February to March, marking the 10th month in a row prices have climbed, according to the Food and Agriculture Organization of the United Nations’ (FAO) food price index. The index now stands at 118.5 points, its highest level since June 2014. “The increase was led by strong gains in vegetable oils, meat and dairy sub-indices, while those of cereals and sugar subsided,” FAO reports. The group expects global cereal production to climb for the third year in a row in 2021. It reports, “current crop conditions point to slightly better prospects compared to earlier expectations, lifting the preliminary 2021 global wheat production forecast to 785 MMT.” That would be a 10.7 MMT rise from FAO’s 2020-21 production estimate.
CORN: May corn is gaining on December futures for a third day. After touching more than $1.02 premium on March 31, the May futures’ premium fell near 61 cents on Monday and this morning it is near 78 cents. A move back above resistance at 85 to 90 cents premium would be a fresh bullish signal. U.S. corn exports in February hit 6.3 MMT, according to official census data published on Wednesday. That tops 2008’s record for the month by 17% and is the largest monthly volume since July 2018. Weekly export data suggests that March shipments reached an all-time monthly record, likely topping 9 MMT. The largest-ever volume was 7.75 MMT in May 2018, and the March high is 6.7 MMT in 2017. Through April 1, U.S. corn sales are now about 1% the USDA current export forecast for a record 2.6 billion bu., well above the five-year average of 82% sold by early April. That supports expectations for USDA to raise it export forecast on Friday.
SOYBEANS: Futures were well contained inside of Wednesday’s downside move overnight. Old-crop soybean futures need to rise above last week’s high to reduce the chances of an important top forming. November futures continue to consolidate above the prior highs from early March but may need a fresh weather or demand news event to begin trending higher. Malaysian palm oil futures reversed a three-day rally, falling 1.5% overnight. Meanwhile China’s Dalian soyoil dropped 2.8% and its palm oil futures declined 2.0%.
WHEAT: Wheat futures are building a base of support with spring wheat leading higher. The results of yesterday’s Egyptian tender were important because it showed Russian exporters were competitive for August deliveries despite the floating tax regime that comes into force on June 1. Export quotes for Russian and Ukrainian origin have fallen very sharply in recent weeks.
CATTLE: Steady to mixed
HOGS: Steady to weak
CATTLE: After early weakness, live and feeder cattle futures turned higher by the close, with cash and product market gains continuing to give market bulls the advantage. Weekly beef export sales fell 14% from the prior four-week average and shipments were off 4% from the four-week average. After some light cash cattle trades Tuesday in Kansas at $121, trade picked up across the south at $120 on Wednesday, with prices climbing to $123 to the north. This represented a $3 to $5 gain from action last week that generated an average price around $118. Boxed beef values shot another $3.54 (Choice) to $3.89 (Select) higher on Wednesday, with an impressive 117 loads changing hands.
HOGS: Tightening hog supplies and ideas African swine fever will keep China as a major buyer of pork helped lift futures Wednesday to new highs. However, this morning’s weekly USDA pork export sales were disappointing. Pork sales last week fell 45% from last week marketing-year high and were 22% below the prior four-week average. While Mexico continued to be an active buyer, Chinese net purchases slowed to 1,200 MT, down from nearly 30,000 MT a week earlier. Support has also stemmed from continued strong pork movement despite lofty price levels. The cutout value climbed $1.30 on Wednesday and 384 loads sold. The average cash hog price rose $1.38 yesterday on good packer demand for live supplies.
Corn: Up 1 to 4 cents
Soybeans: Up 2 to 6 cents
Wheat: Up 1 to 4 cents
GENERAL COMMENTS: Soybean futures gained more ground on Wednesday while corn rose for a second session, as concerns over lower U.S. planting intentions and tightening U.S. and global supplies in Friday’s USDA Supply & Demand Report. Wheat edged higher after closing lower on Tuesday. Cash corn and soybean basis continues strengthen. Decatur, Ill. soy basis is no above St. Louis bids, a rare occurrence but reflecting a shift from an export-led cash market pull to a crush-focused cash market focus.
Before the reopening USDA did not announce any daily private exporter sales. USDA releases is weekly export sales report Thursday morning.
Brazil in on track for an all-time high soybean crop this year, although harvesting and shipments have been delayed due to rains. Agribusiness consultancy Agroconsult reported Brazilian farmers will harvest an estimated 137.1 MMT of soybeans, a record volume despite weather-related challenges. However, Brazils second corn yields will fall by an estimated 3.6% this year, as most growers were forced to sow the cereal outside the ideal climate window after delays in the soy harvest, according to Agroconsult. There continues to be a need for significant rain soon from Mato Grosso do Sul into Sao Paulo due to dryness leading to an increase in crop moisture stress. Some shower and thunderstorm activity will occur in this area Saturday through next Tuesday; however, follow-up rain will be important in week 2 of the outlook and this rain may not be very great. In Argentina, conditions will continue to be good for late maturing summer crops.
The bulk of the nation’s corn-producing areas are drier than normal heading into planting season, except for the far south and southern Plains—ideal for all crops at this point—though forecasts have shifted a bit overnight, with wetter conditions this week followed by colder air going forward. But there are few concerns about material delays currently. Soils should be able to absorb modest rains quickly in their current condition which allows fieldwork to resume quickly.
U.S. producers can amend their intentions at any time between now and the final plant date. Anecdotal reports indicate the Midwestern farmer is using the weather as a regulator, not so much the insurance dates to tell him when and what to plant. Rains fell in the central Plains and northern Plains and corn belt overnight, lingering today in the western Midwest. This week continues to bring active precip (through Saturday) with heavy amounts expected in most of the central and eastern Midwest. The forecasts maps for next week are wetter in the southern Plains but dry conditions reign otherwise. Temperatures are below-normal next week but may begin warming by later this month.
Brazil will likely boost soybean plantings by 1.5 million hectares (3.9%) in 2021-22, pushing planted acreage to 40 million hectares, according to a U.S. attaché there. That would likely push production to 141 MMT, a 7-MMT from what the post expects the country to harvest this season. The attaché says that current “strong demand, high prices, and a favorable exchange rate” are likely to persist well into 2021-22, bolstering production. The post expects the country to export a record 85 MMT of soybeans this season, followed by 87 MMT in 2021-22. “Healthy returns will leave growers well capitalized to make future investments,” the attaché observes.
Jamie Dimon said he’s optimistic the pandemic will end with a U.S. economic rebound that could last at least two years. “I have little doubt that with excess savings, new stimulus savings, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine and euphoria around the end of the pandemic, the U.S. economy will likely boom,” the JPMorgan Chase & Co. chief executive officer said Wednesday in his annual letter to shareholders. “This boom could easily run into 2023.”
Meanwhile, Chinas once-a-decade census is expected to show a further fall in the percentage of young people in its fast-aging population as high living costs and an aversion to having children among urban couples push China closer to a demographic crunch. Policy makers are under pressure to come up with family-planning incentives and arrest a falling birth rate, with the worlds most populous country at risk of entering an irreversible population slide if effective measures are not found. In 2010, the proportion of the population aged 14 or younger plunged to 16.60% from 22.89% in 2000, an effect of a decades-old one-child policy. Citizens aged 60 and older accounted for 13.26%, up from about 10%. The continuation of those trends will undermine Chinas working-age population and weigh on productivity. A shrinking pool of working adults will also test its ability to pay and care for an aging nation.
CORN: May corn is gaining on December futures for a second day. After touching more than $1.02 premium on March 31, the May futures’ premium fell near 61 cents on Monday and this morning it is near 73 cents. A move back above resistance at 85 to 90 cents premium would be a fresh bullish signal. Later this morning the market will be focused on the weekly EIA ethanol report with traders looking for production to slip slightly and stocks rising fractionally. Rising vaccine distribution and increasing reopenings and travel will support better gasoline and ethanol demand into the summer.
SOYBEANS: Futures were well contained inside of Tuesday’s ranges overnight. Old-crop soybean futures need to rise above last week’s high to reduce the chances of an important top forming. November futures continue to consolidate above the prior highs from early March but may need a fresh weather or demand new event to begin trending higher. Chinese soybean crushing remains slow even as Brazil soybean arrivals increase, leading to a potential glut in the market and increasing speculation that some of the unshipped purchases from the U.S. will be cancelled or more likely rolled into new-crop delivery. Malaysian palm oil futures rallied 1.1% overnight to a two-week high on rising exports this month and a tightening global vegoil supply situation. Meanwhile China’s Dalian soyoil rose 1% and palm oil futures gained 1.7%.
WHEAT: Wheat prices are trying to build a new base of support and the narrow premium to corn suggests the market will follow corn over the next several weeks until more is discovered about the health of the U.S. winter crop and if rains reach the Northern Plains and Canadian Prairies. Egypt’s GASC yesterday bought 345,000 MT of wheat for August 1-10 shipment, including 290,000 MT from Russia and 55,000 MT from Ukraine, with prices ranging from $251-$253 per MT Japan’s Ag Ministry is seeking 91,000 MT of milling wheat in their regular weekly tender, including 66,000 MT from the U.S. and 25,000 MT from Canada.
CATTLE: Steady to higher
HOGS: Steady to firm
CATTLE: Cattle futures have been anticipating the rally in cash and beef and may need a pause, but the long-term outlook remains positive. Cash cattle trade got started at $121 in Kansas on Tuesday, with the early start hinting packers were short bought on needs. That’s up a sharp $4 from prices last week in the state. Trade was quiet in other locations. Today, the online Fed Cattle Exchange auction should provide some additional market insight. Packer profit margins have soared nearly $137 over the past week to $525.35 a head, according to HedgersEdge.com, with soaring beef prices outpacing modest cash market gains in recent weeks. Choice beef shot another $4.10 higher on Tuesday, with Select jumping $1.44. Movement was also solid considering lofty prices at 124 loads.
HOGS: Nearby lean hog contracts pared losses into the close, with the market encouraged by strong morning pork movement despite higher prices. Movement held strong into the afternoon, with 414.14 loads changing hands on a dime rise for the pork cutout value. Stronger load counts are impressive with cutout values over $109 a hundredweight. Cash hog bids edged 27 cents lower on Tuesday, but the CME lean hog index has climbed to its highest level since October 2014. Underlying support remains optimism about strong Chinese demand for pork imports amid rising case of African swine fever. Traders will be eager to see if Thursday’s weekly USDA export sales report shows sustain gains after sales rose to a marketing year high in last week’s tally.
Corn: Up 1 to 7 cents with old-crop futures leading higher
Soybeans: Up 9 to 15 cents, with old-crop leading
Wheat: Up 2 to 4 cents
GENERAL COMMENTS: May soybeans are heading for a second daily gain after plunging April 1, while the November contract has yet to put in a negative close since the surprisingly low USDA planting intentions estimate on March 31. The acreage fight hasnt subsided after the USDA came in below trade estimates, signaling tight supply through the 2021-22 marketing year. Wheat is following the row crops higher despite the U.S. winter crop mostly coming out of winter in good shape after a severe winterkill threat in February. Last week’s prospective plantings and quarterly stocks report certainly delivered on the USDA reports’ reputation of inducing spikes in market volatility.
New selling may be limited in front of Friday’s USDA Supply & Demand Report on Friday. Traders are looking for USDA to cut old-crop corn carryover projections about 120 million bu. from last month’s 1.502 billion bu. forecasts. Old-crop soybean ending stocks seen fractionally lower than last month’s 120 million bu. projection. The ranges for both estimates are relative wide and could lead to more fireworks later this week.
Early planting chances still look solid with dry conditions for most and a generally favorable forecast into mid-April. Forecast maps for the U.S. do bring in plenty of rain chances for the Midwest in the next ten days, to slow super-early progress for corn planting, though overall wetness doesn’t appear to be an issue beyond April 15. Scattered and light rains continue in the northern Plains and belt this morning, after similar light activity over the past 24 hours. Intensity of those showers will pick up throughout the week, with good coverage expected for the bulk of the Midwest over the next five days. Drier weather outlook is forecasts for the Southern Plains.
Rains fell in far northern Argentina over the past 24 hours, building across most crop areas over the next five days to slow corn and soybean dry down, then drier again for the 6- to 10-day period. Showers were more scattered in Brazil with heavier rains in far southern areas yesterday. Drier weather increasing soybean harvest elsewhere but increasing dryness concerns for the safrinha corn.
Before the reopening USDA did not announce any new private exporter sales. That follow’s Monday’s announcement that private exporters sold 130,000 MT of SRW wheat to unknown destinations for new-crop delivery.
A Chinese carrier group is exercising near Taiwan and such drills will become regular, Chinas navy said late on Monday in a further escalation of tensions near the island that Beijing claims as its sovereign territory. The U.S. Navy said on Tuesday that its Theodore Roosevelt Carrier Strike Group (TRCSG) entered the South China Sea on April 4 to conduct routine operations, its second such visit this year, amid stepped up U.S.-China tensions. Taiwan has complained of an increase in Chinese military activity near the island in recent months, as China steps up efforts to assert its sovereignty over the democratically run island, which receives weapons and other support from the United States.
American stock futures slipped, suggesting the rally that drove the S&P 500 to an all-time high may pause as concern China is curtailing loan growth tempered optimism stoked by the U.S. economic rebound. The dollar erased earlier gains and fell to the lowest in two weeks and U.S. Treasury yields were steady to slightly lower. European stocks, meanwhile, rose to a record as markets reopened after Monday’s holiday across the region. The global economy is poised for the fastest growth in 60 years in 2021, according to Bloomberg Economics, but the recovery may be uneven as some countries struggle to curb the pandemic and lag behind in inoculations. Oil rebounded, mirroring a broader rally in commodities, ahead of talks on reviving the Iranian nuclear accord. Crude plunged on Monday amid a resurgence in Covid infections in Europe and an imminent increase in OPEC+ supplies, which could swell further with an agreement with Iran.
CORN: May corn was stuck inside yesterday’s range overnight but did close near the session highs after successfully holding support. December corn needs to close above $4.93 1/2 to ignite fresh fund buying. As of April 4, USDA reports 2% of the U.S. corn crop had been planted, which was a point slower than expected and right in line with year-ago and the five-year average. Texas is farthest along, with 55% planted, followed by Kansas at 2% and Missouri, North Carolina and Tennessee all at 1% seeded.
SOYBEANS: May futures cleared Monday’s high overnight and now needed to finish above last month’s contract high at $14.60 to sound the all-clear signal to market bulls. November futures are trading just below Thursday’s contract high at $12.85 at the break this morning. Malaysian palm oil futures rallied 1.4% overnight to a one-week high on lower April production forecasts and improving exports. Meanwhile China’s Dalian soyoil and palm oil futures both rose 2.7%.
WHEAT: Futures are largely following the corn and soybean to the upside but finding support from a recent improvement in export business for both U.S. and world supplies after last month’s steep drop in prices. USDA’s initial winter wheat crop rating came in just as expected at 53% “good” to “excellent,” which was a seven-point improvement versus the last update on Nov. 30. The amount of crop falling in the top two categories is down nine percentage points from year-ago, however. USDA rates 54% of top-producing Kansas’ winter wheat crop “good” to “excellent,” which is an improvement from the 46% it put in the top two categories last fall before dormancy. Three percent of the U.S. spring wheat crop had been planted as of April 4, which is right in line with year-ago and a point ahead of the five-year average. That was a point more advanced than analyst polled by Reuters anticipated.
CATTLE: Steady to higher
HOGS: Steady to weak
CATTLE: Cash cattle traded at an average price of $118.08 last week, with action ranging from $116 to as high as $120.50, with the western Corn Belt leading gains. Traders are hopeful for additional gains this week, in part thanks to soaring boxed beef values heading into grilling season. Choice boxed beef charged $5.82 higher on Monday and Select shot $2.89 higher, with processing again clipped by Easter downtime on Monday. Yesterday’s kill totaled just 108,000 head, which was 11,000 head below last week at this point, adding to the strength of the beef market.
HOGS: The pork cutout value slipped 22 cents to start the week, despite solid gains for ribs and bellies. Movement was also unimpressive at 288.78 loads. Pork features are expected to fade moving forward. Yesterday’s kill was quite light at 331,000 head, down 152,000 head from week-ago and 144,000 head under year-ago, with plants taking time off for the Easter holiday. Cash hog bids fell 86 cents nationally on Monday. Summer hog contracts occasionally post tops in April, and follow-through weakness into week’s end would be a warning sign. China reported another outbreak of African swine fever (ASF) in northwest China’s Xinjiang region. This marked the ag ministry’s ninth official report of an ASF outbreak this year, with most of the reports coming from southern areas of the country. In contrast, industry reports signal “at least” 20% of northern China’s hog herd has been impacted by the virus. Meanwhile, a dead pig infected with ASF washed ashore in northern Taiwan over the weekend. That has prompted the country to begin testing hog herds for African swine fever and limiting movement in the area where the pig washed up.
Corn: Mixed; Old-crop steady to weak and new-crop up 3 to 6 cents
Soybeans: Up 10 to 15 cents, with new-crop leading the rally
Wheat: Steady to up 3 cents
GENERAL COMMENTS: Last week’s prospective plantings and quarterly stocks report certainly delivered on the USDA reports’ reputation of inducing spikes in market volatility. The acreage fight hasnt subsided after the USDA came in below trade estimates, signaling tight supply through the 2021-22 marketing year. Early planting chances still look solid with dry conditions for most and a generally favorable forecast into mid-April. New selling may be limited in front of this week’s USDA Supply & Demand Report on Friday.
Before the reopening USDA announced private exporters sold 130,000 MT of SRW wheat to unknown destinations for new-crop delivery. That should help to add support to the wheat markets.
U.S. corn planting is expected to pick up April 10-20 when key crop insurance dates pass. Forecasts for warmer, drier U.S. summer could attract new buying. The weather has midweek rains falling over the midsection of the country, then moving out for the end of the week, with more rains forecast for week two. Down in South America, the forecast models have rains due next week for the center of Brazil. But most other crop areas will continue to dry down raising moisture stress for many Safrinha corn crops from Mato Grosso do Sul and Paraguay to Sao Paulo. Additional rain and shower are forecast for eastern Argentina, where overall conditions are beneficials for late-season crop development.
After the close today, USDA releases its first national wheat ratings from the USDA. Concern may rise from the central and southwestern U.S. Plains this week because of missed rainfall and warm temperatures. Portions of the northern Plains and Canada’s Prairies will get some needed moisture, but much of it will concentrate on South Dakota and Minnesota limiting the moisture boost for some of the drier areas in North Dakota, Montana and Canada’s Prairies.
Most of Europe’s wheat is in good condition. Precipitation in the Black Sea Region was greatest from central Ukraine through the heart of western Russia maintaining moisture abundance in those areas. Precipitation elsewhere was more limited, but soil moisture was still favorable from past weather events and melting snow. APK-Inform forecasts Ukraine’s production of grains and pulses will reach 73.8 MMT this season, up by 13% compared with the prior year. Wheat crop will grow by 10% to 27.5 MMT, barley crop will increase by 2% to 8 MMT and corn increases 19% to 35.7 MMT.
The CFTC Commitments of Traders Report showed less large spec net selling in wheat, soybeans and soyoil and unexpected net buying in corn in the week ended March 30. Funds boosted net long in corn futures and options to 395,584 contracts from 388,175 a week earlier when most expected net selling. That is funds’ most optimistic corn stance since Feb. 1, 2011, and the move was largely due to the addition of outright longs. Funds reduced their net long in soybean futures and options by nearly 21,000 contracts to 141,880, their least optimistic view since late August. Funds added just 615 soybean meal futures and options contracts to their net long, resulting in a position of 58,235 contracts. But they were sellers of soybean oil for a fifth consecutive week, with their net long as of March 30 dropping to 80,840 futures and options contracts from 93,977 a week earlier. Funds have established a bearish SRW wheat view for the first time since December. Funds’ net short in SRW wheat was 14,711 futures and options contracts as of March 30 versus a net long of 8,160 a week earlier. Money managers maintained their bullish views in HRW wheat futures and options through March 30, though their net long of 21,722 contracts is the smallest since September.
CORN: May corn futures extended the rally to new high but closed lower after touching $5.85, the highest on the weekly continuation chart since July 2013. Prices have traded both sides of unchanged overnight. December corn touched a new contract high at $4.93 on April 1 before paring gains into the close. Prices are back near those high this morning on the smaller USDA estimates for U.S. planted acreage and tighter March 1 inventories. USDA also reported February corn use for ethanol totaled 332.8 million bushels. For the first six months of the crop year, corn use totals 2.448 billion bushels and that is down from 2.684 billion a year ago. The recent improvement in production suggests USDA may raise its current forecast in Friday’s report. Archer Daniels Midland said late last week it would restart ethanol production at two of its U.S. corn dry mills this year, as expects demand for the biofuel to rebound from a pandemic-led slump. The company had last April decided to temporarily idle ethanol production at its facilities in Cedar Rapids, Iowa, and Columbus, Nebraska due to lower gasoline demand. Meanwhile, Attorneys General for Iowa, Nebraska, Illinois, Michigan, Minnesota, Oregon, South Dakota and Virginia signed the brief which said that “authorizing the unfettered granting” of SREs would “gut” the Renewable Fuel Standard (RFS) and the broader interpretation of the SRE authority sought by refiners would “cause substantial economic harm to the rural economies of many states.” The affected refineries have appealed the matter to the nation’s top court which will hear the matter April 27.
SOYBEANS: May futures failed to clear last month’s contract high at $14.60 last Thursday and closed lower, Overnight prices were able to rebounded from the 40-day moving average and cleared the 20-day moving average into the break. overnight, touching $14.56 1/4 before paring most of its gains by the break this morning. November futures are trading just below Thursday’s contract high at $12.85. The CME announced that maintenance margins for CBOT soybean futures will rise to $3,350 per contract, up 11.7% from the current $3,000, for May 2021 contract. Malaysian palm oil futures closed up 0.1%, paring an early gain of 1.6%. Meanwhile China’s Dalian Commodity Exchange was closed for a public holiday today. The February soybean crush totaled 164.3 million bu., about 800,000 bu. below expectations and not a record, USDA reported April 1. The total crush for the first six months of 2020-21 is 1.113 billion bu., compared with 1.073 billion last year. The USDA forecast of 2200 million bushels implies March-August crush of 1087.3 million bushels. The Mar-Aug crush totaled 1091.6 million last year.
WHEAT: Futures are trying to build on last week’s reversal action to the upside. A close below last week’s lows would prove the rebounds were just following the corn and soybean markets. But closes above the March 31 highs at $6.31 3/4 in May SRW futures and $5.87 in May HRW would be positive signals and likely trigger short-covering and new buying.
CATTLE: Steady to mixed
HOGS: Steady to firm
CATTLE: June cattle moved to new highs and closed lower Thursday and may see some follow-through profit-taking this morning. However, pausing below prior highs still favors further gain eventually. Boxed beef prices continue to soar with Choice jumping $2.88 and Select rising $2.27 on Friday. Over the past week, Select jumped $19.20, and Choice climbed $15.19, narrowing the spread between the grades to just $5.88. Cash cattle prices climbed to the $117 to $120.50 area late last week, with the western Corn Belt leading gains.
HOGS: Lean hog futures ended last week on a strong note, with bulls in part propelled by a surge in weekly pork export sales to a new high for 2021, with China as the lead buyer. African swine fever outbreaks in China are also lending the market support, with some in the industry saying at least 20% of the breeding herd in northern China had been wiped out. The pork cutout value climbed 65 cents on Friday, but movement slowed to 249.71 loads. Cash hog bids jumped $2.24 nationally on Friday. Summer hog futures topped in April during 2004, 2010, 2011, and 2019 but highs in May are more typical.