Grain prices surged significantly higher again yesterday on Chicago, spurred by this week’s cold snap, which brought rain, snow and the prospects of widespread planting delays in corn and soybean wake.
The world not being able to undergo climatic hazards in a context of very tight balance sheets, mainly in soybeans and corn.
The Midwest and Plains have already seen some rain and snow this week, and most of the region will get some additional measurable moisture between this morning and Sunday, per the latest 72-hour cumulative precipitation map from NOAA.
Most areas will see less than 0.25” during this time, however.
The agency’s 8-to-14-day outlook predicts more seasonally wet weather east of the Mississippi River between April 28 and May 4, with a small pocket of colder-than-normal temperatures centered around Missouri and Iowa.
Consequently, between low temperatures giving rise to fear of frost damage on winter wheat and a persistent water deficit, panic seized some operators.
Meantime, in add, we must note the reluctance of producers to sell, despite the rise in prices, in a context where last year they mostly sold too early and thus could not benefit from the increase.
In this context, corn prices jumped another 3% higher.
Soybeans climbed 1.75% higher and nearly closed above $15 per bushel – a feat not seen since the spring of 2014.
Wheat prices also enjoyed healthy gains of around 1.5% to 2%.
Cattle markets were off sharply with the grain rally.
They’re starting to look towards the next cattle on feed figures and expecting large increases in both placements and inventory bouncing back after the Feb weather delays.
Energy prices on the other hand, eroded significantly, with crude oil down more than 2%, on higher U.S. stocks and lower demand in coronavirus-stricken India.
Gasoline and diesel were also down around 2%.
On Wall St., the Dow rebounded 316 points higher to 34,137 on strong travel stocks and mostly positive quarterly corporate earnings reports.
Meantime, the head of the US Fed has made headlines again, with the news getting hold of a letter he wrote to a US senator earlier this month discussing inflation potentials and appearing to accept higher levels for the future, while the U.S. Dollar softened more.
Coming back on grains market, corn prices rocketed ahead again.
The widespread planting delays for a crop that’s already getting in the ground a bit slower than expected are genereting more concerns.
Ahead of the this morning export report from USDA, analysts expect the agency to show corn sales ranging between 13.8 million and 43.3 million bushels for the week ending April 15, offering fair confidence that week-over-week sales will improve from the prior tally of 15.0 million bushels.
The latest data from the U.S. Energy Information Administration showed a steady rate of ethanol production for the week ending April 16, with a daily average of 941,000 barrels – identical to a week ago.
Year-over-year production jumped 67% higher this past week as demand continues to improve from pandemic-related lockdowns last year.
Meantime ethanol stocks are down 26% year-over-year, falling to its current level of 20.447 million barrels.
More stock was shifting again towards the US Gulf which might suggest there could be more boats to come.
Also soybean prices moved higher on another weather-related round of technical buying.
Tightening domestic supplies has also lent support in recent sessions.
Ahead of this morning’s export report from USDA, analysts expect the agency to show soybean sales ranging between 5.5 million and 27.6 million bushels for the week ending April 15.
Analysts also anticipate soymeal sales ranging between 50,000 and 250,00 metric tons last week, plus soyoil sales ranging between a reduction of 5,000 MT and a net gain of 20,000 MT.
Wheat prices rose, on a round of technical buying spurred by frosts in the U.S. Plains and Midwest, along with tension over a Russian military buildup near the Ukrainian border.
Frost concerns across HRW areas have mostly passed, but some more eastern SRW areas have warnings in play for tonight.
Ahead of Thursday morning’s export report from USDA, analysts anticipate wheat sales ranging between 7.3 million and 25.7 million bushels for the week ending April 15, offering some confidence that actuals will best the prior week’s tepid results of 8.0 million bushels.
From Canada, with more focus on spring wheat and canola this year, next Tuesday’s StatsCan acreage report looks to be more closely watched by markets than normal.
The country was been even forced to import canola Ukrainian origins for its lean season, for delivery on the next August.
Consequently, canola prices in Canada are thus reaching all-time highs.
From South america, Brazil’s second corn crop is experiencing some quality concerns, especially in the No. 2 production state of Parana.
The crop rating of corn has gone from 92% as good to excellent in 2 weeks, to 76% last week, then 62% this week.
The area, indeed, is experiencing one of the driest Aprils over the past two decades.
Consequently, safrinha weather concerns in Brazil are back in vogue.
The latest weather runs are pulling back the chances for rain on the 2-week maps, compared with flirtation the other day briefly with rain ahead.
So, crop ideas are continuing to trend lower.
Many market estimates have been moving into the low 100 million-tonnes-range in the last several days.
The Argentinian USDA Bureau has cut its estimate of Argentina’s soybean crop by 2.5 Mt, to 45 Mt, from 48.8 Mt last year.
Meantime, The Buenos Aires Grains Exchange expects Argentinian farmers to plant 16.062 million acres of wheat for the 2021/22 season, holding plantings steady from a year ago.
Planting season begins in May.
On European market, the firmness of commodity prices cannot be continue to denie.
In France, the weather forecasts still do not announce precipitation.
After the frost damage, fears of water deficit dominate the news.
Less than 3 weeks before the May expiry date in wheat on Euronext, the arrival of a wheat ship from Romania to Dunkirk suggests a Matif delivery on this deadline.
Another supporting factor for wheat, Chinese demand: according to the Inter-Courtage firm, Chinese feed manufacturers have bought this week “between 10 and 14 boats of French wheat from the next harvest, confirming that the wheat is cheaper than maize, including in the new season ”.
Rapeseed prices continue to climb in a context where world prices of vegetable oils continue to rise.
We should also note the passage of rapeseed due in August 2021 above 500 € / t, which is a historic first!
The dry climate and very small surface areas in France indeed herald a new, very tense campaign.
From Black Sea basin, the progress of sowing in Russia still shows a significant delay compared to last year, even if half of the Russian regions have now started sowing.
Yesterday, the producers had sown 1.1 Mha of spring barley or 14% of the expected area.
In wheat, less than 500,000 ha were sown out of the 12.7 Mha expected this spring.
Thus, sowing of wheat is only up to 3.2%.
In the south of the country, producers have started sowing sunflower, corn, rapeseed and even soybeans.
Respectively, the areas are expected this year at 8.3 Mha for sunflower, 3 Mha for soybeans, 2.8 Mha for corn and 1.2 Mha for spring rapeseed.
Ukraine’s corn exports for the 2020/21 marketing year are at 712.6 million bushels, according to the country’s agriculture ministry. Ukraine is one of the world’s largest grain exporters.
Ukraine’s wheat exports for the 2020/21 marketing year are at 540.1 million bushels, which represents 85% of the total wheat export quota that was imposed this season.
Total grain exports are down about 23% year-over-year so far.
However, some late demand reportedly is coming to the table in the Black Sea for old crop wheat and corn.
There’s more talk, indeed, of Chinese corn purchases from Ukraine again.
Meantime from China, chinese agriculture ministry has published new guidelines on pig and poultry feed that include recommendations to reduce corn and soymeal, which have become very costly to local users in recent months.
A bevy of alternatives were suggested, including wheat, barley, sorghum, cottonseed meal, distillers dried grains and more.
Palm oil in Kuala Lumpur posted a further increase this morning, especially in a context where palm production, which rebounded strongly normally in April, disappointed observers.
The only downside is the covid pandemic which affects India with 315,000 new contaminations recorded on yesterday alone.
Saudi Arabia’s SAGO announced last night that they’d finalised their last flour mill sale, selling two more mills to different consortia as the government works to get out of the grain business.
Aussie local markets were much the same yesterday as previous.
More bids are starting to pop up as the trade looks to cover near-term commitments amid tight logistics from fewer farmer-owned trucks on the road.
Weather maps still holding dry, and pulling back some on the chances of rain for WA in the extended run model.
As May futures expiry is approaching, we will see futures to shift moves quotations to the July contract at the start of next week.
Tonigth we will see, how the sessions will close.
