Grain prices rebounded nicely yesterday on Chicago as traders resumed a pattern of technical buying based largely on strong supply and demand fundamentals.
Corn prices saw the most upside, with July futures jumping more than 2.5% higher by the close.
Soybeans also turned in a strong performance, rising more than 1%.
Some wheat contracts rose more than 1.5%.
On macro markets, also energy futures trended higher, on optimism over demand in the United States and Europe.
Consequently, crude oil rose more than 1.25% higher.
Gasoline and diesel each climbed around 1.8% higher.
Concerns about rising inflation, in contrast, applied some downward pressure on Wall St. and the Dow was up only 20 points higer, trading to 34,133, remaning mainly bogged down by some losses in the tech sector.
The U.S. Dollar firmed moderately.
Coming back on grain markets, corn prices firmed substantially higher as traders returned their focus to the current strong set of supply and demand fundamentals.
Worries over dry weather developing in southern Brazil lent additional support.
Also soybean prices rose spurred by tight domestic supplies and helped further by spillover strength from other grains, finishing the session with double-digit gains.
Wheat prices followed corn and soybeans higher.
Slightly deteriorating winter wheat crop conditions over the past week also helped prices stay firm.
For winter wheat, indeed, 27% of the crop is now heading, up from 17% a week ago but still behind 2020’s pace of 30% and the prior five-year average of 34%.
Quality ratings for winter wheat dropped a point, as expected, to 48% of the crop rated in good-to-excellent condition.
Another 33% of the crop is rated fair (up a point from last week), with the remaining 19% rated poor or very poor (unchanged from a week ago).
Spring wheat plantings are now at 49%, trending 19 points higher week-over-week and a point better than the average trade guess of 48%.
This year’s pace is also well ahead of 2020’s pace of 27% and the prior five-year average of 32%.
Fourteen percent of the crop is now emerged, doubling last week’s mark of 7%.
Corn plantings are now at 46% through May 2, moving well ahead of last week’s mark of 17% and two points above the average trade guess of 44%.
While planting progress is slightly behind 2020’s pace of 48%, it is still a full 10 points above the prior five-year average of 36%.
And 8% of the crop is now emerged, up from 3% a week ago but still slightly behind the past five-year average of 9%.
Also soybeans made good planting progress this past week, moving from 8% a week ago up to 24% through Sunday.
Analysts expected
USDA to show a slightly faster planting rate, with an average trade guess of 25%.
That’s still a bit above 2020’s pace of 21% and well above the prior five-year average of 11%.
Some light rains could fall across the Midwest and Plains later this week.
The US agency’s 8-to-14-day outlook predicts a return to seasonally wet, cool weather for much of the central U.S. between May 11 and May 17.
Meantime, USDA reported yesterday that 1.803 million tons of distillers dried grains with solubles (DDGS) were produced in March, which is an 8.9% year-over-year increase.
UADA also reported that 420 million bushels of corn were used for ethanol in March, a year-over-year increase of around 2%.
The May WASDE report is setting numbers.
How much of the much speculated Brazilian corn cuts will the USDA bake into this report we still don’t know.
The US has already shipped 40Mt of corn, with 4 months to run, and the current full-year estimate is 45Mt.
It suggests some adjustments are needed, of course.
However, it’s logical to assume that 1.5bbu carryout seems overdone based on these anticipated adjustments.
In this context US corn basis bids showed a fair amount of variability, firming as much as 4 cents higher.
While soybean basis bids were mostly steady but mixed among the few locations where there were available some quantity.
Bids boosted, indeed, as much as 10 cents higher at a Nebraska processor but fell as much as 5 cents at an Ohio elevator.
In South America, CONAB (Brazil’s National Food Supply Company) will follow the USDA report and will likely either validate or dispute the American numbers.
Dr Cordonnier, a well-known analyst who specializes in South America, pegged the Brazilian corn at 100 million tonnes (Mt) (USDA 109Mt) but flagged the risk of further downside due to dryness.
He even mentioned 90Mt as a potential.
Brazil’s Anec, meantime, estimates that the country’s soybean exports could reach 439.6 million bushels in May, representing a month-over-month decline of around 23%, if realized.
Brazilian corn exports are expected to zero out this month, per Anec.
April corn exports only reached 1.2 million bushels.
About crop progress, in Parana, only 28% of corn is now in good to excellent condition compared to 40% last week, compared to 61% last year to date and 74% on average.
The Buenos Aires Grains Exchange, meantime, is forecasting the country’s 2021/22 wheat production at 698.1 million bushels, which is roughly equal to its all-time best set in 2018/19.
Also on European market, grains were still very firm yesterday with fears more and more proven in France in the face of a persistent water deficit.
The rains hit part of Europe, bringing a little pressure to the trend, although many French regions and the majority of British plots remain subject to a worrying water deficit.
The corn surge have pushed wheat upwards while rapeseed continue to depends on very limited supplies.
Canola is not to be outdone and operators will be examining with interest the Statcan report on stocks in Canada as of March 31, which will be released this Friday.
Feed barley prices are still lagging behind wheat harvested in 2021, a consequence of less marked interest in this cereal for the moment by China, unlike last year.
From Black Sea basin, Russian wheat exports are up 13pc so far this season according to the Federal Center of Quality & Safety Assurance for Grain and Grain Products.
After a long Easter truce, the physical market is reopening this morning in the Black Sea area, with producers hoping that dynamism will remain in force at the start of the week in the wake of the good performance of last week.
Maize was indeed a new high on the old campaign.
During the past week, improving prices on the world stage drove the prices of corn, wheat and sunflower for the new season to higher levels as well, for harvest 21.
The psychological threshold of 250 USD / t for these two cereals in port delivery is now accessible for Ukrainian producers.
Aussie local market, have seen new season wheat and barley prices a buck or 2 softer on the bid side yesterday across the boards.
Yet again canola is the performer in this new crop market as we saw bids up again by $5/t with west coast track values $740/t and WA FIS $775/t range, which is peaking to the highs we have seen thus far.
Current crop wheat remained steady across the trading day with still reasonable liquidity being traded in the market across WA.
Barley markets along the east coast continue to remain wide on the bid offer spread for May-July slots.
Sorghum harvest through the northern parts of Australia continues to ramp along, but we still seeing downgraded sorghum hit the market and being rejected from port for export programs with SORG 2 values trading around that $30/t discount due to shot and sprung as a result of mice infestations.
South Australian Viterra network released their monthly receivals report yesterday and figures showed a total of 6,664mt received into the system across the 3 regions in the past month coming off farm back into the network as the bulk export program continues to power along.
On the international scene, Tunisia has launched a call for tenders for 50,000 t of feed barley.
Qatar is also shopping for around 105,000 t of feed barley.
Tonight we will see how the sessions close.
