Corn futures posted life of contract highs in several contract months again this week, adding another 12% to the rally in nearby May.
End users are scrambling for old crop supplies, and there is a threat of a short squeeze in May futures.
That played out initially as a “pin” attempt at the May options expiration.
Planting is beginning across the country, with 8% planted as of last Sunday, matching the 5 year average pace.
It was likely slowed by cold and in some cases snowy weather this week.
The Wheat market continued to climb out of its late March hole.
Contracts in all three markets set life of contract highs.
Chicago SRW was up 8.9% on the week, with KC HRW 10.5% higher.
Minneapolis spring wheat rose 8.2% as planting continues and acreage must be kept away from corn and soybeans.
Wheat prices, in add, are rising also in part because of concern over crop conditions following winter weather in some areas and farmer selling was light in anticipation of higher prices.
USDA reported total U.S. winter wheat conditions unchanged from last week. Winter wheat reported as good or excellent was 53
percent.
Freezing temperature this week are a concern, but in areas where it snowed, notably Kansas, Nebraska and Colorado, the snow provided some protection against potential crop damage, while some rainfall to parts of Oklahoma and northern Texas.
However, also with this rain, the USDA reports 60% of Texas and 26% of Oklahoma’s topsoil moisture short or very short.
The Plains states were cooler with areas of snow, but precipitation was still below normal in much of the Dakota’s and Montana.
According to the USDA, 65% of Oregon and 60% of Washington are short or very short of topsoil moisture.
As of April 18, farmers had planted 19 percent of the country’s
total intended spring wheat area, up from last year’s 11 percent and 58 percent ahead of the 5-year average.
Soybean prices followed corn higher Friday on the same set of bullish supply and demand fundamentals, along with widespread planting delays caused by adverse weather earlier this week.
So, soybean futures shot 7.4% higher this week, for a two week rise of $1.37.
Soy Meal rallied 5% on the backs of the feed grains and inflation buyers.
Soy oil was the main driver, though, up 11.33%.
The $6.38 weekly gain added 74 cents per bushel to soybean value, accounting for roughly 70% of the gaibn in beans for the week.
Meal did the rest.
Some profit-taking overnight and early in Friday’s session kept wheat, corn and soybean prices on their heels for a while, but a late-session rally helped push them back into the green by the close.
On macro market, in Wall St., despite hot tech and bank stocks helped pushed on Friday, the Dow 227 points higher to 34,043, investor concerns regarding a possible tax hike on capital gains, moved Dow Jones moderatly lower during the week.
Energy prices moved fell, with WTI about $1 lower and Brent $0,50 lower for the week.
The Baltic Dry Index (BDI), an assessment of the average cost to ship raw materials such as grains, coal and iron ore, gained 18% on the week to end at 2,750.
The U.S. Dollar Index decreased from last week’s 91.56 to close at 90.87.
Coming back the grains market, U.S. Agriculture Secretary Tom Vilsack unveiled plans earlier this week to enroll as much as 4 million acres into the agency’s Conservation Reserve Program (CRP) and expand some incentivized environmental practices that are allowed under that program.
Thursday’s weekly Export Sales report showed corn bookings at 387,500 MT old crop and only 29,500 MT for 2021/22 crop delivery.
That took the 20/21 shipped and unshipped sale total to 99% of newly updated USDA forecast vs. the 85% average.
Exports have reached 58% of the WASDE full year projection, with the normal pace at 55% by this point in April.
This week’s U.S. 2020/21 wheat commercial sales of 240,200 metric tons (M.T.), were up substantially from last week’s 56,600 MT but below trade expectations of 250,000 MT to 550,000 MT.
Total wheat export commitments for old crop are now to 25.607 MMT, totaling 96% of the USDA projection, vs. the average pace of 103%.
USDA expects total 2020/21 U.S. wheat exports will reach 26.8 MMT, 2% higher than last year, if realized.
Net sales of new crop wheat were 373,800 metric tons (M.T.) for delivery in 2021/22.
For soybean disappointing weekly export sales data showed old crop soybean bookings of 64,300 MT, and 315,300 MT in sales reported for new crop delivery.
Total soybean old crop export commitments for the MY now total 60.827 MMT.
That is 98% of the revised USDA full year forecast, compared to the 5-year average pace of 92% for this date.
Shipments have progressed to 90% of that projection vs. the 77% average pace.
Per the Commitment of Traders report, the large money spec funds reduced their net long position in corn futures and options by 17,995 contracts during the week ending 4/20.
That position stood at 383,998 contracts net long on that date.
Some of those folks had to scramble to get back in when prices broke higher and headed for limit up on Thursday.
On wheat they erased their net short position in CBT wheat futures and options during the week ending April 20, flipping it to net long 1,583 contracts.
In KC wheat, they added 7,719 contracts back into their CFTC net long position to put it at 18,747 contracts on April 20.
That worked out well for them.
They also came charging back into the market of soybean futures and options, adding 30,286 contracts to their net long in the week ending April 20, taking it up to 172,544 contracts.
During this week, there were also the announcements of an export sales of 114,300 metric tons of corn for delivery to Mexico during the 2020/2021 marketing year.
Of an export sales of 336,000 metric tons of corn for delivery to unknown destinations during the 2021/2022 marketing year.
Of an export sales of 136,680 metric tons of corn for delivery to Guatemala during the 2021/2022 marketing year.
And an export sales of 132,000 metric tons of soybeans for delivery to China during the 2021/2022 marketing year.
In this context all wheat futures prices were up for a third week in a row.
CBOT soft red winter (SRW) futures rose about 58 cents to close at $7.10/bu.
KCBT hard red winter (HRW) futures were up about 58 cents to end at $6.73/bu.
MGE hard red spring (HRS) futures gained about 44 cents to close at $7.18/bu.
CBOT corn futures jumped 69 cents to end at $6.55/bu.
CBOT soybean futures gained $1.07 to close at $15.39/bu
Basis, in contrast, remained steady this week in the Gulf and PNW.
Meantime, CME Group announced that after a routine biannual review, it has decided to expand daily price limits for Chicago Board of Trade grain and soy futures.
The new limits will take effect May 2 for trades dated May 3.
Following are some of the new limits.
Corn: 40¢ per bu. (currently at 25¢ per bu.)
Soybeans: $1 per bu. (70¢ per bu.)
Soymeal: $30 per short ton ($25 per short ton)
Soy oil: 3.5¢ per lb. (2.5¢s per lb.)
SRW and HRW wheat futures: 45¢ per bu. (40¢ per bu.).
From South America, the Buenos Aires Grains Exchange (BAGE) expects Argentine farmers to plant 6.5 million hectares (16.0 million acres) of wheat in 2021/22 unchanged from the previous season.
Sowing begins in May and harvest ends in January.
Meantime Argentinian government may increase its grains export taxes to combat inflation.
The country already imposes a 33% tax on soybean exports, along with soymeal duties of 31% and 12% for corn and wheat.
Industry groups are unhappy with the proposition.
On european market, after the surge of the last few days was followed on Friday by notable profit taking.
Rapeseed in particular suffered the heaviest losses with a contract in August 2021 which sank by more than € 7.75 / t.
Note, however, that the expiry maintains a clearly positive weekly balance sheet.
In addition to this technical decline, the oilseed was pulled down by the withdrawal of the Malaysian palm.
The partial closure of an Indian port due to the covid-19 crisis is indeed a concrete expression of the risks posed by the worsening health crisis in the country on world demand for oil.
Wheat also sank into negative territory amid profit taking on Euronext.
The climatic conditions, however, remain under close surveillance.
In France, corn farmers have planted 41% of the 2021 crop through April 19, making a lot of headway versus the prior week’s progress of just 18%.
A year ago, 50% of France’s corn crop had been planted by this time, per the country’s FranceAgriMer farm office.
French farm office FranceAgriMer reports that 85% of the country’s soft wheat crop is in good-to-excellent condition through April 19, sliding two points lower from a week ago, due to extensive cold, dry weather.
French barley quality ratings also dropped two points week-over-week, with 81% of the crop in good-to-excellent condition.
In this context, Euronext ended the week with Matif May wheat futures prices gained 18,75 euros to end at €236,25/t.
Matif corn June futures raised 10,00 euros to close at €230,25/t.
While, Matif rapeseed May futures, jumped 82,25 euros to end the week at €591,50/t.
From Africa, Morocco’s government announced it will increase its custom duty on soft wheat and durum imports to help domestic farmers.
Wheat import duties are suspended through May to ensure price stability and consistent supply following two consecutive years
of drought.
Nigeria’s central bank plans to halt dollar funding for wheat imports.
The move forces local traders and millers to secure private
funding.
Bread prices have risen 15 percent over the past year.
The USDA attaché in Lagos predicts consumption to rise 10
percent year-over-year to 4.9 MMT.
Nigeria is the fifth largest importer of U.S. wheat.
A new Reuters analyst survey suggests South African farmers could see corn production for the 2020/21 crop rise 7% from a year ago, with an average trade guess of 643.6 million bushels for the continent’s largest corn producer.
South Africa’s Crop Estimates Committee will release its official estimates on April 29.
From Black Sea basin, Russian agriculture consultancy IKAR reduced its forecast for Russia’s 2021 wheat crop from 81.0 MMT to 79.5 MMT.
More than 700,000 hectares (1.7 million acres), around 17 percent of the planted area- primarily in central Russia, has to be replanted following dry conditions during fall planting.
On the international trade scenario, a South Korean feed association has purchased 7.9 million bushels of corn, sourced from either the United States, South America or South Africa, in an international tender that closed last Friday.
The grain is for arrival in late August.
Another South Korean group also purchased another 5.4 million bushels of animal feed corn in a separate international tender that also closed last Friday.
Watching next week market, grain traders will start the week adjusting to any surprise futures positions inherited at the expiration of the May options.
USDA will release the weekly Export Inspections report on Monday morning, with the Crop Progress report that afternoon.
On Wednesday, EIA will release the weekly report, including data on ethanol stocks and production.
The weekly USDA Export Sales report is scheduled for Thursday morning.
