The latest grain rally took another big step forward Friday, led by huge gains in corn prices, which have now risen higher for the past five consecutive weeks.
Chicago corn July futures jumped nearly 4% higher to close limit up once more, with weeklong gains of 6.4%.
Soybean futures also made significant inroads, rising around 2% higher.
Chicago wheat gains were more muted, with most contracts rising between 0.75% and 1.25%.
Investors remained skittish about the prospect of rising inflation, although the latest round of data showed lower inflation than expected in March.
Macros saw more weakness, as the Indian coronavirus outbreak continues to weigh on demand ideas globally.
India continues to report record coronavirus cases and the daily death toll is rising.
Some Indian states are imposing lockdown to attempt to stop the surge.
At the same time, EU countries are starting to push towards re-opening, with France and Spain both aiming to be fully re-opened by the end of June as they hope for an end to the “third wave”.
In this context, crude oil dropped more than 2%.
Diesel dropped nearly 2%.
Gasoline was down 1.25%.
Also the Dow dropped on Wall St., 186 points to 33,874 despite a very optimistic earnings report from Amazon.
The U.S. Dollar firmed moderately.
Coming back on grain markets, corn prices jumped higher on another round of technical buying, anchored by strong supply, demand and weather fundamentals.
Soybeans have risen in tandem with corn over the past few weeks on the same set of bullish supply and demand fundamentals.
Wheat prices rose on a round of technical buying largely supported by spillover strength from corn and soybeans.
Dry weather forecasts across the U.S. Plains has been also supportive of higher prices, as were some production challenged emerging.
Rain forecasts across the eastern corn belt, meantime, have another 2-3 + “still to come for most of the SRW areas this week, and there are better chances of moisture for some of the spring wheat areas in Montana / North Dakota.
Meantime, cash basis in the U.S. continues to explode higher for the months of May through August, indicating to the world exactly how tight old crop supplies actually are in the U.S..
In add, basis looks to stay strong until the crop (which is just starting to be planted now) will harvested in the fall.
Widespread snow throughout the central U.S. two weeks ago severely put the brakes on planting progress, but weather was more cooperative last week, allowing for some forward momentum, according to data from the newest crop progress report from USDA, covering the week through April 25.
The latest weekly grain export inspection report from USDA held mostly positive numbers for traders to digest.
Corn volume saw moderate week-over-week gains, with soybeans also slightly above the prior week’s tally.
Wheat volume was down from a week ago but still landed on the higher end of trade estimates.
The latest set of export sales data from USDA held enough optimistic data to keep most grain prices in the green immediately following the report.
Old crop corn sales improved 35% week-over-week, with old crop soybeans tracking well above the prior four-week average.
Old crop wheat sales saw a 7% decline from a week ago.
The USDA May’s WASDE report, will be published on Wednesday of next week.
We will see USDA’s first formal global figures for the new crop.
CME expanded daily price limits will apply from today, 40 ¢ on corn up from 25 ¢ / bu, 100 ¢ on beans up from 70 ¢ / bu and 45 ¢ on wheat futures up from 40 ¢ / bu.
First notice day on grain contracts for May had five contracts of HRW, 200 of SRW, 66 of beans, and no corn (no surprise given basis – and note that May futures were up 37 ¢ as no limits in delivery).
CFTC figures released on Friday, based on data at Tuesday 27 April, drew some attention given the reduction in managed money corn length, off net 5000 contracts, despite the board rally.
In South America, meanwhile, Brazilian weather maps look empty, to put it lightly, for safrinha corn areas, with almost nothing coming out across the 2-week models as conditions continue to deteriorate there.
Crop ideas continue to see more cuts discussed.
Indeed, Brazil’s Safras & Mercado has trimmed its production estimates for the county’s total 2020/21 corn crop by 8%, falling to 4.098 billion bushels, citing dry weather as the reason for the downgrade.
The country’s second corn crop has been particularly susceptible to drought this season, according to the forecaster.
Dry weather in Argentina has helped soybean farmers speed up their harvest, which is now 33% complete, according to the Buenos Aires Grains Exchange and its production estimate is 43 million tonnes against 47.5 still posted in the last USDA report.
That’s a 14-point jump from the prior week.
However, harvest remains far behind last year’s pace, when 68% had been harvested at this time a year ago.
Production estimates are around 1.580 billion.
In Europe, corn plantings in France have accelerated, with consultancy FranceAgriMer reporting that 74% of the 2021 crop is in the ground through April 26, versus 41% a week ago.
FranceAgrimer also updated crop conditions, cutting its rating of good-to-excellent conditions on wheat by 4pc to 81pc.
Solid rains are forecast for most of central and western Europe this week though, so some are hoping for an improvement to crops with the moisture.
Rapeseed crop in France remains worrying, especially with temperatures that are sometimes still slightly negative during full bloom.
The May 2021 wheat deadline on Euronext, last harvest deadline for 2020, closes next Monday.
Meantime, a 33,000 t boat has arrived in Dunkirk of Romanian origin to be delivered on this deadline.
This element is extremely rare but complies with the specificities of this contract.
Meantime, Morocco – a major buyer of French wheat – reports that it may see a threefold increase of cereals production in 2021 versus a year ago.
That includes soft wheat production estimates of 177.1 million bushels, plus 86 million bushels of durum wheat, per the country’s agriculture ministry.
From Australia, the USDA Australian initial estimate of Australia’s new crop wheat production is 27 million tonnes (Mt) and of barley, 10Mt.
Lachstock presently forecasts them at 28.2Mt wheat and 9.8Mt barley.
The storm system moving across WA this week continues to expand with a solid 20-30 mm forecast across the entire wheat belt.
Black Sea markets are in holiday mode – happy Orthodox Easter.
