The grain markets posted another active week, last week.
For the week ending April 16, on US market, May corn prices were up 9¢ and May soybean prices were up 30¢, all May wheat classes were up, with Kansas City that was up nearly 23¢.
Also July bean oil futures rose 137 points at 54.24 cents last Friday, also closing at a bullish weekly high close and for the week rising 331 points.
Meantime, July soybean meal futures even if lost a dime, last Friday to close at $406.40 but for the week gained 90 cents.
Friday’s CFTC fund positions report confirmed new increases in overall fund length on corn (and new highs for the year) though the reduction in length on beans is likely no longer accurate, because CFTC data from last Tuesday don’t include the effects of the rally later last week.
To note that corn futures briefly topped $6.
While the futures prices didn’t stay above $6 for long, the strong price signals showed up in both old crop and new crop past week.
A $6 corn doesn’t come around too often.
And $5 December new crop corn doesn’t come around too often, either.
Since the shockingly low Prospective Plantings report of 91 million acres of corn, we have note that the market has doing a job as that’s not enough to fill all needs: corn, indeed, is trying to compete with soybean acres.
USDA’s total planted acres of nearly 179 million to main row crops, leaves a deficit of 4 million to 6 million acres.
So, the market is trying to buy some of those lost acres.
Maybe $5 will be the low for December corn prices going forward, with this market action explosive.
However, we must reminds how quickly prices have changed recently.
We were at $5 in 2014 and we stayed below that $5 mark for 2400 days; and we went from $5 to $6 in 99 days, and that due an incredible demand and just continued weather problems.
Some geopolitical issues are also playing into the markets, especially between Russia and Ukraine.
But there are still some US domestic factors contributing to current prices.
End users obviously don’t have enough ethanol bought.
For the past five or six years, there’s just been affordable product for them.
And from a risk management standpoint, the people who got caught, were the people who were short bought.
So, we could continue stay explosive, but we have also to loock the seasonal trends of the markets.
Basis levels also improved past week, with some farmers able to contract $5+ new crop corn futures.
Weekly USDA export sales data showed slower new business and a small cancellation by China.
The market focus this week will be on Brazilian rainfall amounts and coverage, and the updated U.S. forecasts after a second cold wave.
Brazil’s key agricultural areas will experience three waves of scattered showers and thunderstorms during the next two weeks.
Big soaking rains will likely be localized.
Many Safrinha crop areas will get some rain and crop conditions will improve, but low subsoil moisture in some areas could lead to crop stress quickly returning in May
The soybean and bean oil futures bulls put in an impressive performance past week and may lead to some follow-through buying interest in those markets this week.
However, soybean meal continues to languish and that’s an underlying worrisome element for not only meal, but for soybeans and bean oil.
Meantime, Nopa estimated US crushing last March at 178 million bushels, a figure lower than market expectations and significantly lower than last year.
To note, indeed, that U.S. futures were supported in part by stronger soybean, soymeal and soyoil futures on China’s Dalian Commodity Exchange past week.
Argentine strikes hit again on Friday, there with several crush plants briefly shutdown.
However, operations are back up and running, even if talks ongoing and markets are questioning if we’ll see follow up strikes to come.
Wheat prices, on its hand, are breaking out to the upside on weather concerns.
There is supposed to be cold weather from Canada down to Texas.
Wheat is well enough along that if get it too cold, we will see nipped the crop.
Wheat prices were mixed last Friday, however, as traders quickly consolidating weekly gains before the weekend.
To note, in add, that much of Friday’s lack of buying interest was tied to beneficial rains across the central Great Plains overnight into Friday.
In any case, winter wheat futures are making runs toward contract highs hit in February while the spring wheat hit new contract highs earlier past week, touching highest on the weekly continuation chart since August 2017.
In fact, these moisture will be beneficial only if remnants of winter next week will don’t cause crop injury.
Frost and freezes are forecasts as far south as central Illinois and Oklahoma next Tuesday through Thursday.
We could see the freezing line drop deep into the Texas Panhandle past weekend, while extending east to cover the western two-thirds of Kansas.
Crop progress figures are due to be released tomorrow in the US.
On the European market, there were little change in grains on Friday, after a week of rising prices, fueled mainly by climate risks centered on the American continent.
Another factor giving rise to fears among producers, especially in France, is the weather forecast which indicates no precipitation for the next 10 days in Europe.
FranceAgriMer posted a wheat crop rating on Friday, down only 1 point to 86% as good to excellent.
In winter barley, this crop rating has dropped by 2 points to 83%.
However, it is no surprise that in spring barley the decline was the most significant, as a result of the risk of frost, to 88% against 92% posted the previous week.
Corn plantings are estimated at 18% as of April 12, compared to 23% last year to date.
Rapeseed was once again making progress in the 2021 harvest, in the wake of palm and canola.
On the last 2020 harvest deadline, May 2020, the market enters a phase of high volatility with its closing at the end of the month.
In Germany, in contrast, production prospects are encouraging for the moment, with an anticipated all-wheat harvest for 2021 of 22.6 Mt by the Association of German Cooperatives (DRV), an increase of 500 kt compared to last year.
However, rapeseed production across the Rhine is likely to be disappointing again this year (3.57 Mt).
From Black Sea basin, politics remaining hot, with Russia expelling a Ukrainian diplomat over the weekend and retaliation by the Ukrainian government is expected to start this week.
Ag logistics, however, seems still not directly impacted by the tense political situation, but some background concerns remain about the impacts if the situation does turn more violent.
Black Sea planting of spring crops is starting to pick up pace after previous cold weather had slowed fieldwork.
During the past week, Russian producers sowed more than 2 Mha or 4% of the target.
In Ukraine, already 1.5 Mha for all crops have been sown, including more than 1050 Kha of barley and already 400 Kha of sunflower, which would account for about 20 per cent of estimated total..
Cool and moist weather still is on the cards for most of the Black Sea this week though, with a fairly widespread inch forecast across winter wheat areas.
Aussie local markets saw last Friday a fairly quiet end of the week with a rally on the boards after the global moves but fairly quiet overall trade.
There are some concerns, about mice infestation impacts, that remaining in focus, as reports of trucks getting rejected for contamination are more and more frequently.
The force majeure claim situation in WA also getting more focus as the trade works to sort out the logistics.
Logistics on the east coast, indeed, remaining tight with the rail delays and tight truck availability.
Wheather maps still bringing a nice dry week for most of the country, although there are some chances of rains flirting around on the extended run maps into later next week.
From China, chinese pork production was reported up 32 per cent year-on-year Q1 by the government on Friday.
Meantime, hog numbers also were reported up nearly 30pc higher, despite the ASF culls.
On the international scene, activity was very reduced on Friday with in particular South Korea which did not follow up its call for tenders in corn.
On macro market, to note that cryptocurrencies have crashed hard over the weekend with talk of more regulation in the US and bans in Turkey both cosidered spooking markets.
However, it is still amazing to see how much the acceptance of cryptocurrencies has increased in the markets.
Tonight we will see how the sessions close.
