Nick Paumen

Apr 30, 2021

Highlights

Well, the grain markets certainly ended the week with a bang. Reuters reported that Safras & Mercado updated their total corn crop to 104.1 MMT, down 8% from their previous estimate. The safrinha crop is being cut about 10 MMT to 70.7 MMT. This caused a ripple effect of strength throughout the rest of the grains market after a two-sided day where a fair amount of weakness was seen. The macro market is feeling the pressure today from coronavirus concerns around the world and increasing inflation.

  • At 3:00, the DJIA trades down 220 at 33731 and the S&P market down 33.50 at 4169.00
  • Crude trading up $1.50 at 63.51
  • The U.S. $ up 697 at 91.290

Corn

Wow, after what looked like was going to be a quiet/weaker day in the markets as we came out of the night session turned into a runaway in the end. The May contract had no limits in the first day of the delivery cycle, July closed locked limit higher. The cut to the safrinha crop confirmed the concerns that had been talked about the last couple weeks that weather has been that bad for the Brazilian farmer. Our domestic demand remains very strong as evident by the lack of deliveries this cycle.

  • There will not be expanded limits Sunday night as only one month closed locked limit higher.
  • Funds about an estimated 25,000 contracts today.
  • Argentina’s corn harvest sits at 19% harvested, compared to the 30% 5-year average.
  • The vast majority of the safrinha crop continues to remain in a dry/below normal chance for rain in both the 6-10 and 8-14 day forecasts.  
  • May closed up 38’0 cents at 740’0, July up 25’0 at 673’2, July corn synthetically closed up 35’3 cents at 683’6, September up 21’6 at 592’2, and December up 17’4 at 563’6.
  • Spreads: K/N up 6’2 at 60’0 cent inverse, N/U up 11’2 at 89’2 cent inverse, N/Z at up 18’0 at a 120’0 cent inverse, and Z/H up 04’ at a 5’4 cent carry.

Oilseeds

Soybeans felt the spillover strength effect today after the corn market was hit with the news out of Brazil. Early on soybean weakness was seen because of rumors that China had been cancelling purchases from Brazil. News late this week that the U.S. eastern coast is booking imports of Brazilian soybeans as the pipeline remains very thin. There were 66 contracts put out for delivery in soybeans and 629 contracts for soybean oil.

  • Not to be forgotten, the soybean planting pace is expected to make significant jumps on Monday's report as weather improved this week to promote fieldwork.
  • Monday we will see the USDA March crush report with an average estimate of 188.4 million bushels.
  • New crop sales now sit at the highest total for this time of year since 2013.
  • Funds bought an estimated 20,000 soybean contracts, soybean meal bought 5,000 contracts, and soybean oil bought 7,500 contracts.
  • May soybean oil up 2.47 at 68.46 cents/lb, July up 2.50 cents at 62.39 cents/lb. May soybean meal up $3.4 to $426/MT and July meal up $3.1 at $426.1 MT.
  • July board crush up 3.3 cents at 90.5 cents/bu.
  • May up 28’4 at 1571’0, July up 32’0 at 1534’2, August up 28’0 at 1471’2, and November up 21’0 at 1339’6.
  • Spreads: K/N down 2’6 at 37’4 cent inverse, N/Q up 4’6 at 63’6 cent inverse, X/F up 0’2 at 1’2 cent inverse.

Wheat

As with soybeans, the three wheat classes found strength from the runaway corn market shortly after the noon hour. Very little changed in the wheat world as weather concerns in the U.S,/Canadian prairies remain but farmers are still putting the crop in the ground. The 6-10 day forecasts show below normal odds for precip and above normal odds for above-normal temps for the majority of the country west of the Mississippi.

  • Ukraine continues to expect a better than originally thought production from their wheat crop this year with the UGA putting their estimate at 27.7 MMT. Exports are expected to be up 3.5 MMT from last year as well.
  • Australia is expected to have a second straight year of improved crops at 27 MMT, but that is down from last year’s production level.
  • Funds bought an estimated 3,000 contracts.
  • Mpls May up 27’6 at 763’2 and July up 19’2 at 763’6, KC May up 9’6 at 698’2 and July up 9’0 at 703’4, Chi May up 5’0 at 742’4 and July up 5’6 at 734’6.
  • Spreads: Mpls N/U up 2’0 at 3’4 cent carry, KC N/U up 0’4 at 3’4 cent carry, and Chi N/U up 0’4 at 2’4 cent inverse.