John Wesley Willson

May 7, 2021

Highlights

For the second session in a row, the Dow has reached an all-time high. The S&P 500 made new highs as well on Friday, as investors believe that a friendly Fed policy will continue due to the slower job recovery. Commodity markets saw several products reach new contractual highs as inflation fear and a weaker dollar kept the bulls in the driver seat.  

 

  • The big news today was the announcement of a slower job recovery, with only 266,000 jobs added in the month of April. This led to unemployment levels rising to 6.1%.
  • The WHO has approved the use of China’s Sinopharm Covid-19 vaccine.
  • With nearly a third of Americans vaccinated, new cases of Covid-19 are declining sharply.
  • Outside markets as of 2:37 PM Central: June crude oil at $64.79 up $0.08; U.S. Dollar index at 90.2180 down 0.7330; Gold at $1832.8 up $17.10; Dow at 34789.63 up 241.10 points. 

 

Corn

At the risk of sounding like a broken record, corn has once again traded into new highs on both the old and new crop contracts. Concerns about the weather are growing as drought conditions in the west move east. Dry weather persists in Brazil as well, threatening the safrinha crop production.

 

  • Closes: July at $7.32’2 up 13’4; Sep at $6.54’6 up 9’2; December at $6.36’4 up 11’0.
  • Basis levels remain firm across much of the country, justifying the recent and sharp rally in corn futures.
  • Spreads: N21/U21 78’0 inverse, N21/Z21 95’4 inverse, Z21/H22 3’4 carry.

 

Oilseeds

After prices settled off their highs early in the session, the bean market caught the bid, setting new highs in the old crop July contract and new crop November contract. With a red-hot corn market due to a strong export program of late and production issues in Brazil, soybean futures are fighting for additional acres. Meal was up sharply, supporting futures as well after being the laggard for most of the recent rally.

 

 

 

  • Closes: July at $15.89’6 up 20’2; Aug at $15.37’4 up 21’6; November at $14.33’4 up 24’4.
  • Board crush jumped sharply, with July crush rising 18’4 cents, putting it at 82’6. The sudden rise in meal prices had a significant impact on margins as prices had previously been falling behind compared to the rest of the complex.
  • Spreads: N21/Q21 52’2 inverse, N21/X21 157’6 inverse, X21/F22 2’4 inverse.

 

Wheat

 

The wheat market saw higher trade as well after an early sell-off attempt. Both the KC and Minneapolis futures reached new contractual highs. The new highs were set in new crop KC July and both the old crop July and new crop September Minneapolis wheat. Competition for acres, as well as dry weather continues to provide a solid foundation and support for this market.

 

  • July closes Chicago at $7.61’6 up 8’4; Kansas City at $7.36’6 up 10’0; Minneapolis at $7.97’4 up 7’0.
  • The July wheat/corn spread is now at 6’2.
  • Spreads: Chicago N21/U21 0’4 carry, Kansas City N21/U21 3’6 carry, Minneapolis N21/U21 5’2 carry.