Nick Paumen

Jun 2, 2021

 Highlights

  • Cattle markets remain under pressure in the fallout of the cyberattack against JBS. According to USA Today, the CEO said the vast majority of plants would be operational Wednesday and the company is sparing no expense to fight the threat.
  • China’s Economic Tsar Liu He held a virtual meeting yesterday with U.S. Treasury Secretary Janet Yellen, observers say this is a sign for economic policy coordination between the two economic power houses.
  • The USDA soybean crush report yesterday showed 169.9 million bushels of beans were crushed in April, down from the estimate of 171.1 million bushels and 188.2 million bushels crushed in March. Total crush for the year is at 1.471 billion bushels vs. 1.449 billion last year, we now will need to crush 719 million bushels from May-August.
  • POET announced yesterday that it will acquire Flint Hills Resources, the deal will boost POET’s ethanol capacity 40% to 3 billion gallons/year, DDG production to 7 MMT/year, and corn oil production to 975 million lbs./year.
  • As of 6:00 AM: Crude oil up 73 cents at 68.45, Dow futures up 58 at 34608, S&P 500 futures up 3.25 at 4201, and the U.S. $ index down up 331 at 90.150.      

 

 Corn

  • Two-sided trade in the overnight session as the market takes a breather from the big moves yesterday.
  • The first glimpse at the G/E rating put corn at 76%, one of the highest initial ratings in the last decade. Planting at 95% and emergence at 81% remain well above 5-year averages.
  • Inspections yesterday showed strong numbers for corn, disappointing for soybeans and wheat. Barge freight was under pressure yesterday as well with the lack of grain movement coming from the farmer’s bin. Rail freight on the weaker side too.
  • Adding to the weather premium is Brazil’s central growing regions remaining dry and hot, southern regions still seeing better chances for precipitation.
  • AgRural updated their production estimate for Brazil at 90.9 MMT for the total corn crop, USDA is at 102 MMT so we’ll be watching to see how they adjust things in the WASDE next Monday the 10th.
  • Open interest was up 5,360 contracts with N down 7,300, 4,200, and Z up 4,100.
  • Spreads: N/U 86’4 inverse, U/Z 23’6 inverse, N/Z 110’0 inverse, Z/H 6’2 carry.

Outlook: Choppy trade to end the night session but if the funds want to keep trading the weather, we will continue to see support in the market.

 

Oilseeds      

  • Soybeans and its bi-products hold on to gains coming into the morning as the market keeps eyeing up the dry and hot weather coming at the end of the week.
  • Planting progress at 84% and emergence at 62% remain well above the 5-year averages.
  • Some reports yesterday indicated there was enough frost damage in some areas to call for replant, but likely not widespread enough to get the market excited. Traders more concerned about how hot and dry conditions look the next week.
  • Yesterday’s bid rundown showed more weakness in processor bids, and plenty of plants in the midwest rolling bids to August.
  • Chinese Dalian prices are stronger this morning with price equivalents around $18.27/bu and demand showing no signs of stopping.
  • Open interest was up 2,540 contracts with N down 4,600 and X up 4,300.
  • Spreads: N/Q 46’6 inverse, Q/X 101’0 inverse, N/X 147’4 inverse, X/F 0’4 carry.

 Outlook: Weather markets in full force as the complex trades higher.

 

Wheat

  • Futures across the three classes continue to draw support weather, careful trading these markets as we can see corrections at any time.
  • To no ones surprise, spring wheat's G/E rating fell another 2% to 43% G/E, the lowest rating since 1988. Winter wheat came in at 48% G/E.
  • 73% of North Dakota’s topsoil moisture is considered below adequate and only 31% of the crop is rated at G/E.
  • Bad weather conditions have caused a slight disruption in grain loading at Ukraine’s major Black Sea ports.
  • Spreads: Mpls N/U 3’4 carry (the low on Friday was 7’0 cent carry), Kansas City N/U 7’2 carry, Chicago N/U 3’6 carry.

 Outlook: Once again, we’re trading weather right now with Mpls leading the way and there is borrowed strength from corn and soybeans.