- After a firm start Chicago turned mixed with soybeans higher while corn/ wheat futures were weaker. The volume of trade has been curtailed by the uncertainty surrounding Tuesday’s USDA Crop Report. Fund managers are squaring positions and waiting for the WASDE/NASS stocks/crop data. The May WASDE report incorporates the March Seeding Report and will provide the first WASDE blessed 2020/21 crop/stocks estimates. Traders are positioning long soybeans/ short corn and long oats/short corn. Corn appears to be the short leg of all spreads with WASDE to use 97.0 million acres of seeding until the final release of the survey in the closing days of June.
- We anticipate a lower Chicago close in corn /wheat with KC July wheat futures holding at key support from the 50-day moving average at $4.76. If July KC wheat futures closes below $4.7325, last week’s low, the selling pressure is likely to increase. Soybeans are firmer as China crushers have secured another 4-6 cargoes from the US for September/October keeping with last week’s program. Soybean/corn spreads should widen into early summer.
- Chicago traders estimate that funds have bought 3,400 contracts of soybeans and 1,800 contracts of soymeal, while selling 2,000 contracts of corn and 1,600 contracts of soyoil. Funds are flat in Chicago wheat futures’ trade.
- China crushers have booked another 4-6 cargoes of US soybeans to start the week. This is like what occurred last Thursday and is now expected become more “normal” as Chinese crushers cover their autumn import needs. We cannot confirm rumours that China’s is securing soybeans for its reserves. In fact, China announced to start the week that it will start auctioning off domestic Government surpluses of corn and soybeans on a weekly basis. The auctions are starting earlier than normal, based on abundant supplies in government stores. The Chinese purchases of US soybeans is what is underpinning Chicago soy futures.
- US export inspections for the week ending May 7 were; 52.5 million bu of corn, 18.2 million bu of soybeans, and 12.5 million bu of wheat. For their respective crop years to date, US corn exports stand at 984.7 million bu (down 457 million or 32% from last year), US wheat exports at 12.5 million bu (up 23 million or 3.5% from last year), with US soybean exports at 1,262 million bu (up 61 million or 5% from last year). WASDE is expected to trim their 2019/20 US soybean exports in Tuesday’s report by at least 50 million bu. China shipped out 2.5 million bu of US soybeans off the PNW last week.
- Russian fob wheat trades continue to leak lower with a trade reported at $194.50/mt for July. The recent rain has stabilised the Russian wheat crop.
- The forecast holds less rain for the Midwest with greater totals for the Plains/Delta. Midwest rain totals are forecast in the next 10 days in a range of 0.75-2.50″ which would be ideal for emerging summer row crops. The 11-15 day forecast holds another rain chance to keep crops well-watered. Temperatures start warming on Tuesday with highs reaching the 60′s, 70′s and 80′s by the last half of the week. The warmth persists into May 25 with near to above normal rain. The warm/wet weather is favourable with farmers to complete their spring planting by the weekend amid this week’s cool/dry conditions. There is no indication of any lasting extreme heat.
- China crushers have become regular buyers of US new crop soybeans now that Brazilian fob offers are rising, and Brazil has shipped out record soy tonnages since February. China has soybean import need from late August into early 2021, before Brazilian soybeans are cheaper again. Rains for the right areas of the Black Sea and Mato Grosso Do Sul are aiding world wheat/corn production outlooks. Our view stays bearish with WASDE’s old crop corn /soy stocks estimate likely to be larger than industry expectations for the report.