14 April 2023

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  • HEADLINES: China buys more US corn, does China know that the Ukraine grain corridor will be closed. Frost/snow follow summer heat in NW Midwest; Central Plains drought worsens.
  • Chicago futures are mixed at midday with the grains higher while soybean/soy product prices sag. It has been a back and forth morning with corn showing independent strength due to strong cash markets. And China booked an additional 382,000 mt of US corn for old and new crop which we understand are switches from Ukraine. The Russians/Chinese have a cosy political relationship which has some wondering if Russia is informing China that the Ukraine Grain Export Corridor will be closing on May 18.  Since yesterday, China has booked 709,000 mt of US corn including 450,000 mt in an old crop position and 259,000 mt for new crop.
  • Soybeans are being pressured by news that 1-2 boats have left Brazilian ports and heading for the SE US Coast. These sales were completed and talked about several weeks back. It is not unusual that Brazilian soybeans work into the SE US Coast. The oil processed from these beans will likely be used for food, not renewable diesel. S American soybeans or soyoil are not approved for CA/OR/WA renewable diesel credits and there is a 19% tax on S American soyoil being imported into the US.
  • Chicago brokers estimate that money managers have sold 4,700 contracts of soybeans while buying 5,500 contracts of corn and 3,500 contracts of wheat.  In the soy products, money managers have sold 4,500 contracts of soyoil and 2,100 contracts of soymeal.
  • China has secured 8.5 mt of US corn for the 2022/23 crop year. China’s recent day new crop corn purchases are the first for them. There is 2.4 million mt of US corn sold on an unknown basis and recent history indicates that about half of that corn will be switched over to China. If 1.2 million mt of US corn in unknown is switched to China, total US corn sales to China would equal 9.7 million mt. In total, US exporters estimate that China will take 12-13 million mt of old crop corn from the US, 4-5 million from Brazil and 4-5 million from others for net 2022/23 import total of 20-23 million mt this crop year. This compares to the WASDE annual corn import forecast of 18.0 million mt. China continues to be active in booking Brazilian soybeans and world corn. The doubt is that Ukraine will be able to export China 1.0 million mt of corn from 3 ocean ports.
  • NOPA will be out on Monday with their March member crush data. It is expected that NOPA members processed 182-184 million bu of soybeans, compared to 182.4 million last year. In February, NOPA processed 164.4 million bu or soybeans or an average daily run rate of 5.87 million bu. The same daily run rate for March would forecast an annual crush rate of 182.0 million bu. WE would estimate US soyoil stocks falling to 1.79 billion pounds, down slightly from February stocks of 1.809 billion pounds and down more than 100 million pounds from last year’s 1.908 billion pounds.
  • The midday GFS weather solution is like the overnight run with rain starting this weekend before a much cooler outlook unfolds into April 22, which produces a new frost/freeze threat across the Plains and the NW Midwest. Snow is forecast across CO/NE/W IA/MN and WI with accumulations of 2-10” between April 22-24. Warming follows which is followed by another cool onslaught to end the month.
  • Rain chances start this weekend across the N and W Midwest with totals of 0.25-1.25” with another system in the last half of next week with rainfall totals of 0.4-1.50”. Both systems will provide a needed shot of moisture for the Western Midwest. However, MN would appreciate dry weather to limit the flooding from snowmelt. Unfortunately, the chance for rain across the Plains is limited into May which deepens the drought.
  • Today is a step forward in the dance with Chinese demand for corn and cold temperatures and the ongoing drought rallying wheat. Monday’s NOPA report will be key for soyoil to see if demand can outpace production for the second consecutive month. Biofuel demand for vegoils is seasonally increasing now and a double low should be formed in soyoil futures. We are bullish grain/soyoil on technical breaks.
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