- HEADLINES: Chicago sags on Brazilian soybean sales; NOPA crush record large at 196 million bu; GFS weather forecast starts rain later today across W Midwest.
- Chicago grain futures are lower at midday with soybeans/soymeal pacing the decline. Crude oil futures are down over $1.20/barrel with gold off $6.50/oz which has added to the pressure. Friday was a macro buy day ahead to the expected Iranian aggression against Israel. Today is a sell day as these trades are being unwound. Soybeans/soymeal are giving back Friday’s gain while soyoil steady is holding on highly profitable biodiesel margins (vs fossil diesel and outright). We calculate that biodiesel margins are at their best levels in 7 years. The profitability of bio and renewable diesel underpins soyoil on breaks, but the trade is going to have to confirm better cash demand to turn futures. There is 7.6lbs of soyoil in a gallon of biodiesel which equates to a feedstock cost of $3.45/gallon at a cash soyoil price of $.0455/lb. Remember that the $1.00/gallon of blenders credit applies through the end of the year before it switches to a producer credit as of January 1. A weaker Chicago grain close is forecast with a turnaround forecast for Tuesday as this back-and-forth market continues.
- The USDA confirmed the sale of 165,000 mt of US corn to Mexico with 135,000 mt in the old and 30,000 mt in the new crop position. Mexico continues to add US purchases to account for their dire drought which is persisting.
- Chicago brokers estimate that managed money has sold 3,400 contracts of wheat, 6,700 contracts of soybeans, and 7,300 contracts of corn. In the products, managed money has sold 4,300 contracts of soymeal and 1,200 contracts of soyoil. The selling of soyoil has been more aggressive than early buying.
- NOPA reported a record March soybean crush rate of 196.4 million bu which works back to a daily crush of 6.33 million bu. The daily crush back is just below that of February, but it is expected to hold above 6.2 million bu/day during April. NOPA member soyoil stocks rose to 1,851 million pounds, the largest since May. There have been reports of US soy processors struggling to move soyoil until fossil diesel prices jumped over the past few weeks. The seasonal jump in diesel prices pushed margins for traditional biodiesel prices to their best levels since 2017. Cash soyoil basis at plant started to gain on Friday.
- US export inspections for the week ending April 11 were 52.4 million bu of corn, 15.9 million bu soybeans, and 20.2 million bu of wheat. For their respective crop years to date, the US has shipped out 1,129 million bu of corn (285 million or 34% more than last year), 1,397 million bu of soybeans (down 317 million or 18% less than last year), and 585 million bu of wheat (58 million less or 9%). We maintain that at the current pace, USDA will raise their 2023/24 export estimate of corn by 25-50 million bu by the end of the year.
- The Brazilian Real reached 5.19 vs the USD which has sparked the sale of an estimated 800,000 mt this morning. The weak Real hiked farm profit margins.
- The GFS weather forecast breaks out rainfall across some of the Eastern Central Plains and Western Midwest this afternoon with the showers spreading east into Thursday. Rainfall totals are estimated in a range of 0.25-1.50” and locally heavier. The forecast is similar to the overnight run with cold temperatures late week and on the weekend. Corn and soybean seeding will advance at a normal rate. The extended range forecast calls for a new storm system in the 10-15 day with warming temperatures.
- Choppiness in a range bound trade is forecast with Chicago having questions surrounding S America crop sizes in terms of Argentina’s corn stunt disease and Brazil’s soybean crop. The Mexican corn drought is forecast to persist with feed demand (corn/meal) staying elevated. The downside potential in Chicago grain is limited amid WASDE understating the US soybean crush by at least 40 million bu. Central US and European weather will caps rallies, but it is premature to generate any downside until seed is in the ground and initial condition ratings are known. Sideways volatility is the theme.