- HEADLINES: July corn/soybean futures rally on strong cash bids; NOPA report disappoints on low April crush; Midday forecast trims Northern Plains rainfall totals.
- Chicago futures are mixed at midday with an early corn rally failing to pick up any upside momentum as the market needs to technically heal. Last week’s conservative nature of the USDA in estimating 2021/22 US corn/soybean exports along with the lnforma/Markit new crop corn acre estimate finding 6.0 million acres (96.8 million acres) has produced bearishness. The June Seeding report is 6 weeks away and there will be host of views of whether farmers held to their rotations or seeded a considerable number of extra acres. Although it is not popular today, our leaning is that farmers held to their rotations and 2021 US total cropped acreage rose just 2.5-3.0 million acres from the March Intentions.
- US farmers have halted new old crop corn and soybean sales on sinking prices. Farmers argue that there are many chapters yet to be written in terms of Northern Hemisphere weather and its impact on yield. A time for reflection and Chicago choppiness is ahead before the weather fun starts in June/July. We look for a mixed Chicago close with strong cash basis offering support under July soybeans/corn and soyoil. New crop futures price direction will be directed by weather and its yield potential. The US corn market is no longer bulletproof as considerable uncertainty exists on US 2021 row cropped acres/yield.
- US FGIS export inspections for the week ending May 13 were 74.5 million bu of corn, 11.3 million bu of soybeans, and 24.2 million bu of wheat. For their respective crop years to date, the US has shipped out 1,852 million bu of corn (up 814 million or 78%), a record 2,058 million bu of soybeans (up 783 million or 61%), and 24.2 million bu of wheat (up 17 million or 2%). US corn, soybean and wheat exports are running ahead of USDA/WASDE annual forecasts. The US only needs to export 46 million bu of corn per week to reach the USDA annual forecast. Based on the current pace and our expectation that China will ship out its corn purchases for restocking its reserve, the USDA could easily be understating US 2020/21 US corn exports by 200-250 million bu, dropping stocks closer to 1,000 million bu.
- FAS announced this morning that China had purchased 1.7 million mt of US new crop corn taking their known purchases to an estimated 5.5 million. We hear from cash connected exporters that a total of 8.5-10.0 million mt of US new crop corn is sold with China also booking 1.5-2.0 million mt of Ukraine corn. In total, it appears that China has booked 10-12 million mt of world corn and is still asking for offers. The USDA had China importing 26.0 million mt of world corn in 2021/22 which based on China’s purchase pace this early seems to be too low. China appears to have a feedgrain shortage and desires to ramp up imports this summer and early autumn before US soybean exports start in earnest.
- NOPA reported that its members crushed 160.3 million bu of soybeans in April, well below the range of analyst forecasts of 168.7 million bu. Processors having trouble finding cash soybeans slowed their crush and pushed ahead maintenance. NOPA member soyoil stocks at 1,702 million pounds were well below the end of March total at 1,771 million pounds and trade estimates of 1,785 million pounds. The slower crush rate curtailed NOPA soyoil production. The April NOPA report was deemed slightly bearish and soybean futures declined on the news.
- The midday GFS weather forecast is drier across the N Plains and N Midwest with heavier rain south of the Iowa/Missouri border. The heaviest rain falls across E Texas and SE Oklahoma where totals could reach upwards of 6-7.00″. The forecast does offer broad rainfall chances for the Canadian Prairies between May 25-28. Our guess is that the coverage of rain greater than 1.00″ will be curtailed across the Prairies. A zonal pattern is offered in the 11-15 day forecast period.
- Old crop pushes for corn/soybeans are just not finding supply. Yet, the Central US weather forecast for the last half of May has improved with warmth/rain. There is a long way to go in terms of the US growing season. We are certain that this weather pattern will produce a few serious threats. Chicago is about premium cash markets and Central US weather. Look for choppiness to continue as the market struggles to understand 2021 US crop seedings and the coming summer growing season.