- Chicago corn futures are sinking to fresh yearly lows with May futures reaching $3.14, the lowest spot price since 2016. Yet, spot KC wheat prices have rallied to their highest price since 2019, and are testing key resistance.
- The spot Chicago wheat/corn spread has pushed out to a $2.38 premium and appears to be heading to a $2.50 wheat premium. Many feed users will no longer consider wheat a feedgrain, only a foodgrain. Wheat prices are rich when compared to either corn or soybeans.
- Soybeans have been caught between the two grains, but based on favourable Central US weather, they are following corn more than wheat. We look for a mixed Chicago close with wheat to be very sensitive to Black Sea and European weather in the days ahead. We note that the Northern Hemisphere winter wheat harvest starts in just six weeks. Being long of wheat heading into the harvest will be difficult without dire crop declines in Russia/Ukraine.
- Chicago brokers estimate that funds have bought 6,700 contracts of wheat, while selling 8,100 contracts of corn and 3,200 contracts of soybeans. Funds have sold 2,100 contract of soymeal and 1,200 contracts of soyoil.
- Crude oil prices have slid to $7.90/barrel on the soon to expire May futures contract with cash trade said to be as low as $4-6/barrel (if storage can be found). The spot futures price is the lowest since crude oil has been trading in the mid 1980′s and reflects the worsening landscape for producers when demand falls more than 50%. June WTI crude oil is trading at $22/barrel which reflects the massive oversupply, even when world production was reduced nearly 10 million barrels/day last week. The energy market shows the prospect for deflation.
- Weekly US export inspections for the week ending April 16 were; 26.9 million bu of corn, 19.8 million bu of soybeans, and 17.3 million bu of wheat. For their respective crop years to date, the US has exported 835 million bu of corn (down 475 million or 36%), 1,209 million bu of soybeans (up 69 million or 6%), and 897 million bu of wheat (up 45 million or 6%). The USDA is likely to further reduce its estimate of US 2019/20 corn and soybean annual export estimates in the May WASDE. China shipped out one cargo of US soybeans off the PNW.
- Greater focus will be placed on Black Sea weather. The midday GFS weather forecast is wetter across much of Ukraine and through portions of Southern Russia with totals of 0.5-1.50″. More rain is needed, but the forecast shows some rain improvement. The 11-15 day forecast also added rain for Southern Russia and Ukraine which is welcomed, but more will be needed in the critical months of May and June.
- The midday GFS forecast is wetter across the Upper Midwest with rain totals of 0.75-2.50″. Research argues that the GFS forecast is too wet and maintains that the drier EU model has a better handle on the pattern. Nonetheless, both models offering warming temperatures for the W Midwest and the Plains with highs ranging from the 60′s to the mid 70’s. The E Midwest will be cooler under cloudy skies and a NW upper air flow. Planters are rolling across the Midwest, a trend that should persist into the weekend. Research looks for a fall in US winter wheat ratings of 2-3% in good/excellent with 9-11% of the US corn crop already planted.
- The sharp slide in crude oil underscores the problems that ethanol will have returning to profitability with plants to stay closed for months. It will be an active week for spring planting and weather premium in summer row crop prices is being diminished. One must be careful about being long wheat with spring always producing a few good rains in the Black Sea. And as stated on Friday, soybeans are sinking trying to uncover Chinese demand.