- HEADLINES: Chicago grain markets have traded sharply mixed this morning. The USDA announced China corn cancellations of 12.9 million bu of old crop corn, which has weighed on Chicago corn values and has pulled wheat futures lower. Soybeans were initially higher through the first hour but have slipped into the red at midday.
- The May/July corn spread reached a new rally high 52.75 cents overnight and is trading at an historic high for this date. The only other year that the spread has been higher was in 2021 when the spread reached 67 cents on the last day of April. Similarly, the May/July soybean spread has traded at 38.75 cents today. The only year that the spread was higher on this date was in 2013, when the spread traded 59 cents following the 2012 drought. The historic strength in spreads and basis reflects overall cash market tightness in both markets.
- After today, there are only 4 trading sessions until first notice day against May futures. Despite the narrowing window to move cash grain against May contracts, US corn and soybean basis remains robust across the Midwest, reflecting exceptionally tight cash grain supplies.
- Chicago brokers estimate that money managers have sold 7-10,000 contracts of corn, 3-5,000 contracts of Chicago wheat, and 2-3,000 contracts of soybeans. In the soy product markets funds have sold 3-5,000 contracts of soybean meal and 2-3,000 contracts of soybean oil.
- US export inspections for the week ending Apr 18 were 36.0 million bu of corn, 13.8 million bu of soybeans, and 13.4 million bu of wheat. For their respective crop years to date, the US has exported 880 million bu of corn (down 494 million or 36%), US soybean export inspections stand at 1,729 million bu (up 14.7 million or 1%), with US wheat export inspections at 656.5 million bu (down 18.6 million or 3%). US soybean shipments to China are set to seasonally slow as Brazilian soybean exports remain elevated into at least mid-summer.
- Snow cover in the Northern Plains and upper Midwest is historically large for this date, and although rare, it is not unprecedented. Climate Impact Company’s analysis of analogue years indicates that snow cover dissipation will not occur until May 5-7. The corn prevent plant crop insurance date for the region is May 20, leaving a somewhat narrow window to drain water, apply fertiliser, work ground, warm the soil, and plant a corn crop. The historically late snow cover increases odds that farmers will exercise the prevent plant crop insurance option, especially on the vast number of pasture acres that were intended to be pulled into production. Everything needs to work out perfectly to see all of the additional intended ND acres planted.
- The midday GFS weather forecast maintains broad rainfall coverage across much of the Midwest over the next 10 days. Coverage looks to be widespread, with cumulative rainfall totals of 2” expected across much of the region. High temperatures look to mainly be in the 50s and 60s for the rest of this week, with overnight lows dipping into the 30s and low 40s. It is a less-than-ideal outlook for planting summer row crops and cooler than desired for seeds already in the ground.
- Follow-through technical selling has weighed on Chicago markets at the start of the week, but December corn is funding support on the break below $5.50, while soybean bears have become reluctant to push their position under $12.75. Most of the planting season and the entire growing season is still ahead, and we caution against staying bearish on new crop prices at current levels.