- HEADLINES: Stats Canada surprise on canola seedings; Northern Plains weather too wet/too cold; Chicago daily limits expand on May 1.
- Chicago futures are mixed at midday with old/new crop spreads weakening ahead of May’s first notice day. There was selling noted right after the opening tied to the weakening of the US/world financial markets as the DOW fell 500 points. The weakness of the macro-markets caused the algo funds to be grain sellers, which was quickly retraced as crude oil rallied and the Central US weather forecast stayed cool/wet. Old/new crop spreads are weak on active rolling forward by several large funds ahead of first notice day. As Chicago moves into a weather market, fund managers desire to position in new rather than old crop. Nearby cash basis is steady/firm with soybean bids steady to 3 cents higher as Chicago board crush margins push out to new highs. Midwest corn bids are steady to 2 cents higher as ethanol plants look to extend their forward coverage as the weekly grind starts to seasonally increase.
- We look for a mostly higher Chicago close with new crop corn, soybeans and KC wheat adding premium for the threat of continued challenging planting weather. Also, it is too dry across the HRW wheat areas of the Plains and too cold/wet across the Northern Plains. It will take another 3-5 days before Midwest farmers and 10-14 days before Northern Plains farmers get back to fieldwork and start or restart spring seeding.
- The USDA reported that 133,000 mt of US soybeans were sold to China with 132,000 mt to an unknown destination in the 2022/23 crop year.
- Chicago brokers estimate that fund managers have bought a net 2,000 contracts of wheat and 4,200 contracts of soyoil, while selling 2,500 contracts of corn, 3,200 contracts of soybeans, and 5,500 contracts of soymeal. Soymeal fell below some key chart points which accelerated oil share spreading. The only resistance in July soyoil sits at contract highs at $83.12 from Friday.
- Chicago announced that effective May 1, daily grain price limits will change. The new limits are; $0.50/bu for corn, $1.15/bu in soybeans, and $0.70/bu in wheat (both Chicago and KC). Oat limits expanded to $0.45/bu with the soyoil limit being $0.05/pound while the soymeal limit expands to $30/ton. To the best of our knowledge, this is the first time that Chicago corn daily price limits rest at $0.50/bu and soyoil at $0.05/pound. Margins and option volatility rates will adjust to these new limits starting on Friday.
- Statistics Canada estimated 2022 seeding intentions for canola at 20.9 million acres, down a sizable 1.6 million acres from last year. This was a big bullish surprise with the trade looking for seedings that were near steady. Canadian oat seeding intentions were 3.8 million acres, up a larger than expected 600,000 acres while Canadian all wheat was up 1.6 million acres with durum acres up 700,000 and spring wheat being up 900,000 acres. Like US farmers, Canadian farmers choose to seed low input cost crops.
- The sharp fall in 2022 canola acres means that US/world vegoil supplies will stay constrained for another year. Strong soyoil/canola oil prices will prevent soybean/canola from weakening amid heady crush margins. It is shocking that with $17 spot Chicago soybean prices, that crush margin is at record or near record high. No US soybean crusher will be cutting crush, they will just keep bidding cash soybeans higher to secure future supplies.
- The midday GFS weather forecast is like the overnight run. Heavy rains will continue to batter the Northern Plains and the W Midwest and Delta with 10-day totals of 1.50-3.00”. The rain and ongoing chill will cause issues for seeding and rapid fieldwork. The time is now that Mother Nature needs to start cooperating if there is to be any chance in getting corn/soybean and spring wheat crops seeded on a timely basis. Our seeding concern is rising.
- The Brazilian winter corn crop is going backwards fast due to a lack of rain and soil moisture during the reproductive phase. And the Plains are either too dry or excessively wet which is knifing US hard wheat production. We maintain a bullish stance based on new crop threats and strong end user demand on margin. New highs in new crop corn/soybean futures are forecast.