- Following a weaker start to the morning, soybean futures traded under pressure through the day to end 5-6 cents lower on Tuesday. Funds were estimated sellers of 4,500 soybean, 3,500 soymeal, and 3,000 soyoil contracts Overnight, China suspended canola imports from a Canadian company, the second such suspension this month, citing phytosanitary concerns. The news sent canola futures $5-6 lower, and put nearby May back near contract lows. History shows that canola futures were pulled lower through last summer’s trade war, but did not fall to the extent that US soybeans did. At the peak, nearby canola traded at as much as an $80/mt premium in late June. That spread has steadily narrowed in recent months as soybeans have trended higher and canola lower, and the spread this week has narrowed to just a $6.45/mt canola premium. Chicago soy markets continue to wait on China news, as well as the end of week USDA reports. Funds remain heavily short; we look for slower trade into Friday.
- Chicago corn futures ended slightly lower amid a lack of fresh news on US-Chinese trade policy, as the near-term forecasts includes some measure of warmth in early April. We mention that corn seeding across the Delta/Southeast is largely on schedule. Forecasts next week will gather much more attention as operational models begin to show conditions on and just after April 15. Climate scientists are looking for an overall wet spring. Funds in Chicago sold an estimated 10,500 contracts. US ethanol economics continue to improve. Gasoline futures hit new seasonal highs, with spot RBOB this evening settling at $1.96/Gal. RBOB’s premium to ethanol sits at a lofty $.55/gal. DDG prices in IL continue to firm, while values elsewhere have found support in recent weeks. We calculate actual cash ethanol production margins in the W Midwest at $.20/gal over variable costs and just $.02/gal below all costs. Production will recover once weather improves. Friday’s acreage data will provide a starting point for new crop balance sheets. But we remain concerned about ongoing wet US weather and depleted soil moisture in key areas of Eastern Europe and Ukraine.
- US and European wheat futures ended mostly lower, though spot Chicago found support via Egypt’s purchase of 120,000 mt of US SRW for almost nearby delivery. Egyptian demand will be waning as their domestic harvest approaches, but we do mention Ethiopia is seeking a sizable 1 million tons for old crop delivery, which will trigger a scramble to source supply on behalf of world exporters. There is little other fresh news available. Long term climate guidance is trending warmer/drier in Europe and the Black Sea region. Negative soil moisture anomalies are already present across key areas of E Europe as well as much of Ukraine. New crop Black Sea offers have rallied $5/mt in recent weeks to $200. Work maintains that confirmation of above trend yield is needed to pull down new crop offers moving forward. Such confirmation won’t be available until late May/early June. Otherwise, wheat follows corn into the release of NASS stocks and seedings data.