- HEADLINES: Corn futures push to new highs on China demand; Central US weather forecast too wet/too cold for active planting; Prevent plant for ND.
- Chicago futures are mixed at midday with corn/soybeans firmer, while wheat sags on the prospect for rain across the drought-stricken areas of the Plains after May 3. Corn/soyoil futures have scored new contract highs amid cash rumours of China securing US July/August corn. May corn futures reached $8.20/bu, the highest price in nearly a decade, while May soyoil futures reached an all-time high of $88.51/lb. First notice day against May futures is Friday and no soyoil, soymeal, corn, soybeans are expected to be tendered. Wheat could be tendered against Chicago/KC futures with a new crop harvest just weeks away. Chicago price trends are bullish with US farmers likely to hit the panic button next week on spring seeding due to the calendar shifting from April to May.
- We expect a strong Chicago close amid threatening weather for North American spring seeding and the health of the Brazilian winter corn crop. Cash markets are pacing the Chicago advance with seasonal highs not expected until June. We note that any lasting decline hinges upon the production of record large US corn/soybean/spring wheat yields. Anything less just won’t do with 2022/23 end stocks already forecast at or below pipeline levels.
- Chicago brokers report that funds are buyers of corn, soyoil and soybeans. Funds have sold 3,200 contracts of wheat and a net 400 contracts of soymeal. Funds have bought 5,500 corn, 5,900 soybeans and 4,300 contracts of soyoil.
- Cash rumours abound that China has booked 1-1.25 million mt of US corn for late summer shipment. COFCO has been active booking barges and seeking US cash corn for July/August export. USDA confirmation of the exact tonnages of purchases is awaited, but US exporters are confident that China has booked US corn today
- US weekly ethanol production amounted to 283 million gallons which consumed an estimated 99.7 million bu of corn. The weekly grind was up 2% from last week, but the US needs to equal 300 million gallons of ethanol production per week to reach the USDA’s annual target of 5,375 million bu. Rail tanker car shortages are the constraint with variable margins profitable.
- Argentina’s fob corn basis has scored a seasonal low with 50% of the corn harvest now completed. Last week Argentine corn was offered 10-15 cents below Chicago. Today its offered 10-15 cents over. The quick 20-30 cents in basis confirms strong importer demand and tight-fisted Argentine farm holding of the newly harvested crop. A bottom in Argentine cash corn aids US corn exports with additional basis gains expected as licenses are used up and the Government is slow to issue new licenses on inflation.
- Midwest farmers appear to be patient in corn/soybean seeding awaiting improved weather (warmth/sunshine/drying). However, as the calendar shifts to May 1 on Saturday, the pressure to plant regardless of conditions will develop and panic planting could take place in less-than-optimal soil conditions. Also, the Plains Wheat Quality Tour kicks off early next week with on the ground HRW yield estimates measuring the severity of the 2022 Plains drought.
- The midday GFS weather forecast offers an active jet stream and 3 storm systems for the Central US in the next 10 days, with a fourth indicated in the 11-15 day period. Cool/wet weather persists with 10-day rainfall totals from the Northern Plains into Arkansas and east to Ohio ranging from 1.50-4.50”. The rain produces sufficiently wet fields to further slow N Plains/Midwest spring seeding. Some rains will leak into the W Plains, but totals of 0.2-1.00” will not break the dire drought. The forecast is concerning for timely corn/soy seeding before May 10.
- Too cold/too wet for 2022 corn/soybean seeding to be timely. Prevent Plant dates for North Dakota starts on May 20. Based on existing conditions and the forecast, Northern Plains farmers are out of the fields for at least 2.5 weeks. The next upside target for May corn is $8.43, the all-time high. Soybean futures should also score new all-time highs as old crop supplies tighten and crush margins rest at over $3.00/bu in the cash market.