- HEADLINES: Chicago corn scores fresh contract high on wet weather forecast/China demand confirmation; Soybeans leak lower on May liquidation.
- Chicago futures are mixed at midday. The lack of fresh buying from China has allowed soybean futures to sag, while corn/wheat hold in the green on concerning US and Canadian weather. The volume of trade is well down on prior days, but limited sell orders rest above the marketplace. Brazilian soybean basis bids have declined which has pushed China to secure June soybeans from the Paranagua export corridor. We doubt that the weakness in May soybeans ahead of first notice day will be lasting or deep. A mixed close is forecast with the grains to add weather premium into a wet weekend across the N Plains and the Upper Midwest.
- Chicago brokers estimate that funds have bought 1,800 contracts of wheat and 1,900 contracts of corn, while selling 2,600 contracts of soybeans. Money managers see any modest break in soyoil futures as buying opportunity with US soyoil stocks in decline on renewable diesel demand. First notice day against May futures is Friday, no soybeans, corn, soymeal or soyoil are expected to be tendered. If there are deliveries, they will be against Chicago or KC May wheat.
- The FAS/USDA Weekly Export Sales report held few surprises. For the week ending April 21, the US sold 1.2 million bu of old and 4.6 million bu of new crop wheat, 34.1 million bu of old and 33.2 million bu of new crop corn, and 17.7 million bu of old and 21.3 million bu of new crop soybeans. As expected, China was the largest buyer of both old and new crop US corn and soybeans.
- For their respective crop years to date, the US has sold 709 million bu of wheat (down 231 million or 24.5%), 2,264 million bu of corn (down 402 million or 18%) and 2,115 million bu of soybeans (down 129 million or 5.7%). The US soybean sales pace will quickly catch up with last year with a late year push for US supply.
- We would note that new crop US soybean sales are record large at 395 million bu with corn at 166 million bu. There is a massive 763 million bu of old crop corn and 399 million bu of old crop US soybeans that are sold, but not yet shipped out. A real fight for old crop supply will emerge between US exporters and domestic crushers/ethanol producers in the weeks ahead.
- The USDA/FAS reported that China booked 1,088,000 mt of corn with the purchase split between old and new crops (476,000 mt of old and 612,000 mt new crop). We suspect that the sale was for privates that had received TRQ’s and purchased Ukraine corn, with that corn unlikely to be shipped. The demand was switched to the US for execution. China has now purchased 14.2 million mt of US old crop corn and 1.56 million mt of new crop. We would argue that China has 1-1.2 million mt of US corn purchased in an old crop position that is reported as an unknown destination. This would boost old crop Chinese purchases of US corn to 16 million mt including the sale announced today. We iunderstand that China is still asking for new crop corn offers off the PNW in new crop.
- After being patient, US farmers looking at the wet forecast hit the panic button this morning with planters noted across the Midwest. Farmers feared if they waited too long, that seed would not make into the ground before May 10, the date that yield drag starts to occur. However, the coming cool/wet weather could be equally as damaging to yield with fields reported as too cool and too wet to work. Bean seeding is favoured over corn on their cold tolerance
- 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 Missouri and east to Ohio ranging from 1.50-4.50”. the rain is further north than the overnight EU/GFS forecasts and would be more concerning for MN, IL, and IN. It is looking unlikely that US corn/soy seeding will occur on a timely basis.
- Too cold/too wet for 2022 corn/soybean seeding to be timely and deepening drought for the Brazilian winter corn crop look to keep Chicago grain values supported. Wheat traders struggle as to whether they should pay more attention to the lack of N Plains HRS seeding, or the rain for the HRW wheat crop. Our outlook remains bullish with corn/soyoil the two upside price leaders. The market will look at weather forecasts and add premium for the coming crop risks. Soybean futures are lower on May liquidation and weaker Brazilian premiums.