- HEADLINES: Soymeal rallies above last week’s high on renewed fund demand; US weekly export inspections lack surprises; Midwest farmers worried by wet forecasts.
- US wheat futures fall sharply on the forecast of rain across SW Russia which would aid stressed winter wheat; Corn futures follow wheat lower with EPA’s Greet Model update release set for Tuesday; Soybeans bounce on long grain/short soy spread unwinding; Trader’s position ahead of first notice day against May Chicago futures with soybean/soyoil/wheat/corn deliveries expected.
- Midday Chicago values are mixed in a reversal of Friday’s trend with the grains lower and soybean/soymeal futures higher. Traders are cleaning up May positions before first notice day tomorrow. Chicago wheat has been the downside leader as needed rain is forecast to fall across SW Russia. The Russian dryness and crop concern sparked the 60 cent US wheat futures rally last week. A correction is underway with key support forecast at $5.90 relative to July Chicago wheat futures. July corn has support below $4.42 while July soybean futures appears to be caught in a $11.50-11.95 trading range. We note that soymeal is gaining on oil via new fund buying of soymeal futures. The only Chicago grain that managed money is long is soymeal based on the premium of the cash market. However, as US crush facilities come back online from seasonal downtime, it is expected that cash meal basis will weaken amid the oversupply. Soymeal should be in the final corrective stage of the rally.
- Chicago brokers estimate that fund managers have sold 3,800 contracts of wheat, and 4,900 contracts of corn. Funds managers have bought 3,400 contracts of soybeans and 3,700 contracts of soymeal, while selling 2,900 contracts of soyoil. The funds are back selling wheat with July Chicago futures fall back to test the 100-day moving average at $5.965. The $5.86-5.96 support should catch July Chicago wheat on this decline.
- US export inspections for the week ending April 25 were; 48.3 million bu of US corn, 17.7 million bu of US corn, and 9.2 million bu of US soybeans. The soybean export pace was on the low end of trade expectations. For their respective crop years to date, the US has exported 1,244 million bu of corn (up 303 million or 32%), 1,423 million bu of soybeans (down 320 million or 18%), and 622 million bu of wheat (down 48 million or 7.5%). China shipped out another cargo of US wheat.
- US farmers hope that the 10–15-day forecast is correct calling for more normal rainfall across the Midwest and the Eastern Plains is correct. The heavy totals that have fallen from LA northward into Minnesota have halted planting progress for (at least) the next 5-6 days. Drying weather is needed to firm soil and allows for heavy equipment to be supported again. We suspect that the weather models are too dry in the extended range and that an active Central US weather pattern could persist. This would push corn seeding progress backwards to mid to late May. And some farmers in the Delta and S Midwest may opt to switch acres to soybeans or take out the prevent plant option. A worry over delayed spring seeding/reseeding could emerge later this week.
- Argentine crush and export laborers are striking on President Milei’s policy of higher taxes and worsening standards of living. However, the strikes are not expected to be long lived with workers in dire need of cash. Such labour strikes are commonplace in Argentina as new harvests arrive. Milei will not alter his austerity program with Argentine interest rates in fast retreat.
- A series of storms will roll across the Central US over the next week producing additional rain with episodes of severe weather. Weekly rainfall totals are estimated in a range of 0.75-2.50” with the heaviest rains dropping across the Missouri Valley and the Delta. Midwest rainfall is forecast to range from 0.5-2.50” with the western half of the Plains holding in an arid weather pattern. A strong upper-level trough looks to pull through the Central US early next week adding fresh rounds of rain. Temperature will be variable with 90’s to invade the dry areas of the W Plains by midweek. Excluding the W Plains, the forecast is wet from the E Plains through the Midwest into May 8.
- Wheat’s break on SW Russian rain set the Chicago grain tone. However, the dry weather trend across winter corn areas of Brazil while US farmers will struggle to seed their next 60-70% of the corn crop offers support. Argentine crushers/exporters are holding labour strikes as new crop harvest supplies grow. The strikes will not be long lived as the cash needs of the workers are acute. Seasonally, such export and crush strikes happen every year and spark temporary rally in Chicago soybean/soymeal futures. The Chicago soymeal rally is likely overdone for now.