• HEADLINES: Cash corn basis stays strong with reports of big pushes for corn; Soybeans shrug off talk of soyoil deliveries; US corn seeding at 50% on Sunday?

• Chicago grain and soy futures are mixed to higher at midday. The volume of trade has been well down from recent days as most of the world is celebrating the May Day Holiday while China is out on holiday for the first 3 days of next week. Active corn/wheat spreading has been noted with Chicago wheat trading at a 15.5 cent premium while KC May wheat is priced at a record 31 cents under. The wheat market cannot fall too much farther as cash corn prices rise. Corn values are acting as the bullish lynchpin of the entire Chicago marketplace.

• Corn has been the upside leader as cash basis levels are steady/firm with reports of exporter pushes for spot supply. Ethanol producers, livestock feeders and exporters are fighting to encourage an increased supply of nearby cash corn. So far, no one has had much luck in getting the farmer to part with stored supply. Cash bids firming and old crop futures following with May corn priced at a record large 63 cent premium to the July. If cash corn is tight today, it is hard to imagine how much tighter cash corn supplies this summer become if China goes ahead and executes its old crop purchases. China has some 510 million bu of corn purchased, but not shipped through August 31 . The market must work to get China to cancel or roll some of those corn purchases into new crop.

• Chicago brokers report that funds have bought 14,000 contracts of corn, 1,000 contracts of wheat, and 3,500 contracts of soybeans. In soy products, funds have bought 4,500 contracts of soyoil while being flat in soymeal.

• Safras dropped their Brazilian 2020/21 corn crop estimate to 104 million mt, an 8% fall due to recent dry weather conditions. The winter crop is forecast at 70.7 million mt with the first and third harvests making up the difference. WE see the 2020/21 Brazilian corn crop at 99 million mt currently with a negative bias going forward. The drop in the crop will spur larger Argentine imports with a margin estimated at over $20/mt. However, the Brazilian infrastructure is not set up to handle large scale imports. A few cargoes are occurring but so far, it is going to be difficult to forecast that Brazil imports more than 1.2 million mt.

• Cargill was the big stopper of Chicago soyoil receipts back in December which had some scratching their heads as to why. At that time, renewal biodiesel was just starting to be discussed and no one knew for sure of the pending demand.

• Today, Cargill retendered 629 contracts which were largely from crush and storage facilities that were not associated with the firm. The thinking is that renewable biodiesel plants are taking longer to come online, and that spot hedge coverage needed to be reduced. We hears of just 4 US renewable biodiesel plants that are operating today. But a host of plants are set to open in Q4. December 2021 soyoil futures likely offers a more economic hedge with May soyoil priced at a 14.6 cent premium to December.

• The midday GFS weather forecast in S America maintains complete dryness across Central Brazil’s safrinha belt, with an improved chance for rain across Parana and Santa Caterina late next week. The Northern third of Mato Grosso will also see 0.5-1.50″ of rain which will aid a limited amount of corn acres. Temperatures hold in the 70′s to 80′s with warming next week when lower to mid-90′s return. The forecast is too warm/dry and a further decline in the Brazilian corn crop is expected. The importance of Brazilian weather will be diminished beyond mid-May as corn pushes into the fill stage.

• The cash corn market is unrelenting, and China shows no willingness to slow the export of open US purchases. If China exports all 13-15 million mt of corn that they have bought, July corn will continue to gain on December to $1.60-1.80 over. The corn/KC wheat spread has pushed wheat feeding in the Plains, but it will not be enough to alter the tightening supply of cash corn. July corn looks to test contract highs at $6.80. Midwest spring seeding is moving ahead rapidly with the midday GFS forecast offering rain for the N Plains/NW Midwest in the 11–15-day period.

To download our weekly update as a PDF file please click on the link below: