- HEADLINES: Correction is running its course; Weekly export sales due Thursday; Chicago closed on Friday; KC/Chicago wheat spread.
- Chicago grain futures are mixed at midday with May corn/soybean futures reflecting independent strength on firming cash market bids. US cash markets stay strong and could strengthen further as US farmers head to the field for spring planting. End users were able to secure a few days of needs on Monday when Central Illinois cash corn bids reached near $7.00, but with natural gas prices low and the US driving season dead ahead, ethanol producers are looking to extend their forward coverage well into summer.
- The May/July corn spread pushed out to $0.27/bu with May/July soybeans trading out to a $0.36/bu premium. Both spreads are at fresh highs with cash soyoil basis starting to firm as biodiesel and renewable diesel producers start to seek additional feedstocks.
- The USDA announced the sale of 276,000 mt of US old crop soybeans and 125,000 mt of US corn sold to unknown destinations. The US soybean sale is likely to China as it swaps out Argentine for US soybeans due to the poor quality of the Argentine new crop soy crop. China’s soybean reserve buyer, Sinograin, prefers US/Argentine soybeans to Brazil due to their storability.
- Chicago brokers estimate that funds have sold 3,000 contracts of wheat, 2,600 contracts of corn, while being flat in soybeans. Fund product sales are estimated at 1,200 contracts of soymeal and 2,800 contracts of soyoil. May soymeal appears to have uncovered support against $450/ton.
- The spot KC/Chicago wheat spread has posted a record high premium of $1.82/bu yesterday. Remember that it was back in late 2019 that KC HRW traded $1.00 under Chicago due to the US surplus and lack of export demand for US HRW wheat. This was due to the Russian wheat onslaught that continues today. It is difficult to assess value in the KC/Chicago wheat spread based on the growing domestic nature of the US wheat market (US wheat exports in 2022/23 forecast at 4 decade low) with millers needing hard wheat for flour milling. Price is not producing any demand rationing. And any loss of the US HRS wheat crop will only make matters worse, but determining HRW abandonment rates and yield of the drought plagued Plain’s crop is a work in progress. Preliminarily it appears that harvested HRW wheat acres could be cut by 900,000-1.0 million acres with yield falling 5-6 bushels/acre from trend. 2023/24 HRW stocks will near 210-240 million bu, historically tight by any measure.
- Argentina’s soybean/dollar program will run from Saturday through May 24 according to sources with the Peso conversion rate yet to be announced. The official Peso vs US$ rate is 210 with rumours that the offer will be 270-290 Pesos or a bump of 27.5-30% from what is offered currently. The hope is that farmers will sell 5-7 million mt of soybeans to domestic processors.
- The midday weather forecast is bone dry for the Plains over the next 10 days with strong winds forecast this weekend before temperatures rise to the 80’s to lower 90’s next week which adds to HRW wheat stress. The coming warmth allows the Southern Midwest corn seeding to start on a timely basis. Widespread snowmelt in the N Plains and Upper Midwest will produce regional flooding. The 11-15 day forecast has pushed the rain chances north into the Upper Midwest and N Plains where drier weather is desired.