- Midday Chicago values are mixed at midday with spread unwinding/covering dominating the morning. Corn has been the short leg of most spring spreads with covering noted of long soybean/short corn and long wheat/short corn positions. The covering has pressured soybeans and KC wheat, while corn futures have been able to bounce, even in the face of improving Central US weather. We look for a mixed close with few traders having any passion to push their bullish or bearish view too hard.
- Chicago brokers report that funds have bought 2,200 contracts of wheat and 7,700 contracts of corn while selling 2,900 contracts of soybeans. In soy products, funds have bought 1,200 contracts of soyoil while selling 700 contracts of soymeal.
- The USDA/FAS did not announce any new sales of US grain or soybeans this morning.
- US President Trump was joined by farm leaders to announce the release of $16 billion in coronavirus relief payments to producers. Program details are awaited with most watching to see if payment limitations are reduced/lifted.
- Spot Chicago corn futures reached $3.00 in the closing days of April with July corn futures recovering to $3.25 today. Spot Chicago corn will struggle to rise above $3.25-3.34 resistance without a dire Central US weather problem. With the Midwest weather forecast being favourable, July corn will struggle to rise above $3.30.
- Russian domestic wheat flour prices are holding at record highs which must be concerning to the Government officials as the Ruble has strengthened (along with the rise in crude oil). The stoutness of Russian wheat flour prices and tightness of domestic wheat supplies has some wondering if the Russian’s could continue to the new quota system or work to restrict wheat exports early in their new crop campaign. World wheat importers will be closely following the Government’s intentions for Russian new crop exports in the weeks ahead.
- Indian farmers have harvested a big wheat crop which local/private analysts peg at 103-104 million mt. However, as Covid-19 has struck India, moving the wheat from farm to storage and milling facilities has been difficult amid lockdown and movement restrictions. The fear is rising with each passing day, that monsoonal rains will soon cause wheat quality deterioration. India is at risk that its wheat crop will be damaged by excessive water as Covid-19 ravages the country.
- China’s annual corn auctions are rumoured to be starting in early June which should help ease tight domestic supplies, and lower rising internal prices.
- China seasonally starts to auction off its massive Government corn stockpile each spring to bridge the supply gap to new crop and offer a means to support its farmers. It is unknown if the auction will impact China’s potential import of US corn into SE China livestock areas.
- The US midday GFS’s weather forecast is drier across the Central Plains and Upper Midwest with heavy rain stretching from the Southern Plains eastward into the SE US. To the north, 10-day rain is estimated in a range of 0.25-1.00″ with temperatures warming into Friday and the rest of the 14-day forecast. The forecast leans favourable for the final seeding effort and early crop growth.
- July corn has been the leading the rally on short covering as price is trying to spur enlarged cash corn movement. USDA has been adjusting its ethanol corn grind based on actual monthly losses, which means that future cuts in US 2019/20 ethanol corn use are still forecast. Soybeans need to see actual Chinese demand while KC wheat tests a long-term weekly uptrend line at $4.39-4.41/bu. This is no time to turn bullish of corn or bearish of wheat/soybeans. The EU midday weather forecast stays arid which is concerning for reproducing winter wheat/barley crops.