- HEADLINES: Chicago markets rally sharply on better than expected corn sales.
- Chicago futures are sharply higher at midday in a recapture of Tuesday’s losses. Better than expected US weekly export sales, with the USDA reporting 21.9 million bu of old crop corn sold, lifted bullish spirts. And as we reported on Wednesday, there continue to be reports that China purchased an additional 1.0 million mt of US old crop corn which would confirm that state buyers have no intention of cancelling or rolling existing sales. Tightening cash corn markets are the theme amid a fight for supply from US exporters and US ethanol producers. Soybean and wheat futures have followed corn’s bullish lead.
- The wheat market is also growing worried about the heavy rainfall that is forecast for the Central and Southern US Plains on the weekend and over the next 10 days. The rains could produce fungal diseases that reduce seed quality and yield. The HRW wheat harvest is starting across Northern Texas and will pull northward into Southern Oklahoma by June 5, weather permitting. The forecast is too wet which is raising crop concern.
- Chicago traders estimate that funds have been early buyers of 5-6,000 contracts of corn, 3,500-4,000 contracts of wheat and 3~3,400 contracts of soybeans. In soybean products, funds have bought 3,100-3,500 contracts of soymeal and 2,100-2,800 contracts of soyoil. The volume has been active, and it is difficult to measure fund demand this morning.
- FAS/USDA reported that for the week ending May 20, the US sold 21.9 million bu of US old crop corn and 224.1 million bu of new crop, 1.1 million bu of old crop and 13.7 million bu of new crop wheat, and 2.1 million bu of old crop soybeans and 9.1 million bu of new crop. The old crop corn sales were well above expectations.
- For their respective crop years to date, the US has sold 943 million bu of wheat (down 40 million or 4% compared to last year), 2,700 million bu of corn (up 1,132 million or 72%), and 2,260 million bu of soybeans (up 719 million or 46% above last year). The US has already sold 25 million bu more corn that the USDA forecasts for the annual total. We continue to maintain a 2020/21 US corn export estimate of 3,000 million bu and a 3,050 million bu for 2021/22. The US has ALREADY sold a record 576 million bu (14.66 million mt) of US new crop corn and that total will quickly build via the loss of Brazilian winter corn production.
- FAS/USDA reported the sale of 152,400 mt of US corn to an unknown buyer for the 2021/22 crop year in its daily reporting systems.
- The midday GFS weather forecast is drier in North Dakota but wetter across the Southern and Eastern Midwest. 10-day precipitation accumulation will stay south of the driest area of the Northern Plains and Canada. Soaking rainfall of 1-4″ favours Texas, Oklahoma and pockets of Kansas and Nebraska into late next week. The GFS forecast also maintains the arrival of warmth to the Northern Plains and Upper Midwest beginning June 3. Whether this heat expands into the principal Midwest in the first half of June will be watched closely in the days ahead.
- Markets are recovering as focus, for now, shifts from favourable early Midwest growing conditions to end user margin improvement. Interior cash corn basis levels have failed to break, and it is the competition for demand between livestock, ethanol and export sectors that will continue to underpin the marketplace even amid normal weather. Focus on regional weather issues will be elevated following the coming 3-day weekend.