- HEADLINES: Chicago markets mixed ahead of NASS data; Spring wheat weak on profit taking; Canola market sharply higher.
- Chicago futures are higher at midday with spring wheat futures reversing early gains on profit taking ahead of the NASS Stocks/Seeding Report. Corn and soyoil futures have traded mostly higher on tightening old crop cash markets and ongoing dry weather for the N Plains and the NW Midwest. The midday tone of summer row crops is cautiously bullish with S American firms estimating that a hard freeze overnight likely caused the loss of 2-3 million mt of winter Brazilian corn production in Parana and MGDS. 75% of the Parana corn crop was vulnerable to a freeze due to latent corn seeding dates in early March.
- 50 contracts of Chicago soyoil receipts that were cancelled this morning which added to the need of the bears to cover net short July soyoil positions. Cash soyoil is priced 5-5.5 cents over July futures on the Illinois rail which will keep shorts nervous heading into first notice day.
- July corn futures returned to a $1.35 premium to December which argues that the NASS Stocks estimate will be bullish on Wednesday. Such a heady old crop spread premium argues for US 2020/21 corn end stocks of just 850 million bu or less which makes the need for extra US 2021 corn acres more important.
- Brazilian corn futures are up the limit and will likely trade at a second limit later today following a cooling off break. This would produce record high Brazilian corn futures with the cash market difficult to define. The hard Parana/RGDS/MGDS freeze caught the March seeded corn crop at a delicate time of development, either late pollination or the milk stage. The freeze will produce low test weight corn that is likely to carry a considerable amount of mould. The impact on tonnages is preliminarily estimated at 3-4 million mt with us now pegging total 2021 Brazilian corn production at 87-88 million mt. This would be 10 million under the June USDA estimate. The 2021 Brazilian winter corn crop appears to be cursed, late seeding, drought, and now widespread frost/freeze damage across the south. Making export grade quality could prove difficult.
- Stats Canada pegged 2021 crop seeding at 23.3 million acres of all wheat, 5.5 million acres of durum and 22.5 million acres of canola (rapeseed). All were right on pre-report estimates with the data considered neutral. If there was a surprise, it was that 2021 oat seedings were 3.42 million acres compared to forecasts of 3.6 million and barley acres at 8.3 million acres compared to forecasts of 8.3 million acres. The big concern is not seeded acres in Canada, but the deepening drought and coming heat that looks to produce acute stress on the canola crop. Canola/rapeseed does not do very well under extreme heat with highs in the 90s to lower 100s to produce acute stress across Saskatchewan and Alberta. It is the potential loss of canola yield that has rallied Chicago soyoil to sharp daily gains.
- Chicago brokers estimate that funds have been buyers of corn, soybeans and soyoil. Managed money has purchased 2,000 contracts of corn, 900 contracts of soybeans, and 5,500 contracts of soyoil. Funds have sold a net 2,300 contracts of soymeal and are net flat in wheat (early buyers/midday sellers). Profit taking and technical selling has been witnessed in Minneapolis wheat.
- The midday GFS weather forecast is wetter across Minnesota/Wisconsin with dry weather holding across the remainder of the N Plains and the NW Midwest. The Canadian Prairies and the PNW stay arid without meaningful rain for the next 10 days. Temperatures stay hot across the NW US with that heat pushing east this weekend. The Plains and W Midwest endure widespread 90′s to low 100′s mid next week with such heat adding to the accumulating crop stress. The forecasts have been very consistent in recent days in bringing back the old May and early June weather patterns.
- Brazil’s second corn crop is still in sharp decline with a frost/freeze adding to crop losses and quality concern. Spring wheat futures have fallen on pure technical trading and profit taking ahead of tomorrow’s NASS report. We look for the USDA reports to be positive on US corn stocks and we doubt that combined 2021 US corn/soybean acres will add up to more than 183 million acres. We estimate 2021 US corn seeding at 93 million acres.