- HEADLINES: Sharp gains in wheat, sharp falls in soybeans mark Chicago at midday; Central US weather too dry for the Plains, too cold for the Midwest.
- Chicago futures are mixed at midday with the grains higher while the soy complex sags on profit taking and the fear that Covid is slowing Chinese import demand while cool/wet weather could add to already record large 2022 US soy seedings. Moreover, reports abound that as the Midwest insurance revenue calendar moves allow the ability to plant corn (April 10-15), Midwest farmers are struggling to secure/receive all their fertiliser/chemicals. Several Midwest farmers report that they will spread out their input supplies over more acres. This could be averse for yields. Others might side-dress nitrogen in the future. Each adds to agronomic/yield risk. A mixed Chicago close is forecast with wheat to remain the upside leader while corn needs to push above its recent high in May futures at $7.80 to entice another round of chart-based buying. July soybeans should uncover solid support below $16.40 on tightening stocks.
- Chicago brokers estimate that funds have bought 3,200 contracts of wheat and 2,100 contracts of corn, while selling 3,200 contracts of soybeans. In soy products, funds have sold 1,900 contracts of soyoil and 4,200 contracts of soymeal. There was an early push of new investment pushed into Chicago, but the fall in stock/energy prices pulled values from their highs.
- The USDA/FAS announced that another 1.02 million mt of US corn was sold to China. The sale included 680,000 mt of old and 322,000 mt of new crop. With 12.1 million mt of US 2021/22 corn sold to China on a known basis, and another 1-1.50 million estimated to be held in the unknown category and including the 2 sales of more than 1.0 million mt each in the past week, China has secured an estimated 15.0 million mt of US corn for 2021/22 crop year. And rumours abound that China will announce another 1-2 million mt of US corn for an old crop year bringing purchase total to 15.5-16.5 million mt. Including the 5.9-6.2 million mt that was already shipped to China from Ukraine before the invasion, we estimate that China has purchased some 21.5-22.5 million mt of 2021/22 world corn. This leaves another 3-5 million mt of corn demand that is up in the air. Will China secure additional old crop or shift that demand to US new crop. China’s corn import pace so far in 2021/22 is on par with last year when they imported 29.5 million mt.
- US weekly export sales for the week ending April 7 were 55.8 million bu of corn, 28.1 million bu of soybeans, and 15.1 million bu of wheat. The shipments were all close to expectations based on vessel line ups. For their respective crop years to date, the US has shipped out 647.7 million bu of wheat (down 139 million or 18%), 1,260 million bu of corn (down 232 million or 15%), and 1,651 million bu of soybeans (down 369 million or 18%). The US weekly corn and soybean export pace will increasingly gain vs. last year due to the Black Sea supply loss. US soybean exports will be exceptionally robust during July/August.
- US farmers are unwilling to sell Chicago weakness with their new crop still in the seed bag. And producers fear that they have sold too much new crop due to historically high prices. We estimate that US farmers have sold 40-50% of their new crop soybean and 50-60% of new corn crops.
- Chicago will be closed on Friday for Good Friday.
- The midday GFS weather forecast is just like the overnight run with heavy snows across N Dakota with totals of 12-28”. The snows will be the heaviest in several years and come at the wrong time to advance spring planting. Otherwise, the US Plains are dry while the Delta endures flooding rain. The Midwest has a cool to cold temperature bias which slows seeding and germination.
- It is a short 4-day week, La Niña is strengthening again which raises the Plains/W Midwest drought risks. A bullish bias is maintained with wheat being the upside leader. May or July corn should test resistance at $8.00-8.50 while July beans hold support at $16.30. As China needs to cover their late summer import needs, this break will produce such an opportunity. Soyoil will lead the complex higher on tightening world vegoil stocks amid the pure lack of sun oil supply.