• HEADLINES: Soybeans rally to finish the week: Chicago corn consolidates; planting progress awaited on Monday: Global wheat markets extend rally; KC/MGE post new contract highs.

• Prevent Plant dates are a week away across the Dakotas/Minnesota that start on May 20. Too much rain and too cool temperatures have battered the region for weeks. It will take 5-7 days of dry/warm weather before soils firm enough to support large machinery. 2021 was one of the lowest PP years at just 1.6 million acres, while 2019 was the high at nearly 20 million acres. The 2020 year had 10 million acres when similar cool/wet weather prevented seeding across the Dakotas. We fear that record high input prices and revenue, will push N Plains and NW Midwest farmers to strongly consider PP. Another several rains would push N Plains/MN corn seeding into June, far too late for trend yields.

• May soybean futures rallied ahead of expiration gaining $0.63 on Friday to expire at $17.23, versus $16.21 last year. This lifted the rest of the complex putting July soybeans up $0.32 while November stopped just short of $15.

• NOPA will be out Monday with April crush data. But based on historic crush margins during the month, a record large April soybean crush is expected. The average trade estimate ahead of the NOPA report calls for an April crush rate of 174.4 million bu, a more than 12 million bu increase over last year and the largest April crush rate on record. The Chicago soybean crush spread averaged more than $2/bu in April, while the cash crush margins across the Midwest averaged more than $1.10 higher at an historic $3.10/bu.

• A record large April crush rate will have been accompanied by a record large export rate. The point is that $16-17 cash soybean prices are not rationing US soybean supply. Based on the large volume of outstanding soybean sales and still strong crush margins. Tightening supplies will continue into the autumn harvest. We remain bullish on breaks, with new highs expected in the coming the summer. This is no time to be cautious with US soybean exports rising.

• Chicago corn futures ended slightly lower as the market awaits Monday’s update on seeding progress. It was a rather favourable week for fieldwork outside of the Dakotas and MN. Monday’s progress data will provide a benchmark from which to better understand how much corn will be planted in very late May/early June. The midday GFS is too wet in the E Plains/Midwest in the 8–15-day period, but the EU and Canadian models confirm that widespread rainfall returns to MN, MO, IL, IN and KY beginning May 21-22.

• Corn enters a new and unprecedented bullish phase if weather negatively impacts US yield potential. Choppy trading will be ongoing in the short run, but downside risk is limited amid firm/soaring international corn and wheat markets. Brazilian corn for July delivery settled at $7.97/bu. The Brazilian market is not yet willing to discount itself as safrinha yields continue to be trimmed by warmth/dryness in N Brazil and the potential for frost on Parana early next week.

• Breaks only encourage demand, which is the absolute wrong signal to send prior to knowing yield potential. Dec corn is undervalued below $7.20. Upside risk is sizeable. Plains drought will be more attention grabbing in June as traders debate whether the drought spreads eastward in June.

• Wheat futures ended steady to higher, having shrugged off early weakness, amid no material change in weather patterns in North America or Europe. We expect only 9-12% of spring wheat to be planted by Sunday in ND, vs. 55% on average. HRW conditions will fall to newer lowers amid the return of extreme heat and dryness to the Southern and Western Plains. It is just tough to find bearish input. Breaks will be brief/shallow and confined to periodic profit taking.

• Most importantly, end users/importers have been reluctant to extend forward coverage, and the recent dramatic rally in global wheat prices has not yet been a function of demand. Yet, the inherent need for supply is up year on year as stocks decline in major importing countries and food security becomes a priority. Riots have erupted in Iran this week amid rising bread costs. The full return of importer demand triggers a new bullish phase for world wheat.

• Even amid acreage expansion in 2023/24, the US wheat balance sheet will be historically tight. This is becoming a new era of food pricing.

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