Market News

Rally continues for corn, soybeans, wheat

Soybeans were sharply higher on commercial and technical buying, extending the run to new highs. The big drivers continue to be the tight near-term supply and solid global demand for beans and vegetable oils. Soybean oil was sharply, including a limit up finish for the May contract, and bean meal was higher. The USDA says 8% of U.S. soybeans are planted, compared to 3% a week ago and the five-year average of 5%. Unknown destinations bought 120,000 tons of new crop U.S. beans. That follows the sale of 132,000 tons of 2020/21 U.S. beans to China last Friday. U.S. soybean prices have surged, but remain below China’s domestic prices, and while Brazil’s harvest is nearly over, their FOB prices high because of demand. Export inspections were down on the year, Mexico and Japan led the way, but remain ahead of the pace needed to meet USDA projections for the current marketing year. A cargo of soybeans from Brazil is reportedly headed to an East Coast poultry producer. The USDA’s next set of supply and demand numbers is out May 12^th.

Corn was sharply higher on commercial and technical buying, including limit up finishes for the May and July contracts. Corn is also being driven by supply and demand fundamentals, along with probable crop stress in parts of Brazil. Most forecasts have dry conditions during key development phases in central and southern Brazil along with high temperatures, which will likely limit yields. Brazil’s second crop is the source of most of their exports. The trade is also watching harvest activity in Argentina. China’s domestic corn futures mostly continue to top $10 per bushel, with some approaching $11. Drought conditions are also expanding in parts of the U.S. Plains and Midwest. As of Sunday, 17% of U.S. corn is planted, compared to 8% last week and 20% on average, while 3% has emerged, compared to 4% normally in late April. Ethanol futures were steady. Corn export inspections were nearly two million tons, China and Japan took the top two slots, and the 2020/21 pace is well ahead of 2019/20. The USDA’s attaché in Ukraine estimates 2020/21 corn production at 28.067 million tons, well below 2019/20 because of dry weather issues during the spring, rising to 33.475 million in 2021/22. Exports this marketing year are seen at 24 million tons, compared to 28.929 million last marketing year and 27.6 million next marketing year.

The wheat complex was sharply higher on commercial and technical buying. Drought is the big concern for wheat in the U.S. Plains and Canada, along with any potential damage to crops from last week’s cold snap. For winter wheat, 49% of the crop is rated good to excellent, down 4% on the week and 5% on the year, with 17% of the crop headed, compared to 23% on average. For spring wheat, 28% of the crop is planted, compared to the usual rate of 19%, and 7% has emerged, compared to 5% normally this time of year. Winter wheat conditions generally look good in Ukraine and Russia, but some spring wheat planting delays have been reported in parts of Russia. The USDA’s attaché for Ukraine projects 2020/21 wheat production at 25.819 million tons, compared to 29.144 million last year because of weather issues, but says the 2021/22 crop could be as large as 26.841 million tons. 2020/21 wheat exports for Ukraine are pegged at 15.5 million tons, compared to 21.013 million in 2019/20 and 18.5 million in 2021/22. World wheat prices were higher heading into the session. With just over a month remaining in the current marketing year, 2020/21 wheat inspections are slightly ahead of the 2019/20 pace. Last week’s top destinations were China and South Korea. Egypt reportedly issued a wheat tender over the weekend. Some of the major meat packers in Brazil are switching to wheat from corn in feed rations because of high prices, with Brazil’s domestic wheat planted area expected to be up on the year. China’s National Grain Trade Center says just 311,837 tons of wheat were sold from state reserves out of the more than 4 million ton offering, with one analyst citing increased feed supplies from earlier state auctions and another citing the impending availability of new crop wheat.