Market News

Soybean, corn, wheat rally pauses

Soybeans were lower on profit taking and technical selling. The supply and demand fundamentals continue to be bullish, but contracts are overbought after the recent run to multi-year highs. May beans did trade above $16, but only closed just above the day’s low. 8% of U.S. soybeans are planted, just ahead of the five-year average, with planting delays likely in some areas this week. Still, those interruptions will aid soil moisture. The USDA’s next set of supply and demand numbers, including the first official new crop projections, is out May 12^th. Given the lower than anticipated planted area number reported in March and generally strong demand, the USDA is expected to project tight supplies for the 2021/22 marketing year. The Rosario Grain Exchange estimates 2020/21 soybean production at 45 million tons, unchanged from the last guess. Soybean meal was lower on profit taking, while bean oil was mostly lower, adjusting spreads. Heading into the U.S. session, global vegetable oils were higher, including big gains in palm oil and new highs in Canadian canola. Statistics Canada says producers intend to plant 21,529,900 acres of canola in 2021, below -pre-report estimates, compared to 20,782,600 in 2020. Ukraine is reportedly capping sunflower oil exports at 5,380 tons until the end of their current marketing year, which runs through the end of August.

Corn was mixed, mostly modestly lower on spread adjustments and profit taking following an up and down session. Corn is also looking at a bullish supply and demand situation against overbought signals. May corn traded above $7 in the overnight session, the first time above that mark in years, and while it did close well below the session highs, it was the only contract in the black. 17% of the U.S. corn crop is planted, slower than average following last week’s inclement conditions, with more delays expected in some areas this week, while heat stress is probable in Brazil. Brazil’s second corn crop is the larger of the three and the source of most of their exports. Drought in South America is drying up waterways used to transport crops. In Argentina, farmer selling is picking up steam because of high prices, pushing basis premiums below CBOT prices. The Rosario Grain Exchange projects Argentina’s crop at 50 million tons, up 1.5 million from the prior estimate. Unknown destinations bought 101,600 tons of U.S. corn, with half for delivery this marketing year and half for next marketing year, which starts September 1^st. That could turn out to be China when it’s time for delivery. Statistics Canada says producers will plant 3,622,600 acres of corn this year, in-line with expectations, compared to 3,559,200 last year. Ethanol futures were higher. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday.

The wheat complex was mixed, with Chicago down, Kansas City mostly firm, and Minneapolis mostly weak. Drought is an ongoing concern in parts of the Plains and the USDA’s winter wheat condition rating was down on the week, with the possibility of more freeze and drought damage showing up in next week’s numbers. 49% of the crop is in good to excellent condition as of this past Sunday. U.S. spring wheat planting is ahead of average despite the drought conditions in the northern and northwestern Plains. Statistics Canada says producers in that nation will plant 23,260,000 acres of all types of wheat this year, just under the average guess, compared to 24,982,200 acres a year ago. Spring wheat planted area for Canada is seen at 16,339,900 acres, compared to 17,926,200 last year. Weather is also an issue in parts of the European Union and the Black Sea region. DTN says Algeria and Bangladesh are both in the market for 50,000 tons of milling wheat. Egypt reportedly canceled their most recent wheat tender and while a reason was not stated, it was likely due to high global prices.