Market News

Soybeans, corn up on renewed tight supply support

Soybeans were solidly higher on commercial and technical buying. The near-term soybean supply is very tight, the cash basis is strong, and the trade is continuing efforts to ration demand. Brazil’s harvest is a little bit behind 2020 and the five-year average, while their FOB prices remain high because of strong demand. Brazil’s government says April soybean exports were record large at 17.4 million tons, but they expect May imports to 15 million tons because of high prices. Planting is ahead of average but will slow down in some areas due to rain, with parts of the region seeing cooler temperatures as well. The drought or near drought conditions in the Plains are also a factor. Soybean meal was up on commercial buying and bean oil was mostly higher, all except for May, on commercial spread adjustments. Canola prices were up ahead of the U.S. session, while palm oil was modestly lower on expectations for a bigger crop from Indonesia and concerns about demand from India. The CEO of Bunge was quoted as saying increased feed wheat usage is limiting soybean meal demand but described the situation as a short-term concern.

Corn was sharply higher on commercial and technical buying, with May continuing to hold above $7 and July spending a solid chunk of the session above that mark. Corn is also looking at bullish supply fundamentals, a strong cash basis, and probable U.S. planting delays, along with the very dry conditions in parts of the U.S. Plains. Most analysts expect the USDA to lower the production estimate for Brazil in next week’s supply and demand report due to early planting delays for the critical second crop and widespread dry weather during key development phases. Harvest is still ongoing for Brazil’s first crop, with activity close to the year ago pace and a little bit behind average. CONAB’s next estimate is out May 12^th, the same day as the next set of USDA supply and demand numbers. Ethanol futures were unchanged. The U.S. Energy Information Administration’s weekly ethanol production and supply numbers are out Wednesday. The Renewable Fuels Association says March ethanol exports were 133 million gallons, a jump of 31% from February, with solid month to month increases for China, Canada, and India, against significant decreases to South Korea and Brazil. DDGS exports were 882,553 tons, up 13% on the month, with Mexico, Vietnam, and South Korea leading the way. DTN says South Korea bought 65,000 tons of optional origin corn, which will “likely” be sourced from Argentina.

The wheat complex was higher on commercial and technical buying. Large parts of the Plains remain in drought or near drought conditions, while some soft red winter growing areas are too wet. Less than half of the U.S. winter wheat is in good to excellent condition because of that dry weather in the Plains and the excessively wet conditions in some SRW growing areas. That said – SRW is generally in much better condition right now than HRW. Spring wheat planting and emergence are ahead of average, but forecasts for the northern and northwestern U.S. Plains into the Canadian Prairies generally remain very dry. Parts of the spring wheat region also saw below freezing temperatures Monday night into Tuesday morning. With about a month remaining in the 2020/21 marketing year for wheat, U.S. export prices remain above several major competitors. The new marketing year on wheat starts June 1^st.