Market News

Supply, demand, weather drive corn, soybeans, wheat

Soybeans were sharply higher on commercial and technical buying, notching more new highs for the move. The near-term supply remains very tight and demand for beans and vegetable oils is strong. FOB prices for Brazil’s soybean crop are also very high, even with record expected production. Soybean meal and oil futures were both sharply higher on the supply implications of the tight soybean supply and solid demand. Most forecasts have planting delaying rain in some southern and southeastern U.S. growing areas. Most of the Midwest is expected to see a return to seasonal temperatures. Weekly old and new crop U.S. soybean export sales were bearish, but the overall 2020/21 pace remains ahead of USDA projections. The new marketing year for beans starts September 1^st and the new marketing year for soybean products kicks off October 1^st. Ukraine’s trade ministry is proposing a 0% export tax on sunflower seeds to stabilize domestic prices. The Buenos Aires Grain Exchange says 18% of Argentina’s soybean crop is harvested.

Corn was sharply higher on commercial and technical buying, including limit gains in the May and July contracts. A tight near-term supply and talk of new demand from China pushed corn to another round of new highs. The rumored sales to China were for new crop delivery, but there’s no confirmation yet. China was a net cancellation for old crop corn exports last week, as was unknown destinations, and didn’t buy any new crop during that reporting period. Corn is watching probable U.S. planting delays in parts of the Corn Belt and likely dry weather damage for Brazil’s second crop. Most estimates for that critical crop remain fairly lofty, but a couple of major analytical firms have lowered projections this week. Conversely, rain is expected to disrupt corn harvest activity in Argentina. Expanded trading limits for corn will be in place Friday. Ethanol futures were steady. The USDA’s attaché in the European Union sees 2020/21 corn production at 64 million tons, compared to 66.693 million in 2019/20, with 2021/22 production projected at 65.6 million tons.

The wheat complex was sharply higher on commercial and technical buying, with most of Chicago and all of Minneapolis closing above $7. Some freeze damage is likely for the U.S. winter wheat crop and dry conditions in the northern Plains and Canada will probably limit spring wheat planting. Parts of the central and southern U.S. Plains will also see drier weather, following up on the freezing temperatures from earlier this week. There are weather concerns in parts of Europe because of dry weather and a recent cold snap. The USDA’s attaché in the European Union estimates 2020/21 wheat production at 125.98 million tons, compared to 138.7 million in 2019/20, with 2021/22 production rising to 134.2 million tons because of expectations for improved weather conditions and an increase in planted area. Exports are expected to be 31 million tons this marketing year and 32 million tons next marketing year. The USDA’s next set of production projections is out in the May 12^th supply and demand report, while Statistics Canada will issue 2021 planting intentions numbers for that nation on April 27^th. Weekly old crop export sales bounced back from the previous week’s marketing year low, but 2020/21 now trails the 2019/20 pace slightly. New crop sales were solid, with the 2021/22 marketing year for wheat getting underway June 1^st. DTN says Japan bought 85,100 tons of food wheat from the U.S. and Canada, while Ethiopia is tendering for 30,000 tons of milling wheat. The trade is continuing to monitor military tensions between Russia and Ukraine.