Market News

Wheat sees more gains, soybeans and corn mixed

Soybeans were mixed on bull spreading, reflecting the tight nearby supply. Near-term planting weather looks generally favorable in most of the Midwest and Plains. Export sales were down on the week, but above the four-week average. The big old crop buyers were China and Germany, with a net cancellation by unknown destinations, while new crop sales were routine, all to China. Brazil continues to dominate the export market, but their basis has moved higher with the record harvest nearly complete. Still, the logistics of that record crop continue to be a big issue and could cause problems down the road. CONAB’s next set of numbers for Brazil are out May 11^th and the USDA’s updated supply and demand report is scheduled for the following day. The woes in Argentina are factored in. Soybean meal and oil were lower due to tighter domestic crush margins.

Corn was mixed, with nearby contracts up and deferred months down. Most forecasts have good planting weather in much of the Corn Belt into mid-month. There’s also rain in the forecast for parts of Brazil’s second corn crop. That expected record crop could face some of the same logistics issues for storage and movement as soybeans. Export sales were a 2022/23 low following cancellations by China and unknown destinations. Japan and Taiwan were the top buyers for old crop, while Mexico led the way on new crop. The recent cancellation by China and unknown were likely due to the expectations for a record second crop, and lower prices, out of Brazil this summer. The RFA says March ethanol exports were up 27% from February at 132.3 million gallons, with Canada taking the top slot for the 24^th month in a row, followed by India and the European Union, while DDGS exports were 898,086 tons, 17% higher and mainly to Mexico, South Korea, and Turkey. The year-to-date numbers are a lot less friendly, with quarter one ethanol exports the slowest since 2016 and DDGS Q1 exports the slowest since 2019.

The wheat complex was higher on short covering and technical buying, along with some weakness in the U.S. dollar during the session. Any rain in the southern Plains is too late to help hard red winter with a major crop tour starting the 15^th. The USDA’s good to excellent rating on winter wheat is one of the lowest on record for this time of year because of HRW, with soft red winter generally in comparatively good condition. Spring wheat planting in the northern Plains is slow, but many areas should be able to make up some ground in the coming days. Exports might not meet the USDA’s projection with less than a month left in the marketing year. Last week’s main buyers for old crop wheat were Mexico and South Korea with minor cancellations, while the leading buyers for new crop were unknown destinations and South Korea. The trade is monitoring Russia and Ukraine following the recent drone strike on the Kremlin. Moscow has accused Ukraine and the U.S. of involvement, which has been denied, with some pointing to a possible “false flag” operation by Putin to boost national morale in the face of the ongoing war. An extension of the Black Sea Grain Initiative is highly in doubt. Turkey is offering its national bank as an intermediary for Russian grain transactions, which would require the approval of the U.S. and the United Nations. The USDA’s attaché in Ankara says Turkey’s government raised import tariffs on wheat and other grains from 0% to 130% on May 1^st. The office says that caught some grain traders by surprise and is likely an attempt to stem imports of cheaper grains and support domestic producers.