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Morning Comments

May corn -5 at 5.42

May beans -3 ½ at 14.3025

The DOW is UP

USD is Down

Crude oil 0 at 65.05

 

Good morning,

Overnight grain markets were mixed with corn and beans trading lower headed into the break, the bull spreads in corn are soft while the bean spreads are firm. Chicago wheat is a touch higher while KC is slightly lower. Soybean oil continues to gain with new contract highs while meal is breaking down its recent range on the other side of the product trade and oil share spreading. The rally in soybean oil and global veg oil strength continues as the feature trade of the moment due to tightening global supplies and surging demand for both food and biofuel use.

The USDA March WASDE comes out at 11:00 cst, this is not typically a major report and trade expectations are for fairly modest changes although there is always a delta for a USDA curveball. Week 2 options offer the least cost option premium to manage the crop report risk, those options expire this Friday. US carryouts for corn are estimated on average to tighten from 1.502 bb to 1.471, beans from 120 mb to 117 and wheat to increase from 836 mb to 839 mb. World carryouts are estimated on average to tighten from 286.5 mmt to 284.2 mmt in corn, from 83.3 mmt to 82.6 mmt in beans and to increase from 304.2 mmt to 304.4 mmt in wheat. Argentina’s crops are estimated to fall by 500 tmt to 47.0 mmt in corn, and by 600 tmt to 47.4 mmt in beans. Brazil’s crops are estimated to fall by 700 tmt to 108.3 mmt in corn and to increase by 90 tmt to 133.09 mmt in beans.

Argentina’s weather forecast includes needed relief from hot/mostly dry conditions starting next week while Brazil continues to struggle with too much moisture in parts of the central to northern growing regions that is impacting soybean quality and jeopardizing safrinha corn plantings and early germination.

Cordonnier left his Brazil soy and corn production estimates unchanged at 132 mmt and 105 mmt respectively, noting poor soybean quality in the wet areas and risk to safrinha plantings in a neutral to lower bias going forward. He also left his Argentine soy and corn production estimates unchanged at 46.0 mmt and 45.5 mmt with a neutral to lower bias on both.

 

Overnight, the corn market had a softer vibe, finishing 3-5 cents lower by the morning pause. The primary focus today will be the USDA’s March WASDE report, due for release late morning. Usually, the March S&D is a subdued affair, and we have no reason to suspect any major changes are afoot. Some demand tweaking and minor changes in world production are possible. There is also always the low probability wild-card of a China S&D revision, given continued uncertainty over that country’s corn balance sheet? In general, traders are expecting both U.S. and world corn carryout to tighten slightly. The analyst consensus pegs U.S. carryout at 1.47 billion (vs. 1.50 in Feb) and world carryout at 284.2 (vs. 286.5 in Feb). It may still be too early for the USDA to make wholesale changes to their South American crop estimates, which generally skew toward the high-end of current private forecasts. Looking forward, the April WASDE will likely incorporate any changes implied by the March 31 Quarterly Stocks data, while the May WASDE will offer the first official full balance sheet for new crop 21/22. Barring a major curveball in the March report, we suspect markets will go back to trading South American weather shortly after release. There has been slowly rising optimism over a boost in Argentina’s precip later this week and next, though Brazil fieldwork remains a slog.

 

Brazil Harvest Drags While Moisture Hits Bean Quality: Brazilian farmers reaped less soybeans than expected from fields last week as rains continued to disrupt the work of the harvesters in the world’s largest producer of the oilseeds, agribusiness consultancy said AgRural on Monday. Bean quality is also being affected by damp conditions, the consultancy said. Brazilian farmers had harvested an estimated 35% of the planted soybean area through last Thursday, the slowest pace in a decade amid March rains. At the same time a year ago, 49% of the area had been reaped in Brazil. With high humidity for the past few weeks in regions of Mato Grosso (state) and in the north and northeast of the country, quality problems have been increasing, AgRural said. In addition, the large amount of soy leaving fields with high humidity has caused lines of trucks at warehouses because the standardization of the batches has been consuming more time due to excess damp. Delays to reap soy have affected the pace of second corn crop planting in Brazil, as farmers have sown only 54% of the estimated area for the cereal compared with 80% in 2020.

 

Study Finds No Negative Effects From E30: The use of E30 in state of Nebraska non flexible-fuel vehicles for one year found no observable negative effects on vehicle performance or costs per mile, the results of a study released by the state on Monday show. Just as markets for E15 continue to grow across the country, the study also found because E30 is about 2.5% less expensive than E15, the wide use of E30 would make it a more economically viable fuel. What’s more, the study found non-FFVs were able to adjust the air-to-fuel ratio to adapt to E30’s higher oxygen content. The results of the study were released during a Monday press conference by Nebraska Gov. Pete Ricketts. The year-long demonstration involved 50 non-FFVs from the state of Nebraska to determine adaptability, economic feasibility and environmental effect of using E30. The analysis said if the state’s non-FFV vehicle fleet changes from using E15 to E30, ethanol consumption would increase by 66,000 gallons per year with a reduction of 529 tons of carbon dioxide emissions.

 

Darren, David, and Elizabeth

 

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