May corn +6 ¾ AT 5.3925
May beans +6 AT 14.165
The DOW is UP
USD is UP
Crude oil +1.68 AT 65.51
Overnight grain markets traded higher across the soy complex and corn with wheat trading slightly lower. A drop in Argentina crop ratings is lending support but other fresh news is limited around the grains today. While soybeans continue to pay rent in ‘chop city’ for the moment, meal has been hanging out in the ‘bend but don’t break’ part of town as soybean oil is living large in the ‘new contract high’ end of town.
The most recent data this week from the USDA census crush and the weekly export sales reports underscore the fact that soybean demand has not been curtailed to this point. This is a supply problem that will need to be solved with higher soybean prices that encourage export cancellations and/or slow processing demand. The bean rally may be taking a breather from making new highs, but don’t be lulled into complacency because our supply issues have not been resolved.
The outside markets feature the dollar extending its breakout rally trading 25 pts higher which is not bothering the crude oil market trading into new highs of its own over $65/barrel.
Buenos Aires Cereal Exchange rated the Argentine soybean crop as 10% G/E down from 15% a week ago while the corn rating was 25% G/E down from 30% a week ago, 70% of the crop is in normal condition and 20% of the crop is in fair or bad condition, up from 15% last week. They noted they could cut its harvest forecast for Argentina’s 2020/21 soybeans, currently at 46 million tonnes, if there were no rains in key producing areas in the coming weeks. They also noted if rains aren’t seen in eastern corn growing areas they would also likely pull back their forecast for that crop.
Overnight, the corn market was able to rebound after a squishy Thursday close, ultimately finishing 6-7 cents higher in old crop and 3-4 higher in new by the morning pause. Heading into ‘Big Friday’, the corn market is effectively unchanged for the week, when counting overnight gains. In keeping with the recent choppy theme, a close right here would be in the middle of a 22 cent weekly price range. Outside markets are in a good mood to start and could very well be helping give corn an early boost; Crude Oil is into new highs and stocks bounced back, but the U.S. Dollar is firm. Note that yesterday’s Crude Oil rally left Ethanol behind; in fact, the crush gave back most of its recent gains and then some Thurs. On the weather front, we will start to have to watch Europe, as we are nearing the start of spring grain planting over there (mostly barley to start). South American weather is not much changed; we have observed a little more rain around Argentina than we expected this week, but note it is not widespread. Southern Argentina looks to be favored over the next week or two, while the central part of the country is disfavored for rain and will likely see some stress? BAGE left crop estimates unchanged this week, but says Argentina corn and beans may be due for a downgrade if dryness continues? Elsewhere, still no deliveries against March futures, and we have the next monthly WASDE update this coming Tuesday.
Darren, David, and Elizabeth