GOOD MORNING,

The markets continue to adjust into Friday's WASDE report, which is typically not a market maker.   Prices are mostly firm this morning proceeding still with an air of caution.  On the bear side for beans are China's crushing margins, which are weaker, and slows demand for SA beans.  Brazil's bean prices remain at a deep discount vs. US.  Countering that are strong US processor bids for crush, with domestic bean basis firmer.  

What to expect from the April WASDE due out at 11:00 central time on Friday?   Expectations of tighter ending stocks for 20/21 support May bean futures.  Bean futures continue to also take a cue from firm soyoil trade.  Beans are supported by soyoil and expectations that the next NOPA crush report could be a record.  World vegoil values are higher, soyoil basis is firm, and energies are generally well supported.  Look for oilshare to continue to trend upward, though there is some profit-taking here for the day. 

Corn futures still remain well supported though a favorable weather outlook pressures Dec corn, while slower Chinese buying pressured May.  US farmers are now in the fields and typically farmer selling pressure remain light during the planting stage.  SA farmers are busy harvesting the last of the crops.  Look for hedging to be light on rallies, and if funds buy prices may go further than expected. In terms of the USDA report, some expect that the gov. may lower the SA corn crop.  Higher US exports and fuel usage could find corn carry-out finally below the neutral 1.5 bln bu carry-out.  Of note is that May corn and Kansas City wheat values are near even, something which is rare, which implies there is less corn than is thought and higher US wheat feeding.  

Traders expect wheat numbers to remain neutral.  Wheat is busy finding the level that sparks demand.   In its latest tender, Egypt purchased a combination of Russian and Ukraine wheat.  Matif wheat prices traded to new lows for 2021.

WEATHER

--Favorable weather is noted across the Midwest for the next two weeks.  Rains are forecasted for the Delta with the 6/10-day outlook calling for below normal temperatures and below normal rains, particularly in the northern plains.  

--Concerns are still mounting over Brazil's Safrinha crop given the drier trend in the interior of Southern Brazil, though the latest models offer up the chance for rain next week.  Regions in Brazil from Mato Grosso do Sul into Sao Paulo need a good rain event.  Argentina's weather continues to be good for maturing crops.  

ANNOUNCEMENTS

AgroConsult revised Brazil's Safrinha crop to 78.3 mmt, vs. 82.8 mmt prev. and forecast 20/21 bean production to 137.1 mmt vs. Jan at 132.4 mmt.   They forecast yields at 59.3 bags/ha vs. 57.4 pre.

The Russian gov. approved a formula--based export tax system for sunflower oil and a higher export tax for sunflower seeds as part of a drive to combat rising food inflation costs.  

Latest USDA attache report from Brazil forecast 21/22 bean acres to expand to 40 mln hectares from 38.5 mln this season, which would produce a record 141 mmt vs. 134 mmt now.  They kept their 20/21 corn production forecast steady at 105 mmt, but increased 21/22 production to 114 mmt.  

CALLS

Calls are as follows:

beans:  3-5 higher

meal:  1.40-1.80 higher

soyoil:  mixed

corn:  2 1/2-3 higher

wheat:  steady

OUTSIDE MARKETS

Crude oil trading down to $58.78/barrel, stocks either side of even, and the US dollar weaker at 92.18.

TECH TALK

• May corn prices congest after hitting a contract high of $5.85.  The market is working into a classic pennant  pattern on the chart, and would expect an upside exit from here.  The 50-day moving average offers support at $5.45 should we go there on a pullback.  The path of least resistance is still higher and would view the congestion on the chart as positive for higher trade.  
• May wheat chart still offers up a more negative scenario than positive, with current clear resistance from $6.25/$6.30.  Would look for a continuation of a $6.00-$6.35 trading range, using straddles/strangles.   
• May bean prices congest from $14.00-$14.60, using $14.30 as a pivot point.  Key resistance is $14.33, and the market has a good bid to it when it pulls back.  Look for higher trade back towards $14.50.  
• May meal prices fall once again back towards the lower end of the trading range and back under the 50-day moving average price at $411.00.  Prices appear more vulnerable to another break, but good support is still located at $400.00 should we go there.  If needing to would price, cover a short, or try the long side of May meal on a good break.  
• May soyoil prices rebound nicely from 51c to 54c, and also could be in the process of forming a bottom from which to rally.  Best resistance is still above the market at 5560c, but think we could go there.  Overall trading range for May soyoil is from 51c-56c.  Would use pullbacks to get long.  

KANSAS CITY WHEAT

The overall trading range is from $5.53 - $5.90 and appears ready to trade down to a target low of $5.35 if new lows are posted.  A down-trend channel provides overall direction as prices trend lower.   The overall downtrend is strong, with an ADX at 39.  The market is trending towards oversold with an RSI at 35, but that is not enough to warrant a price correction.  Highs set at $6.09 were set in March, with a break-down to $5.90, leading to the last leg lower.   If short, would begin to scale down cover from $5.35 - $5.55, and see if further weakness develops.   If $5.35 is traded, would look for a settlement back over $5.65 to confirm a market low.  Rallies should continue to be successfully sold.

TAGS – Feed Grains, Soy & Oilseeds, Wheat, North America