GOOD MORNING,

Prices were mostly higher overnight taking back losses from Thursday's holiday shortened session.  Funds are still holding long positions across the board, and were rewarded for their patience via the bullish USDA report.  Weather is not bullish, as warm and dry conditions were good for warming up soils in preparation for planting.  

The market continues to digest the numbers from March 31, with acreage the most bullish component for new crop.   Inverses continue to head lower as old crop prices remain locked in previous ranges, while new crop corn and beans score new contract highs last week. Inverses continue to weaken as new business to China continues quiet, and Brazil beans are much more inexpensive vs. US origin.  November beans may have to rally to continue to attract acres given the numbers on March 31.  December corn may remain well bid as traders expect USDA to perhaps raise exports and higher domestic use.  There is some chatter that farmers may not add to the USDA estimates of 2021 corn acres due the higher cost of fuel and fertilizer.   Total spring wheat area is forecast to fall to 11.7 mln acres, down 4%, as farmers may instead choose to plant more corn and beans.  

Wheat is higher on short -covering this morning.  Funds are now a small net short based on a neutral to bearish wheat March 31 report, lower world prices, and negative technical signals. Russia's IKAR was down $12/mt this AM from week ago.   This morning, Egypt announced a tender for 55,000 mt of wheat for Aug. 1-10 shipment, with a deadline of April 6th.  

WEATHER

--Argentina's bottom line still looks good for most of the summer crops, with favorable soil moisture levels.  Brazil will see a pick-up of rains into Mato Grosso supporting Safrinha crops, though other areas will remain dry.  Stress for Safrinha crops in Parana and Mato Grosso do Sul will head higher.  

--US weather was mostly dry through the weekend.  Temperatures were warmer in the Midwest.  The cold extremes of last week probably did not inflict any damage on crops.   Moderately strong wind and low humidity accompanied the Grain Plains heat accelerating topsoil moisture losses.  Rains will return to the Midwest mid-week.  Some snow is expected in the Dakotas and northwestern Nebraska.  There is another big storm moving across the northern plains and upper Midwest April 11-15 producing additional rainfall of .20-.80".  Warmer and drier weather is expected in the plains again over the next few weeks, which could support KC wheat.

According to the US Drought Monitor, most of the Northern Plains is abnormal to extremely dry.  Farmers like to plant spring wheat early to increase yield potential and dry field conditions help them get spring wheat in the ground.  

REPORTS

Commitment-of-Traders report as of March 30 disaggregated futures / options:

beans:  net long 141,880

meal:  net long 57,420

soyoil:  net long 80,840

corn: net long 395,584

wheat:  net short 14,711

Positions were in line with expectations, with corn even longer than expected.  

USDA Fats and Oils:  

Feb. crush:  crush was 4.9 bln bu, (164 mln bu vs. 165 mln bu expected), slightly below the expected, with ending stocks of soy oil above 2.305 bln bu (vs. 2.25 expected).  Both were slightly bearish relative to trade guesstimates.  Meal stocks were 544,178 tons vs. 512,000 mo ago, and 396,000 year ago.  

Feb. corn for Fuel Alcohol:  332.794 mln bu, with DDGS at 1.406 mmt.

ANNOUNCEMENTS

Brazil's Datagro pegged 20/21 Brazil total corn production forecast was 103.30 mln mt, down from the prev, 109.62 mmt.  The forecast bean production at 135.47 mmt, down slightly from 135.68 mmt. 

Ukraine's Economics Ministry forecast a total of 310,560 spring crops of barley, oats, peas, and wheat.  Overall, 2021 acres are forecast at 15.5 mln hectares, with crops so far in good conditions.  

Russia’s Ag SovEcon lowered its forecast for Russia's 20/21 wheat exports by 0.2 mmt to  38.9 mmt.  Russia doubled its wheat export tax to 50 Euros ($59) /ton mo ago in an attempt to curb higher food inflation due to the pandemic. 

CALLS

Calls are as follows:

beans:  8-10 higher

meal:  3.80-4.30 higher

soyoil:  40-50 higher

corn:  mixed

wheat:  3-5 higher

OUTSIDE MARKETS

A weaker crude oil trade below $60.00/barrel to 59.59/barrel.  The US dollar sinks to 92.92, while equities trade over 200 pts. higher.

TECH TALK

May corn prices hit new ctr highs of $5.85 but give back most of it to trade back to key support at $5.55/$5.58.  Prices should stabilize at this level and head into a $5.55-$5.85 trading range or higher.   The peak high at the report seems to be a bit of an aberration, but would still now prefer to be long this market rather than short.   The presence of a new ctr high implies a run at another.  May wheat hit a blow off low at $5.93 1/2 with the chart posting double lows of $6.00.  Prices are barely above the $6.00 level, but the trend is fairly weak with an ADX of 21.   Prices are verging on oversold at 38 relative strength index, (RSI- anything under 30% begins the oversold process).  Look for the market to begin trading range activity from $5.90 to strong trendline resistance located at the 100-day moving average of $6.31.  While prices could trade there, if long would get out and try the short side, as both the 100-day and trendline resistance meet at $6.31.  May beans post more congestion trade having not been able to move above prev. ctr highs at $14.60.  The ADX continues to show weak trend, and while prices did not post new ctr highs the market numbers from last Wed. suggests that prices have to probably stay above $14.00 for now.  

Look for the 50-day moving average of $13.95 to come into play as very strong support should we go there, and if wanting to own the market could be a good place to do so.  May meal bases out from $395.00-$400.00 courtesy of the report from last week, with trade to $433.00.  However, the market did not keep its gains and we began back towards the break-out level of trade.  The 100-day moving average is located at $411.00 and given last week's jump to the upside of a down-trend channel would probably raise pricing ideas to match the market direction.  Overall, the market could be working into a $400.00-$435.00 trading range again.  May soyoil prices reached major support on a huge down-side correction by trading to 5022c, which held for a good market rebound.  Clearing 5330c sends the market on its way up to 56c once again.  Frankly, think that given oil's trade and prev. price pattern, would be looking for a pullback to price, cover a short or go long.  Strong trendline support is located at 5175c - 5220c for the day, and would be a buying opportunity. 

DECEMBER CORN

The market posted double lows at $4.50 heading into the report which was below the previous trading range by 10-15c.  There is now a gap from $4.77 1/2 to $4.80 3/4, which is not wide enough to be considered the most bullish of all gaps, (which would be a measurement gap), but left unfilled is a bullish signal.  The trading range has broadened out to the upside, with the low end of the range now moving up to $4.75/$4.80, and the top end of the market still in place at the high of last week post report at $4.93.  The ADX is still fairly weak despite the higher market, as prices have not yet shown they can keep the higher price action in place.  At some point, prices attempt to fill the gap, and if so look for sideways trade with a higher bias.  If not, look for $5.00 or higher ahead.

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