THE OPEN
May beans: 1/2 higher
May meal: 4.20 higher
May soyoil: 12 lower
May corn: 1 1/2 lower
May wheat: 3 higher
The markets were mixed with the major theme that of unwinding of inter-market spreads. Oilshare was trading weaker as traders return to buy meal/sell soyoil, and wheat/corn spreads correcting a bit. Prices remained on the defensive overall, as traders booked profits on recent price rallies. Wheat prices head lower as the chart lost its bid vs. the last several weeks.
Reuters reports the following:
International Grains Council (IGC) forecasts record world grain crop for 20/21 at 2.22 bln tons, up 2% on the year
International Grains Council (IGC) forecasts 20/21 global wheat crop at 768 mln tons, vs. last season's 763 mln tons.
International Grains Council (IGC) forecasts 20/21 global corn crop at 1.16 bln tons, up from 1.12 bln year ago
SOY
- The markets opened mixed as meal prices were once again rallying against a weaker soyoil trade.
- Soyoil prices turned lower as crude trades weaker down to $23.22/barrel, showing few signs of having the ability to put in a recovery trade.
- Beans drop lower in consolidation trade, as technical selling sets in for beans, meal, and soyoil. May fails to trade above its $9.00 benchmark, triggering a round of profit-taking.
- November beans rallied to $8.85 yesterday, but today cannot get over its 20-day moving average line at $8.80 with sustained strength.
- July crush remains a steady 1.15c/bu while oilshare trades steady at 29.47%.
- Export sales were good today, but traders booked profits later in the session on recent buy meal/sell soyoil spread trade, sending meal back down towards the PM session trading range lows at $317.00 for the May contract. The July/Nov bean inverse continues firm though off its high of 8c for the day to trade down to 3 1/2c. Meal spreads follow with July/Dec trading from highs of $9.50 to $5.40 lows. In the big picture, the inverse for meal remains firm. The meal margin in SA is improving, with farmers not selling at current values.
GRAINS
- Corn prices continue a congestion phase but were on the defensive to begin the day with funds still maintaining a short position. Ethanol plant closures or slow-downs continue to weigh on corn rallies. Valero is closing two plants in IA/NE and declaring force majeure on corn purchases and DDGS sales. Part of this information is now factored into today's lower corn price, while the unknowns that could produce a rally would be continued planting delays.
- Export sales this morning helped prices to remain steady with May corn close to the $3.40 benchmark, as a weaker US dollar will only make corn more competitive.
- Wheat prices prove to be the weaker trade today, as the IGC highlights that global supplies remain plentiful.
- Traders continue to unwind inter-market spreads. May wheat/corn trades 2.33 3/4c down to $2.20. Corn spreads are slightly firmer with July/Dec narrowing back into 12 1/2c from 15c, while May/July trades from 5 1/4c out to 6 1/2c.
AT 12:00 THE MARKETS ARE AS FOLLOWS:
HI LO
May beans: 7 lower 8.84 1/2 8.71 1/4
May meal: 2.40 lower 327.70 317.20
May soyoil: 25 lower 2677 2623
May corn: 3 lower 3.48 3/4 3.43 3/4
July wheat: 12 lower 5.68 1/4 5.54 3/4
July canola: 4.10 lower 474.30 470.10
OUTSIDE MARKETS
The Dow trades up 1124 pts at midday. The US dollar continues to weaken from its 3-year highs, trading down to 99.50, which will be supportive for ags down the road. Crude continues to put in weak trade with a low of $23.05/barrel.
CLOSING COMMENTS
The markets are acting a bit tired after we have seen some decent rallies. Trading ranges now emerge heading into the important Planting report next Tuesday, to be released at 11:00 Chicago time. This will be an extremely important report as high corn acre estimates are telling beans not to get too low in price.
The roll for May contracts will begin in about one week's time, with front running expected starting early next week. Funds are still a sizable short in May corn.
May trading ranges ahead of the report now look as such:
May corn: $3.40-$3.55
May beans: $8.70-$9.00
May soyoil: 26c-27c
July wheat: $5.30 - $5.70
May meal: $310.00-$3.36.00
Would prefer at this time to own good breaks in wheat and meal, given the constructive trade as of late. May corn appears to be attempting to define $3.40-$3.45 as a value level, and don't see much changing into next week.
At some point one has to wonder how much negativity has already been factored into price action given macro weakness. Funds are net short corn into the report and may opt to cover on a good break considering the trade is now estimating record high corn acreage, (or close to it at least), meaning the onus is on the market to see that number.
The markets have little weather premium to them as we head into the beginning of the planting season in April. Would look at the market reaction to the numbers on Tuesday, as the largest fund short is now in corn. As for today, think the markets will go out on the same note they started, weaker across the board.
ON THE CALENDAR
Quarterly Hogs and Pigs out after the close.
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