Markets

Daily Market Wire 1 April 2021

Lachstock Consulting, April 1, 2021

Row crop markets jumped sharply to close limit up on corn and beans. Both options markets priced higher values above limit after the bullish USDA’s prospective plantings report. Wheat followed along for the ride. Implied spring wheat acres were far larger than expected.  Macro markets had crude oil off again. The DOW was off 85 points.

  • Chicago wheat May contract up US16.25c/bu to 618c;
  • Kansas wheat May contract up 17.25c/bu to 575.75c;
  • Minneapolis wheat May contract up 9c/bu to 610.75c;
  • MATIF wheat May contract up €5.75/t to €215.50;
  • Corn May contract up 25c/bu to 564.25c;
  • Soybeans May contract up 70c/bu to 1436.75c;
  • Winnipeg canola May contract up C$30/t to $757.10;
  • MATIF rapeseed May contract up €12.75/t to €514;
  • US dollar index down 0.1 to 93.2;
  • AUD unchanged at US$0.759;
  • CAD firmer at $1.256;
  • EUR firmer at $1.173;
  • ASX wheat May contract unchanged at $280;
  • ASX wheat January 2022 down $2/t to $287.

International

Fireworks were ignited by the USDA Prospective Plantings report, the first official estimate of 2021 US area estimates and especially relevant to summer crops about to be planted.  Corn area was pitched at 91.1 million acres, beans at 87.6 million acres, for a “total pie” of 178.7 million acres versus trade talk of up to 184 million.  The survey took place a months ago. Predictably there are questions about accuracy of month-old survey numbers as a forecast of planted area, given recent market moves.  In any event these are the numbers the markets will trade off for now and the overall lower acres led to extremely tight balance sheets for both crops.

Wheat, at 46.4 million acres, was actually above the USDA’s outlook forum and implied far less shift back from Hard Red Spring (HRS) wheat into corn/beans in the Dakotas.  Those States are where the majority of the swing to/from row crops happens, although the big changes this year compared with last are off the high prospective plantings numbers forecast last year. Milo/sorghum, at 6.9 million acres was slightly above estimates, but mostly in line with reported sentiment in the southern Plains at these milo prices.

Stocks figures were also slightly bullish for corn, 7.7 billion bushels (bbu) and soybeans, 1.56 bbu. Both were slightly above surveyed estimates but were overshadowed by the acreage figures.  Wheat stocks,1.3 bbu, were above expectations. But reports of firming feed basis in Hard Red Winter wheat areas suggest the price spreads are finally doing some of the work to encourage feeding there into their local summer.

CBOT will trade tomorrow with expanded daily limits on row crops enabled by the limit-up moves today for corn, beans. The new limits on outrights are beans 105¢/bu and corn 40¢/bu.

Where do we go now?  That’s the question market are looking to answer after the surprise on acreage.  Can the rally buy back-in more row crop acres with planting already kicking off down in the southern parts of the US?  Or do the row crop markets need to work to ration demand lower to balance out the lower acres?   That scenario would be hard to achieve if you are bullish China demand. There’s plenty of room in all these scenarios for each individual take on the market, and now traders are rapidly readjusting and repositioning to reflect their own views into the planting window.

The OPEC+ meeting last night has not yet had a policy recommendation released. Markets are waiting to see how today’s talks go with regards to any more production cuts, even as demand ideas vary.

EIA weekly ethanol production was up to 965,000 bpd even as stocks dropped another 695,000 bpd. Perhaps it reflects another export vessel loading. Regions 1 and 3 had the large drops.

The regular weekly US export sales report will release tomorrow, and with the lower corn stocks and ongoing sales there are plenty of questions about how the USDA will be able to balance their figures into the April WASDE. The US export sales report should account for flash corn sales to Japan, but flash sales to China have already been accounted for.  It means that any new sales to China will be in volumes for which flash reported wasn’t required. Dalian Corn Exchange (DCE) recently traded lower, so it will be interesting to see the DCE response after the massive CBOT moves. Reports from China suggest supplies are starting to weigh slightly on markets there and import buyers have been less active in recent weeks. There’s likely to be flow-through from the massive moves on CBOT

Touching back to Brazil’s growing Safrinha corn crop – the weather maps there are still bringing more moisture for northern areas but the south/central safrinha areas are starting to dry out on the forecasts.

Australia

Local markets are looking for support in early discussion today after the global moves in commodities and currency.

Forecasts still bringing in a little more rain for the Darling Downs and northern NSW into next week. But in Western Australia storms continue tracking south, missing the wheat belt. Light moisture is forecast across parts of the Albany zone.

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