Mixed start to May for corn, soybeans
Soybeans were mixed, mostly higher, adjusting old crop/new crop spreads. The near-term supply continues to be very tight and beans were higher heading into Monday’s regular session, but contracts are overbought. Also, there are concerns about sustained demand at current price levels, with Brazil’s prices moving lower and Argentina’s harvest about a third of the way to the finish. StoneX estimates Brazil’s 2020/21 crop at 135.7 million tons, compared to the earlier projection of 134 million. The USDA says 24% of U.S. soybeans are planted, compared to 8% a week ago and the five-year average of 11%. The trading limit for soybeans is now $1.00 following an increase in margins by the CME Group. Soybean meal was lower on profit taking, while bean oil was mostly higher on commercial spread trade, continuing to benefit from strong global vegetable oil demand. The USDA says March’s soybean crush was 188 million bushels, up 24 million from February, but down 4 million from March 2020. Soybean oil stocks were down on the month and the year. Weekly export inspections were down on the week and the year, but the pace remains ahead of 2019/20. The top destinations for the week were Mexico and Costa Rica.
Corn was mixed, mostly lower on spread trade and profit taking after a solidly higher start to the session. Corn is also looking at bullish fundamentals against bearish technicals and concerns about sustained demand around current price levels, while watching planting conditions in the U.S. As of Sunday, 46% of U.S. corn is planted, compared to 17% last week and 36% on average, while 8% has emerged, compared to 9% normally in early May. Following a margin increase by the CME Group, the new trading limit for corn is $.40. Forecasts generally have warm, dry weather in Brazil, likely stressing the developing second crop. Monday, StoneX lowered its production estimate for Brazil’s second crop to 72.7 million tons, down nearly 5 million from the previous guess of 77.65 million. Weekly export inspections were strong, topping 2 million tons, mainly to China and Japan. The final quarter of the 2020/21 marketing year starts June 1st. SovEcon is projecting Ukraine’s 2021 corn crop at a record 36.6 million tons of corn. Ethanol futures were higher. The USDA says corn for ethanol use during March 2021 was 420.045 million bushels, up 26% from February and 2% from March 2020, with DDGS production of 1,803,494 tons, a jump of 28% on the month and 9% on the year.
The wheat complex was lower on profit taking and technical selling after solid overnight gains. Near-term forecasts have rain in parts of the Plains and dry conditions for other areas, with long-term outlooks for the region generally dry. Some soft red winter growing areas are too wet, with more rain in most outlooks. For winter wheat, 48% of the crop is in good to excellent shape, down 1% on the week, with 27% headed, compared to 34% on average. For spring wheat, 49% of the U.S. crop is planted, compared to 32% typically this time of year, and 14% has emerged, compared to the normal pace of 10%. Weekly export inspections were below the prior week and this time last year, the leading destinations were China and Japan, with a month remaining in the 2020/21 marketing year. SovEcon sees 2021 wheat production for Ukraine at an all-time high of 28.6 million tons. The USDA’s next set of global production estimates is out May 12th in the regular monthly supply and demand update. The USDA says the wheat grind for flour during the first quarter of 2021 was 224.517 million bushels, compared to 231.476 million during the fourth quarter of 2020 and 233.010 million for the first quarter of 2020. The total grind for 2020 was 917.978 million bushels, 1% more than 2019.