Midday Comments: 4/7/2021

Corn futures have traded modestly higher, but soybeans weakened on Wednesday morning along with a dive in soyoil.  Wheat futures have traded on both sides of unchanged with year-on-year lower wheat condition ratings helping underpin prices.  Traders continue to position ahead of Friday’s USDA supply-demand revisions.  Traders expect USDA to lower 2020/21 corn ending stocks, leave bean carryover little changed, & raise wheat ending stocks moderately.  USDA will wait until May to provide their first official estimates of US & world supply & usage, so the April report mostly marks time.  At the 7:45 am pause in electronic trading, May corn futures were up 3.25c, July corn was 2.75c higher, Dec. corn was up 1.25c, May beans were 4.25c higher, July beans were up 4.75c, Nov. beans were 2.5c higher, May soymeal was  up $1.60/ton, May soyoil was 0.12c/lb. higher, May SRW wheat was up 1.5c & July SRW wheat was 2.5c higher. For the third straight session, grains struggled early in the session to hold overnight rallies.  Corn then found support after the EIA Weekly Petroleum Status report showed weekly ethanol output rose to a 15-week high & ethanol stockpiles declined to a 20-week low.  Soybeans sagged to double-digit losses by mid-morning as soyoil more than erased Tuesday’s solid gains. Wheat followed corn higher & challenged overnight levels by late morning.  At 11:07 am, May corn futures were up 3.75c, July corn was 3.25c higher, Dec. corn ticked up 1/4c, May beans dropped 9.75c, July beans were 8c lower, Nov. beans lost 2.25c, May soymeal was up $2.40/ton, May soyoil was 1.26c/lb. lower, May SRW wheat was up 1.25c & July SRW wheat was 4c higher.
 
Recapping Tuesday’s price activity, corn & soybean futures mostly gave back the 6.75c & 16.75c old-crop & 1.75c & 9.25c new-crop gains, respectively, that were posted on Monday night & wheat reversed lower from 3.25c+ overnight gains during Tuesday’s regular trading session. Positioning for Friday’s 11 am CDT release of USDA’s monthly supply-demand revisions was a major factor, but spread trading between old- & new-crop months & in soy products were also big features.  Old-crop/new-crop corn & soybean spreads narrowed on Tuesday, reversing Monday’s widened spreads as field work across the Midwest put farmers in tractors instead of trucks.  Soyoil gained on soymeal, supporting soybeans. Corn has tracked crude oil prices this week. Corn first rallied & then weakened along with crude oil futures during Monday’s trading session as crude oil eventually lost $2.80/barrel. Corn hit its highs on Tuesday as crude oil rallied as much as $2.25/barrel & eased from its highs when oil settled only 68c/barrel higher.  At Tuesday’s close, May corn futures ended 1c higher, July corn gained 1.75c, Dec. corn tumbled 5.25c lower, May beans rallied 6c, July beans jumped up 5.75c, Nov. beans were 2.25c higher, May soymeal ticked up $0.10/ton, May soyoil soared 1.11c/lb. higher, May soft red winter wheat dropped 2.5c & July SRW wheat edged 3/4c lower.  
 
Traders look for a significant drop in August 31 US corn ending stocks, but minor changes to 20020/21 ending stocks for soybeans & wheat ahead of Friday’s 11 am scheduled release of USDA’s monthly supply-demand revisions.  Pre-WASDE trade consensus sees Aug. 31 US corn end stocks down 156 mb to 1,346 mb, end-August soybean stocks to decline 1 mb to 119 mb, & May 31 wheat stocks to rise 13 mb to 849 mb.  Those anticipated changes come after the March 1 Grain Stocks report showed corn stocks were 77.4 mb below the average trade expectation, bean stocks that were 3.2 mb above trade consensus, & wheat stocks were 42.3 mb above the average pre-report guess.  The average trade looks for the farm agency to lower total Brazilian & Argentine corn & soybean output this month.  Brazil corn production is expected to decline 0.7 mmt to 108.3 mmt & Argentine corn output is seen down 0.7 mmt to 46.8 mmt.  Average trade forecast looks for Brazilian soybeans production to be increased by 0.4 mmt to 134.4 mmt, but Argentine bean output is expected to decline 0.7 mmt to 46.8 mmt. Global 2020/21 ending stocks of corn are expected to decline 2.8 mmt to 284.9 mmt, world 202/21 soybean stocks are seen unchanged at 83.7 mmt & global 2020/21 wheat carryover is forecast to edge 0.5 mmt higher to 301.7 mmt.
 
In export news, USDA did not report any daily export sales on Tuesday or Wednesday. On Monday, the farm agency reported that 4.777 mb of 2021/22 US soft red winter wheat were sold to unknown destinations.  Traders assumed the actual buyer was China. Egypt’s state grain buyer GASC launched a snap tender for optional-origin milling wheat for August 1-10 shipment & bought 10.656 mb of Russian wheat at a delivered price of about 6.37/bu. & 2.021 mb of Ukrainian wheat at a delivered price of about $6.34/bu on Tuesday.  They paid nearly $1.09/bu less for their first new-crop wheat purchase than they did for their March 11 purchase of old-crop wheat. On June 2, 2020, GASC paid only $5.72/bu. for its first 2020/21 new-crop wheat buy.  In pending business, Algeria is seeking an unknown quantity of milling wheat on Wednesday.  Taiwan is tendering for 3.545 mb of milling wheat & Japan is seeking a total of 3.337 mb of US & Canadian wheat on Thursday. 
 
The US Census Bureau released official US import-export data for February on Wednesday morning.  US companies sent fewer goods overseas, but the stimulus-primed US economy pulled in more foreign goods.  The US trade deficit ballooned to $71.1 billion in February, the largest on record.  US ag exports were mostly a bright spot.  For the month of February, Census exports of corn were a record 248.369 mb, soybeans exports were a 2-year-high 167.539 mb, grain sorghum hit a 3-year-high 22.578 mb, but wheat sagged to a 3-year-low 67.124 mb for that month.  Cumulative 2020/21 corn exports since Sept. 1 stand at 1,104 mb, slightly below the 2018/19 export pace.  With half the 2020/21 marketing year now completed, US soybean exports have reached 2,003.5 mb, 344.4 mb higher than the previous record pace set in 2016/17. Cumulative grain sorghum exports have reached 153.331 mb, the fastest export pace since 2015/16.  And total 2020/21 wheat exports since the June 1 start of its marketing year now stand at 709.5 mb, just 5 mb ahead of the previous year, but still the fastest pace since 2016/17.  Thru Feb. 28, official 2020/21 Census exports exceeded USDA inspections by 49.0 mb (1.856 mb/week) on corn, 83.2 mb (3.148 mb/week) on soybeans, 6.2 mb (0.235 mb/week) on milo & 34.9 mb (0.885 mb/week) on wheat.   
 
Wednesday’s EIA Weekly Petroleum Status data for the week ended April 2 reported that ethanol output rose 2.940 mil.gal. (+1.04%) to a 15-week-high 286.650 mil.gal last week, a whopping 45.09% above last year’s COVID-restricted output. About 97.472 mb of corn & milo were processed for fuel ethanol last week, just shy of the 98.918 mb/week that will be needed to reach USDA’s 4,950 mb crush forecast for 2020/21.  With the US economy rapidly reopening, we suspect USDA will be reluctant to change its current fuel ethanol usage projections on Friday.  Ethanol stockpiles declined to 866.964 mil.gal. last week, down 19.824 mil.gal. (-2.24%) for the week & 270.860 mil. gal. (-23.80%) below last year’s glut that forced ethanol prices below $1/gal. & shuttered many plants.  ADM has announced plans to restart two dry mill facilities at Cedar Rapids, IA & Columbus, NE that were idled last April. The firm cited growing demand to resume operations at those facilities which have combined annual capacity of 575 mil.gal.
 
After rising 2c on corn & remaining steady on beans & wheat on Monday, local corn basis was another 2c higher, soybean basis was 1c lower & wheat basis was steady on Tuesday.  St. Louis barge freight costs have eased to their lowest since Aug. 13 this week, but Gulf soybean export demand has been easing as well. 
 
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"Top Ag Comments" are written by David Marshall, AgTraderTalk LLC, Nashville, IL.  To learn more about his farm marketing advisory or commodity brokerage services, contact him at dmarshall@agtradertalk.com or call (618) 327-4370 (voice/fax) or (618) 314-0918 (cell). This commentary is not intended for specific trading strategies. We strive to insure this information is reliable, but we cannot guarantee its accuracy or completeness.  Commodity trading involves risks. You should fully understand those risks before trading.