Often the prospect of Wasde reports prompts some caution in grain markets.
But not this time. On the eve of the next in the US Department of Agriculture’s series of benchmark ag supply and demand reports, Chicago corn futures jumped 3.4% to finish at $5.79 ¾ a bushel for December.
That was the highest close for a spot contract since July 2013.
It also saw spot corn futures prices end above those of wheat – at least, of Kansas City hard red winter wheat – for the first time since July 2013, despite a decent performance by that contract too.
The Kansas City May lot gained 2.4% to $5.76 ½ a bushel,
The support for corn came in part from US export data for last week which showed sales at an OK 757,039 tonnes, and actual shipments at 2.05m tonnes – the second highest on data going back to 1990.
(The record of 2.20m tonnes was set three weeks before.)
US corn export commitments, ie shipments and unfulfilled orders combined, have now reached 66.5m tonnes, topping the 66.0m tonnes that the US Department of Agriculture has forecast for 2020-21, which has more than four months yet to go.
Futures found support in what was a “decent USDA export sales” report, Terry Reilly at Futures International said.
‘Stressing early growth’
However, there are also growing worries over the Brazilian safrinha corn crop, given the revived dryness worries in key growing areas.
Conab, Brazil’s official ag agency, made only a small downgrade, of less than 200,000 tonnes to 82.80m tonnes in its forecast for the country’s safrinha corn harvest (a revision more than offset by an upgrade of more than 1.0m tonnes to the estimate for first crop corn production).
But there is cause to take a more downbeat view, with Maxar noting that “dryness remains fairly widespread across the safrinha corn belt in Brazil, particularly in south eastern Mato Grosso, Mato Grosso do Sul, and Parana, stressing early growth of the crop.
While northern and central Mato Grosso will receive rains “over the next week, which will favour safrinha corn… dry weather will continue elsewhere across the belt, maintaining stress on the crop”.
Richard Feltes at RJ O’Brien mentioned the assessment that “half of the safrinha area is still trending drier” among dynamics meaning that “weather leans positive” for prices.
Also included in “positive” forces was a forecast for the US showing “95% five-day Midwest rain coverage followed by cool temperatures next week”, hardly ideal conditions for speedy early sowings, a factor particularly relevant to corn (which has a slightly earlier seeding window than soybeans).
Dry northern Plains
Mr Feltes noted too, for wheat, that the “US hard red spring wheat belt is labouring under its driest prior-90-day precipitation in four decades”.
The weekly USDA Drought Monitor showed a marginal, 0.3-point increase to 64.1% in the proportion of the northern Plains rated in drought, with the reading for North Dakota, the top spring wheat-growing state, holding at 100%.
With a lack of rain too in Canada’s Prairies, also a key spring wheat-growing region, these conditions are beginning really to get noticed.
May Minneapolis spring wheat futures ended up 2.5% at $6.40 ¼ a bushel - now up 6.8% over the past week.
That was one reason for the strength in Kansas City hard red winter wheat, which is also on the higher protein end of the scale, if less so than spring wheat.
However, decent US wheat export sales – at least for new crop, of 529,850 tonnes – were also a help, as were actual shipments last week of a brisk 634,188 tonnes.
There is also growing talk of wheat replacing corn in feed rations – mentioned by the UN Food and Agriculture in its monthly briefing, which raised by 8.4m tonnes its forecast for world wheat use this season, largely thanks to feed use in China.
Corn vs wheat
But there are ideas of a switch in other countries too.
“The job of the corn market, against a backdrop of tight US corn stocks, is to shift as much feed use as possible to wheat,” Mr Feltes said.
“We are already hearing select reports of south western [US] cattle feeders planning to shift summer rations from corn to wheat.”
Benson Quinn Commodities said that “wheat markets may have seen seasonal lows as pound for pound hard red spring wheat currently works into feed rations”.
“Decent export business shows more interest in wheat for feed as well.”
Chicago soft red winter wheat, the world benchmark, added 2.0% to $6.28 ¾ a bushel for March, this week losing its (unusual) premium to Minneapolis spring wheat, but maintaining its (unusual) premium to Kansas City hard red winter wheat.
Soybean futures, meanwhile, added a more modest 0.5% to $14.15 ¼ a bushel for May, weighed by signs of higher prices doing some work in terms of rationing demand, with US export sales for 2020-21 showing net cancellations, of 92.500 tonnes, largely thanks to China.
The seasonal surge in Brazilian exports now being realised, after a slow start thanks to a delayed harvest, means buyers have more in the way of alternative sources of supply for now.
Oil World noted that Brazil’s “soybean exports recovered sharply to a record 13.5m tonnes in March”.
While soyoil for May gained 1.0% to 53.38 cents a pound, May soymeal shed 0.6% to $406.80 a short ton.
Mr Reilly noted that US soyoil export sales last week “of 15,700 tonnes were more than three times” that of the previous week, while soymeal sales dropped to 127,700 tonnes, the “low end of expectations”.
Among soft commodities, raw sugar for May nudged 0.3% higher to 15.18 cents a pound in New York, helped by worries over the impact on European 2021 beet harvest prospects of cold weather, besides dwindling expectations for Indian output.
Czarnikow on Thursday trimmed its forecast for India’s sugar output this season, citing an increased quantity of sucrose heading for ethanol production instead.
A firmer Brazilian real, up 0.8% against the dollar, also helped, in boosting the value in dollar terms of assets in which the South American country is a big player.
Indeed, arabica coffee too managed headway, adding 0.9% to 127.85 cents a pound for May.
But cotton was a better performer, gaining 2.4% to 81.41 cents a pound for May, helped by a recovery in US export sales data for last week, to 269,932 running bales for upland – more than three times the 78,377 running bales the week before.
Actual exports, of 371,726 running bales for upland cotton, were strong too.
“Both sales and shipments were ahead of the average weekly pace required to realise the USDA’s target” of 15.50m bales for the full 2020-21, said Louis Rose at Rose Commodity Group.
Is an upgrade to the US export figure, and cut to the carryout stocks number, pending in the Wasde?