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Morning markets: Corn futures build on limit-up close, but soybeans muted


Both corn and soybeans emerged with bullish credentials enhanced from the surprise US plantings data.


Indeed, futures in both lots soared the exchange maximums, of $0.25 a bushel and $0.70 a bushel respectively, in last the session, given the implications of the sowings statistics.


But it was only corn which managed to build notably on these gains in early deals on Thursday.


The Chicago May corn lot stood up 2.9% at $5.80 ½ a bushel as of 11:00 UK time (05:00 Chicago time), having earlier touched $5.85 a bushel, the highest for a spot contract since July 2013.


It also put a clear gap in its chart, of more than $0.10 a bushel from the last session’s (limit-up) close.


By contrast, May soybean futures edged a more modest 0.3% higher to $14.41 ½ a bushel, with no gap in their chart - albeit having earlier too set a multi-year high of $14.56 ¼ a bushel, the highest for a spot lot since June 2014.


Muted products

One factor keeping something of a lid on soybean gains is seasonal, with South America’s harvest in full swing, offering an alternative origin to the US for near-term supplies, at least, of the oilseed.


That applies too to the processing products with the crush in Argentina, the top exporter of both soyoil and soymeal, at “record highs for this time of the year” according to Oil World, as Agrimoney has reported.


Indeed, Chicago soymeal futures for May edged only a further 0.2% higher to $423.90 a short ton, with soyoil futures for May down 0.6% at 52.60 cents a pound, continuing to be dogged by talk of US imports from Argentina (two cargos?), doing little to help values of raw soybeans.


That rival vegetable oil palm oil soared 3.6% to 3,741 ringgit a tonne was more to do with catching up with the last session, when soyoil did put in strong gains, although not quite managing a limit-up close to go with its limit-down ones in three of the previous four sessions.


Stocks data

But also pitched against soybeans were the separate inventory data also released on Wednesday by the USDA, and which showed US inventories of the oilseed as of March 1, at 1,564m bushels, 21m bushels ahead of market forecasts.


While not a huge miss at all, even small amount of extra supply matter when the US has been forecast to see stocks end 2020-21 at pipeline levels of 120m bushels, and exact rationing dynamics can have a marked impact on pricing.


Furthermore, while the US soybean sowings forecast for 2021, at 87.60m acres, actually fell further short of market expectations than the corn one, there is some suspicion that this figure may not tell the whole story.


Double crop idea

One theory doing the rounds is that the surprise increase in the winter wheat sowings number shown in the March briefing – up 1.1m acres from January, when the crop was supposed to have been long planted – could actually herald extra soybean seedings.


… the theory being that farmers, trying to make the most of high prices, put extra, late acres into winter wheat in the hope of getting it harvested in time for a follow-on crop of soybeans, a viable strategy in parts of the southern US.


“Some feel USDA may have not counted all the potential double-crop soybean acres,” said Steve Freed at ADM Investor Services.


“Most look for higher final acres,” he said - although adding that investors should not get too downbeat over this prospect.


“Prices may need to continue to rally to buy acres,” he said, with Rabobank too saying that “US soy acreage is likely going to rise – and may well lead to prices well above year-to-date highs in order to buy more land overall and relative to corn.”


‘Further decline in soil moisture’

And in fact, new crop November soybean futures did manage a far stronger performance than the spot lot, soaring 1.6% to $12.75 ¾ a bushel.


Still, corn proved a stronger bidder for acres, gaining 3.1% to $4.92 ¼ a bushel for the new crop December contract.


The contract, as did the spot corn lot, found greater support in South American dynamics, with Brazil’s safrinha corn crop still in its early development stages, having been planted late - and in fact encountering dry weather.


“In the safrinha corn areas, dryness is now most significant in southern and eastern Mato Grosso, Goias, Mato Grosso do Sul, and far northern Parana, which account for 40% of Brazilian safrinha corn output, and where “the dryness is likely stressing germination and early growth of the crop”, said Maxar.


Over the next week “continued dry weather will lead to a further decline in soil moisture in southern Goias, Mato Grosso do Sul, and western Sao Paulo”.


Stocks forecast downgrade ahead?

Furthermore, the USDA stocks data were, at 7,701m bushels, lower than investor forecasts too, by a small but potentially significant 66m bushels.


“Based on USDA corn demand estimates for the marketing year, the March 1 stocks implies a [2020-21] carryout of 1.2bn bushels” compared with the USDA’s current forecast of 1.502bn bushels, said Benson Quinn Commodities.


“And that does not account for an anticipated increase in export and ethanol demand,” the broker said adding that the “corn stocks number with bigger demand imply a carryout at or under 1.0bn bushels”.




Mr Freed too said that some investors “feel final exports and feed use could increase” from current USDA forecasts for 2020-21, “and ethanol production could also Increase once more Americans are vaccinated”.


In fact, US ethanol production data for last week showed a bigger-than-forecast increase of 43,000 barrels per day to 965,000 barrels per day, and fall in stocks nonetheless of 695,000 barrels to 21.1m barrels.


’Don’t be short’

Rabobank added that corn prices “will likely need to move higher to induce 1m [US] acres of upside, likely the bare minimum – with solid yields – to keep seven-year-low ending stocks from giving further ground.


Richard Feltes at RJ O’Brien said that there is little for either corn or soybeans to suggest “lower prices until the market is confident that 2021 crops are off to a strong start along with a prevailing weather pattern that looks non-threatening for upcoming summer”, said Richard Feltes at RJ O’Brien.


The “message from the crop report is loud and clear—’don’t be short’”, with the market needing “perfect US weather to keep corn from going to $7.00 a bushel”.


“Consumers need to extend coverage”.


Even assuming an extra 1m acres of corn sowings and 1.4m acres in soybean plantings, compared with the figures unveiled on Wednesday, thin carryout stocks prospects “leave no margin for weather adversity.


“We need ideal forecasts and follow up ideal weather to prevent another leg higher in both markets.”


‘Feed demand spillover’

Wheat emerged with less bullish credentials from the plantings report, given the extra winter crop sowings and a March 1 stocks figure a little above market expectations.


And, indeed, the Chicago May wheat contract shed 0.4% to $6.15 ½ a bushel, although still up nearly $0.15 a bushel since Tuesday’s close.


That cut further a wheat-corn price ratio, which Rabobank reported “dropped to 1.13 post report, nearing a five-year low”, and likely fuelling a “feed demand spillover” in the face of tight corn and soybean supplies.


Still, whether the market needs more evidence of demand switching before offering wheat support…


Meanwhile, Algeria has closed its latest tender with purchases expected at about 500,000 tonnes, and seen as favouring European Union origins.


Agritel note that the purchase allowed “as usual, optional origins that could, in view of the price levels charged and the specificities required, be divided between Germany, Poland and perhaps France”.


‘Rumours of large export sales’

New York cotton eased by 0.1% to 80.84 cents a pound, after a USDA sowings figure which, at 12.0m acres, was pretty much in line with market forecasts.


Still, will the fibre gain support from USDA export sales data for last week, due later on Thursday?


“There are rumours of large export sales being accomplished as prices dipped below the 80.00 cents-a-pound mark,” said Louis Rose at Rose Commodity Group, although adding that “most of any such sales” may not emerge until next Thursday’s briefing.


Data later

For grains, corn export sales for last week are expected at 600,000-1.20m tonnes for old crop, and up to 300,000 tonnes for 2021-22, compared with figures of 4.48m tonnes and 144,572 tonnes respectively last time.


Soybean export sales are seen coming in at 100,000-450,000 tonnes for old crop, and up to 200,000 tonnes for new, compared with numbers of 101,822 tonnes and 65,000 tonnes respectively the previous week.


For wheat, sales for this season are expected at 125,000-450,000 tonnes, and for next at 75,000-200,000 tonnes. Last time, the results were 343,573 tonnes and 70,500 tonnes respectively.

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