Morning report: Corn and winter wheat trend slightly lower ahead of Thursday’s session. (Comments are updated by 7:30 a.m. Central Time.)
Corn: Down 2 to 3 cents
Soybeans: Up 2 to 3 cents
Wheat: Mixed
*Prices as of 6:50am CST.
Grain prices have reached heights rarely seen, and that makes it increasingly harder to capture additional gains as they become increasingly susceptible to bouts of technical selling and profit-taking. Prices eased slightly lower overnight for the most part as traders look for the next set of supply and demand cues. The overall environment remains bullish for now, however. In the U.S., winter wheat quality continues to struggle and cold, wet weather continues to hamper planting progress for corn and soybeans. Overseas, Ukraine will struggle to plant, harvest and export its crops as long as the Russian invasion continues.
Overseas stock markets were mixed again today. Asian markets saw Japan’s Nikkei index firm 1.25% while China’s Shanghai Composite slumped 2.25% lower. European markets were firm in midday trading, rising as much as 1.75% higher. On Wall St., Dow futures tracked 225 points higher to 35,304 ahead of the opening bell on the heels of some better-than-expected Q1 corporate earnings reports.
Energy futures were mixed. Crude oil firmed 0.75% overnight to just below $103 per barrel on the possibility of Russian sanctions. Gasoline was also up 0.75%, while diesel spilled more than 2% lower. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows plenty more moisture in store for the Midwest and Plains between today and Sunday. Iowa and the Dakotas are set to receive the highest amounts of rain during this time. Official 6-to-10-day forecasts show a return to seasonally dry weather for much of the central U.S. between April 26 and April 30, with cooler-than-normal conditions likely for most areas east of the Mississippi River.
On Wednesday, commodity funds were net buyers of corn (+9,500), soybeans (+7,500), soymeal (+4,500) and soyoil (+2,000) contracts but were net sellers of CBOT wheat (-6,000).
Corn
Corn prices are still trending above $8 per bushel – levels not seen in a decade – but prices eased modestly lower overnight. The overall environment remains very bullish between U.S. planting delays and Ukraine’s struggles to export its harvested grain and plant this year’s crops. Overnight losses of around 0.5% suggest a round of technical selling and profit-taking could be in store today, especially if USDA doesn’t report a robust round of export sales later this morning.
Corn basis bids were mostly steady to weak yesterday, dropping 3 to 7 cents at three Midwestern locations. An Ohio elevator bucked the overall trend, firming 7 cents higher.
Ethanol production for the week ending April 15 faded another 5% lower to land at the lowest level since September 2021, with a daily average of just 947,000 barrels, according to the latest data from the U.S. Energy Information Administration. Stocks slid 2% lower, falling to a three-month low.
Analysts expect USDA to show another big round of corn sales when it releases its new export report later this morning, with trade guesses ranging between 53.1 million and 90.5 million bushels for the week ending April 14.
Ukraine’s spring plantings have reached 6.178 million acres so far, despite the ongoing Russian invasion, although the country’s agriculture ministry says plantings in areas of “active hostilities” could tumble as much as 70% below normal levels. Ukraine is a significant exporter of both corn and wheat.
Argentina’s Rosario grains exchange is upping its forecast for the country’s 2021/22 corn production, with a new estimate of 1.937 million bushels after an upward adjustment to its acreage estimates. Recent frosts could hamper the country’s per-acre yield potential, meantime.
The preliminary report from the CBOT showed daily futures volume saw a moderate decline to 369,632, with open interest firming by 1,362. Options volume dropped to 116,246 and now favors puts (61,388) over calls (54,858). Implied volatility for near-the-money May contracts retreated to 29.5% and expire tomorrow.
Soybeans
Soybean prices wobbled overnight but trended slightly higher heading into Thursday’s session. The bulls have been hanging around as a disappointing South American season wraps up, and with U.S. plantings likely to be delayed despite an increase in acreage this year. Soymeal and soyoil prices were also modestly firm overnight.
On Wednesday, soybean basis bids moved 1s to 15 cents higher at three Midwestern locations. An Ohio river terminal bucked the overall trend after dropping 5 cents lower.
Ahead of USDA’s export report later this morning, analysts think the agency will show soybean sales ranging between 18.4 million and 71.7 million bushels for the week ending April 14. Analysts also expect to see soymeal sales ranging between 75,000 and 350,000 metric tons, plus up to 25,000 MT of soyoil sales.
In Brazil, more corn and soybean plantings has put downward pressure on the coun-try’s sugarcane acres, which were down another 3.5% in 2021/22 to 20.55 million acres. The crop has been in gradual decline after peaking in 2016/17. “It is hard to match the profitability of planting soybeans and corn in the same area,” according to Conab’s director for agricultural policy, Sergio De Zen. That makes it difficult for the sugar industry to even maintain current sugarcane area, he notes.
And in Argentina, the Rosario grains exchange raised its forecast for the country’s 2021/22 soybean production to 1.514 billion bushels on better-than-expected yields, with harvest progress at 27% so far. Argentina is among the world’s top exporters of soybeans, soymeal and soyoil.
Every year is different, and 2022 is a prime example, according to Josh Green with Advance Trading. “This year has been a testament to how quickly markets can change,” he says, noting drought in Brazil and war in Ukraine as two huge market movers in recent months. At the same time, U.S. producers will plant one of the most expensive crops they have ever grown – but opportunities still abound. Click here to read Green’s analysis in the latest Ag Marketing IQ blog.
The preliminary report from CBOT showed daily futures volume increasing to 236,989 with open interest also trending 8,773 higher. Options volume was at 79,698 and now moderately favors calls (49,306) over puts (30,392). Implied volatility for near-the-money May contracts increased to 26.9% and expire tomorrow.
Wheat
Wheat prices saw cuts of around 0.3% to 0.5% overnight and are still at risk for bouts of technical selling and profit-taking despite the current bullish environment. Prices remain just below multiyear highs, however. The war in Ukraine and poor U.S. crop quality remain the two primary price drivers for now.
Prior to today’s weekly export report from USDA, analysts think the agency will show wheat sales ranging between 5.5 million and 27.6 million bushels for the week ending April 14.
Argentine farmers may plant around 16.062 million acres of wheat during the 2022/23 season, per the Buenos Aires Cereal Exchange. That’s a slight decline from a year ago, with an uptick in barley acres expected to fill the gap. That makes it a bit questionable that Argentina could repeat its 2021/22 production of 801 million bushels.
As expected, Japan purchased 1.0 million bushels of food-quality wheat from Australia in a regular tender that closed earlier today. The grain is for shipment in August.
Taiwan purchased 1.7 million bushels of milling wheat from the United States in a tender that closed earlier today. The grain is for shipment in June.
The preliminary report from CBOT showed daily SRW volume sliding slightly lower to 79,943, with open interest also falling by 751. Options volume moved to 21,699 and still moderately favors calls (12,510) over puts (9,189). Implied volatility for May near-the-money options increased to 43.3%, and expires tomorrow.
Volume in HRW wheat increased to 40,010, with open interest trending 540 lower. Options volume is at 3,886 and fractionally favors calls (1,946) versus puts (1,940).
