Wheat, soybeans finish higher | Monday, April 5, 2021

A fresh sale of U.S. wheat was announced Monday.

On Monday, the CME Group’s farm markets see the wheat, soybean markets close stronger.

At the close, the May corn futures settled 6½¢ lower at $5.53½. July corn futures settled 6¢ lower at $5.39¾. New-crop December corn futures ended 4¢ higher at $4.88½.
 
May soybean futures closed 10¾¢ higher at $14.12¼. July soybean futures settled 8¾¢ higher at $14.05½. New-crop November soybean futures finished 5½¢ higher at $12.69¾.

May wheat futures closed 7¢ higher at $6.18. 

May soymeal futures closed $3.90 short term lower at $406.30.

July soy oil futures closed 0.68¢ higher at 52.81¢ per pound.

In the outside markets, the NYMEX crude oil market is -2.60 lower (-4.23%) at $58.85. The U.S. dollar is lower, and the Dow Jones Industrials are 378 points higher (+1.14%) at 33,530 points.

On Monday, private exporters reported to the USDA export sales of 130,000 metric tons of soft red winter wheat for delivery to unknown destinations during the 2021/2022 marketing year. 

The marketing year for wheat began June 1.

Jason Ward, Northstar Commodity, says that investors are doing a lot of spread trading in the old-crop/new-crop corn contracts. 

“There’s a lot of open interest in the May contract (over 600,000 contracts) that needs to move out, either to July or December. Spread between May/July corn should come together a little more, but this kind of liquidation in the old crop is simply going to be a benefit to the end users who are still scrambling to cover cash corn. The basis tells us that, even with last week’s price rally basis did not weaken, ethanol plants are profitable, many livestock operations are profitable, and dryness concerns are aplenty across the U.S,” Ward says.
 
Ward says that with planting beginning, today, in parts of MN/IA with some rain in the forecast the next few days, others will wait for the moisture and the calendar to move a little closer to the April 11 insurance date.

“The soybean market is showing a different sign and that is of the bull spread. But, price action in soybean meal is dodgy at best, which will limit the upside for the old soybeans. Crush margins under pressure today,” Ward says.
 
New-crop soybeans have to do more work to the upside to pull acres away from spring wheat, because the balance sheet cannot work very well with soybeans planting under 88 million acres, Ward says. 

“That number needs to be closer to 90 million acres. When you look at spring wheat, you have to sell 2 bushels of spring wheat to equal 1 bushel of November soybeans, a spread we have not seen this wide prior to planting. So, is it the dryness that would keep Dakota producers from planting soybeans vs. spring wheat, or will they answer the call and reduce spring wheat acres and plant more soybeans,” Ward says.
 
Big corn state producers report that they would need to see $14 cash soybeans to switch acres to soybeans from corn trading near $5.00/bu vs. December, especially with early planting yield benefits, Ward says.
 
“Our seed/fertilizer contacts are not seeing a switch to more corn acres yet though because of high priced fertilizer, but we will be watching this over the next two weeks.
 
Ward added, “Corn shipments below expectations at 75.2 million bushels, below expectations at 75.2 million. Impressive number no matter what the trade expected.

Al Kluis, Kluis Advisors, says that investors are still digesting last week’s USDA acreage data. 

“The USDA reports were bullish, showing lower acres than had been expected. This year, we have no margin for error,” Kluis stated in a daily note to customers. “The USDA acreage projections in the March Prospective Plantings report will prove to be 2 million acres below what actually gets planted for both corn and soybeans. Total planted corn and soybean acres will be between 182 and 184 million acres.”

Kluis added, “I am watching the U.S. weather and extended weather forecasts. The current forecast through April calls for normal or above-normal temps, with normal to below on precipitation. This is a nearly ideal forecast for getting the crop in early.”

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