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3 Big Things Today, April 26, 2021

Grains, Beans Higher Overnight; Speculators Increase Net Longs in Soybeans.

1. Grain and Soybean Futures Surge in Overnight Trading

Wheat and corn futures jumped in overnight trading and soybeans were higher as adverse weather globally threatens production.

In the U.S., extremely dry weather is threatening parts of the southern Plains where winter wheat is growing and the northern Plains where spring wheat is seeded.

Red-flag warnings have been issued in much of the southern Plains due to strong winds and low relative humidity, the National Weather Service said.

The latest U.S. Drought Monitor report shows the percentage of Kansas, the biggest U.S. producer of wheat, that’s in a drought is creeping up.

About 26% of the state is suffering from abnormal dryness or some sort of drought, the monitor said in its report, up from 22% a week earlier. Still, that’s down from 72% just three months ago.

The entirety of North Dakota, the biggest grower of spring wheat and a major producer of corn and soybeans, is suffering from abnormal dryness or drought.

About 76% of the state is suffering from an extreme drought in which pastures grow dormant and emergency haying of conservation areas is authorized, the Drought Monitor said.

Much of the central Midwest looks decent from a drought perspective, though northwestern Iowa is seeing a moderate drought.

In Brazil, meanwhile, drought stress is expected to expand to almost 60% of the country’s safrinha corn crop in coming days, according to Commodity Weather Group.

Wheat futures for May delivery jumped 13¾¢ to $7.26 a bushel overnight on the Chicago Board of Trade, while Kansas City futures added 16½¢ to $6.97 a bushel.

Corn futures for May delivery surged 12¢ to $6.44½ a bushel.

Soybean futures gained 4¼¢ to $15.20¼ a bushel. Soymeal rose 70¢ to $426.50 a short ton, and soy oil added 0.49¢ to 59.27¢ a pound.

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2. Speculative Investors Push Bullish Bets on Soybeans to Highest This Year

Money managers last week raised their net-long positions, or bets on higher prices, on soybeans to the highest level since the end of 2020, according to the Commodity Futures Trading Commission.

Investors increased their bullish bets on soybeans to a net-160,094 futures contracts, the CFTC said in a report.

That’s up from 130,313 contracts the previous week and the highest level since the seven days that ended on Dec. 29, government data show.

For corn, meanwhile, speculators reduced their net longs in corn to 380,083 futures contracts as of April 20, down from 397,231 contracts the previous week, backing off multiyear highs.

In wheat, hedge funds and other large money managers raised their bullish bets on hard-red winter futures to a net-18,608 contracts last week.

That’s up from 10,775 contracts a week earlier and the highest level since March 30, the agency said.

Investors reduced their net-short positions, or bets that prices will fall, to 3,697 soft-red winter wheat contracts last week.

That’s down from 19,163 contracts a week earlier and the smallest such position since March 23, the CFTC said in its report.

The weekly Commitments of Traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Red-Flag Warnings Issued For Southern Plains Amid Strong Winds, Low Humidity

Red-flag warnings – indicators of extremely dry weather – have been issued for the western parts of Kansas, Oklahoma, Texas, and Nebraska and eastern Colorado, according to the National Weather Service.

In southwestern Kansas, winds today are expected to be sustained from 20 to 30 mph with gusts of up to 45 mph, the NWS said in a report early this morning.

Relative humidity will drop as low as 9%, the agency said.

“Any fires that start will have extreme fire behavior and spread rapidly,” the NWS said.

In the Oklahoma and Texas panhandles, meanwhile, winds will have the same intensity with relative humidity as low as 5%.

The red-flag warnings are in effect until about 10 p.m. Central Time. The dry weather may negatively affect hard-red winter wheat that’s growing in the southern Plains.

The threat of dry weather isn’t as bad in much of the Midwest, though in northern Illinois, winds are expected to gust up to 40 mph today. Relative humidity is expected from 30% to 35% today, which means increased fire hazards, the NWS said.

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