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Futures

May 7th- Closing Market Commentary

05/07/2021
May 7th- Closing Market Commentary

Grains are higher to close:

Corn + 13 1/2 cents/bu (July @ 7.32 1/4)

Soybeans + 20 1/4 cents/bu (July @ 15.89 3/4) ß $20 old crop soybeans off farm!!!

Chi Wheat +8 1/2 cents/bu (July @ 7.61 3/4)

Cdn $ +0.00285 (82.370 cents)

WTI Crude Oil +0.19/barrel (64.90)

What a day… after starting fairly uneventful, markets rallied to new highs, before closing just off of those highs. Over the week, futures markets gained 72 3/4 cents on December 2021 corn, 93 3/4 cents on November 2021 soybeans.

The CFTC Report was released this afternoon after the close, and showed that fund positions were mostly shorter than expected on Tuesday. Corn was 42,000 contracts shorter than expected (long 355,000), soybeans were 11,000 contracts shorter (long 163,000), and wheat was 6,000 contracts longer. Today, funds were thought to be all buyers with corn and soybeans expected to have bought 10,000 contracts each (long 385,000 and 190,000 respectively), and wheat to have bought 5,000 contracts (long 24,000). There is more money playing the commodity market than ever before. More money = more volatility.

The USDA announced a series of flash corn sales this morning…

-1,360,000 tonnes to #China in 2021/22

-86,868 tonnes to unknown in 2020/21

-101,600 tonnes to unknown in 2021/22

That's 61 million bushels of corn total. This is China’s first purchase of new crop U.S. corn, and their first purchase of anything since mid-March. This is eased a lot of traders who were worried about Chinese demand, and was a big supporter of today’s rally.

Soybeans rallied today piggybacking on soymeal which hit a new three-month high.

Statistics Canada released its March 31st stocks report this morning with Canola leading the headlines. Canadian canola stocks for 2021 were much tighter than this time in 2020 as they dropped 37.7%. Total wheat stocks dropped by 13.6%, with the year-over-year tonnage dropping from 18.78 million to 16.32 million, due to record export pace, drought, and COVID-19 uncertainties. These numbers were both lower than expected, and are very bullish for both wheat and oilseeds.

Next Wednesday we have the USDA’s month Supply and Demand report set to be released. Estimates for the S&D Report are below. Key estimates include Brazil’s total corn crop falling by 6 million tonnes due to severe drought in some areas of the country. Anaylsts are also predicting tighter U.S. and world carryouts for 2020/21.

Conab, another analyst company is also due to released their updates in Wednesday. They are currently at 109 million mt for Brazilian corn production. There are a lot of traders (including many in Brazil) that believe even dropping production to 103 million mt is still too generous. Some estimates being thrown around have been as low as the mid-90 millions.

Brazil remains dry and the forecast continues to pull in more dry weather. There is no end in dry forecast inside of 10 days. US weather is quite different. 5, 10 and 15 day forecasts show beneficial rains for many of the dry areas and dryness for some of the wet areas.

Have a great weekend everybody! 

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