Ag Market View for June 2nd
Soybeans traded higher on talk of lower Brazil supplies and higher China demand. Soyoil continued to rally on talk of higher Asia demand. Higher US biofuel demand also supports soyoil futures. Soymeal dropped on concern of oversupply. World soybean exports to China were near 1.8 mmt last week. Year to date exports are near 69 mmt or up 6 pct from last year. USDA is forecasting a 1.5 pct Increase. There is little new data coming out of China but last weeks soybean crush was est near 2.1 mmt. Year to date crush is up 8 pct versus USDA est of a 5 pct increase. SN dropped from contract highs near 16.67 to 14.89 on good US weather. SN has bounced back to near 15.65 on new US summer weather concerns. Key will be if SN can trade over 15.78 resistance and test 16.67 on further weather concerns.
Monthly nearby soyoil futures chart
Corn futures traded lower. USDA rating of US 2021 corn crop was higher than expected. This and talk of lower US corn export basis triggered long liquidation. CN dropped from contract highs near 7.35 to a recent low near 6.02 on good US spring weather and talk that final US 2021 corn acres could increase to as high as 96.8 million versus USDA guess of 91.1. CN tested 6.96 before falling back to 6.75. USDA June 30 acreage update will be key to corn futures. One private crop watcher lowered their estimate of Brazil corn crop to 89 mmt from their May estimate of 100 and USDA 102. Brazil drought is the worse in 91 years. Most look for total China corn imports to be near 34 mmt versus USDA 26. Last week US corn exports to China was 1.0 mmt and all time high. Some est US corn crushers have good cash ownership but exports need corn. This weeks US ethanol production should continue to be up from last year and stocks should continue to drop. Weekly ethanol future chart are at highest levels since early 2014. US 10 weeks upper Midwest, north plains and PNW forecast remains warm and dry. In fact, our weather guy could see additional ridging and dry weather there after day 10. Key will be Pacific sea surface temps. Cooler the temps the higher probability of ridging in the plains and west US Midwest this summer.
Wheat futures closed mixed. WN ended near 6.87. WN dropped from contract high near 7.67 to a low near 6.39 on better US SRW and EU weather. Wheat futures also followed a steep drop in corn prices. WN rallied to near 7.01 following higher corn prices. WN is near 6.87. KWN dropped from a high near 7.41 to a low near 5.88 on better US HRW weather and a higher than expected Kansas crop tour yield. Rains in the south plains could lower HRW protein level. OK harvest is also being delayed. The big news in US wheat is the continued dryness across US north plains and Canada prairies. 10 day forecast remains dry although noon America model put in rains for ND. Confidence in the forecast is low. MWN dropped from contract high near 8.07 to a low near 6.68 on favorable World wheat numbers. In just 4 trading days, MWN has rallied to a high today near 7.99. WN/KWN should follow corn and US summer weather. Our forecast would suggest higher prices. Lack of rain could continue to send MWN higher. Our weather guy looks for a ridge to develop across Russia spring wheat area.
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