Grain Calls Sharply Higher

MORNING OUTLOOK

Grain calls are sharply higher. Overnight trade has SRW Wheat up roughly 7 cents; HRW up 10; HRS Wheat up 10, Corn is up 15 to 8 cents; Soybeans up 19; Soymeal down $1.50 to up $2.50, and Soyoil up 230 to 159 points. US stocks are higher. US Dollar and crude are lower. Copper is higher this morning.

Corn limit has increased to 40 cents, soybean 100 cents, soyoil 350 point and soymeal $30. There could be increase in margin requirements to cover expanded risk. Look for extreme choppy volatility to continue with US export prices a premium to other origins, uncertainty over China and EU economic future and uncertain US summer weather.

Chinese Ag futures are closed for holiday until Thursday. Malaysian palm oil prices were up 155 ringgit at 4,023 (basis July) at midsession supported by strong April exports.

US Midwest rains this week will be in east HRW, MO, S IL, in, oh AND Delta. 6-10 day calls for cool and wet weather. 8-14 is wet with temps cool north and warm south.

Trade estimate US corn planting near 47-52 pct, soybeans 30-34 and spring wheat 65-69. Trade volume could be down due to EU and Black Sea celebrating May Day. China is on Spring Festival Holiday through Wednesday.

Corn futures are up 1.50 in 2 weeks. Friday’s rally was linked to talk that China will take the additional US corn that USDA thought would be rolled to new crop. That could lower US 2020/21 carryout closed to 1,200.  There is also talk that lower Brazil crop could add 400 mil bu to US 2021/22 corn exports. This could suggest US 2021 crop must be perfect or prices could go higher. Last week, US corn crushers paid as high as +60 CN to try to buy corn. Wheat is following and watching US and Canada weather.

Soybean weekly high highest since Sep, 20012. Soybeans rallied on talk that increase soyoil demand could force US 2021/22 soybean crush higher. Most feel China will buy at least some soybeans from US next year. This could also crop US 2021/22 carryout below 100 mil bu. This could suggest soybean prices may need to gain on corn to buy 4-5 mil bu of additional acres.

Wire story reports a White House goal to slash U.S. greenhouse-gas emissions hinges in part on farmers and agriculture companies changing the way they manage fields and feedlots. The farm sector says it will need the government’s help to make it happen. The Biden administration effort outlined in April has drawn support from agribusiness giants including Tyson Foods Inc., JBS SA, Cargill Inc. and CF Industries Holdings Inc., which have been pursuing their own environmental commitments. Individual farmers, whose participation is critical to meeting the administration’s goals, are weighing the potential costs and benefits to their bottom lines, and say government support will be needed.

On Friday, Managed funds were net buyers of 4,000 contracts of SRW Wheat; net bought 55,000 contracts of Corn; bought 17,000 Soybeans; net bought 3,000 Soymeal, and; bought 11,000 Soyoil. We estimate Managed Money net long 11,000 contracts of SRW Wheat; net long 392,000 Corn; net long 181,000 Soybeans; long 53,000t Soymeal, and; net long 98,000 Soyoil.