Closing Market Report- 4/8/21- Corn and Wheat Surge Higher


May corn futures rose sharply to challenge the contract high, moving the May-July corn spread to an 18-cent inverse, as the domestic basis creeps higher. December corn also rose, setting a new contract high. Wheat extended recent gains, led by Minneapolis on the expanding drought in the Northern Plains and Canadian Prairies. Soybeans rallied to modest gains despite a weaker meal market.

A concerning dry and warm forecast for the next two weeks in Brazil’s safrinha crop area, along with a surging corn basis, rumors of China demand and expectations of falling U.S. stocks propelled spot corn to sharp gains. Rumors of new China interest in U.S. corn have circulated for the past week, with no confirmation yet; 1 million metric tons (mmt) to 2 mmt of old crop is mentioned and some new crop interest as well. The corn rally comes despite the Thursday morning higher revision of Brazilian corn production by Brazil’s agricultural statistics agency CONAB. CONAB, expected to lower production, instead raised it to a record large 109 mmt (4.29 bb) from 108.1 mmt last month. CONAB’s projection, which matches USDA’s March estimate, may prove to be very optimistic.

U.S. corn export commitments have already exceeded the USDA’s 2.6 billion bushel (bb) projection (2.617 bb) with a full 21 weeks left in the crop year, and are up 97% versus last year. The U.S. is again in the mix for more export business, as export offers are reported to be on par with Argentine offers.

Soybeans seemed reluctant to join in the bullish corn and wheat parade, with meal lower and bean oil slightly higher, but finished 6 1/2 cents higher. Palm oil finished lower on Thursday, while canola futures extended their upward March, closing higher for the fourth consecutive day. Soybean sales last week dropped to a meager 3 mb for 2020-21, but a respectable 12.4 mb for 2021-22. China was reported to have canceled 216,000 mt of old-crop beans, but likely rolled some of that demand into new crop, where an increase of 264,000 mt to China was reported. However, soybean commitments have reached nearly 100% of the 2.250 bb forecast with still 21 weeks left in the crop year. Brazil holds the upper hand on export sales, with a sharp discount to the U.S. Gulf.

Minneapolis wheat exploded to the upside and now has rallied over 45 cents since the low on Monday. A continued very dry outlook for both the northern and northwestern Plains and much of the Canadian Prairies, has lighted a fire under the hard wheat markets. There is little precipitation in the cards at least to April 20 for the spring wheat belt and soil moisture shortages are still extreme in North Dakota. The wheat rally comes despite a marketing-year-low export sales number of just 3 mb, but sales are still up 1% from a year ago. For 2021-22, wheat sales were an impressive 19.4 mb.

Livestock trade today was mixed as the cash cattle market continues to see higher prices this week. Lean hogs were well supported today with fundamentals remaining strong. Demand for both beef and pork remains strong as well even though weekly export sales were lower today.

Farm and Ranch Director Jesse Allen has our closing report: