CORN HIGHLIGHTS:

• It was a disappointing day in the corn market as prices faded during the session. Even a strong wheat market for the day failed to help lift corn prices higher. Weak ethanol production numbers and position squaring for the end of the week limited corn market gains.
• The next few sessions could bring choppy trade to the corn market. May basis contracts will need to be priced or rolled in the next handful of days. May corn options expire on Friday, and First Notice day for May futures is April 30. All three events will likely bring some volatility and price movement into the corn market.
• Weekly ethanol production slipped to 954 thousand barrels/day last week. This was down 1.3% year-over-year and was the second lowest production week for the marketing year. 95.5 mb of corn were used in the ethanol grind last week, which was below the pace needed to reach USDA targets for the marketing year.
• The USDA will release weekly export sales totals on Thursday morning. Expectations are for ales to range between 400,000 – 900,000 mt for old crop and 25,000 – 350,000 MT for new crop. Last week, export sales were soft with a combined 566,000 mt of new sales.
• Weather models are predicting warmer but wetter-than-normal conditions over the next two weeks. The current corn planting pace is off to a good start, but increased precipitation could slow progress going into May.

SOYBEAN HIGHLIGHTS:

• Soybeans finished the day mixed with May and July ending lower and the deferred months higher. The July contract ended its three-day winning streak after meeting resistance at the 40 and 50-day moving averages. Soybean meal closed higher today while soybean oil was lower as it followed palm oil down.
• The Brazilian soybean harvest is nearly completed, but the southern region where work is not completely done is forecast to receive rains which could delay the progress. In the US, rains are forecast to fall throughout the Corn Belt which could delay planting but will also benefit soil moisture ahead of a potentially dry La Nina year.
• In South America, the Brazilian real has begun to rebound and Brazilian basis levels have moved higher which makes Brazilian soybeans more expensive to the rest of the world. While the US is still not competitive with Brazil, it could push some export business to the US.
• Before today, soybeans had three consecutively higher closes which made for a gain of 33 cents in the July contract. A large part of that was likely short covering ahead of first notice day on April 30, but open interest declined from Friday through Tuesday which could indicate that funds are not opening new short positions in the July contract.

WHEAT HIGHLIGHTS:

• Again, wheat managed to close higher across the board in all three classes, despite the US Dollar firming up today. Support came from higher trade in Matif futures, as well as the addition of global weather and war premium. All this combined has likely led to some short covering by the managed funds.
• May Chicago wheat rallied through resistance at the 100-day moving average today and closed above this level for the first time since late January. The next major resistance might be at the 200-day moving average, which is around 619. May Chicago futures have not traded above that level since July of last year.
• While a significant portion of the US Midwest is forecasted to receive beneficial rains starting later this week, the Southwestern Plains are anticipated to be excluded. This situation might contribute to the continued deterioration of HRW wheat crop ratings in that region, although SRW ratings may benefit from the rainfall.
• Eastern Ukraine and Southern Russia have been in a hot and dry pattern, threatening their wheat production. Although some moisture is expected soon, net drying is still expected, and the addition of weather premium may be in part why the market has rallied strongly over the past several sessions.
• According to APK Inform, Ukraine has shipped 40 mmt of grain as of April 24, comparable to last year’s 40.7 mmt at the same time. Since July, Ukraine’s wheat exports have reached 15.2 mmt, slightly lower than the USDA’s estimate of 17.5 mmt. Additionally, SovEcon estimates that Russian wheat exports for April will reach 4.6 mmt, an increase from 4.4 mmt last year.

DAIRY HIGHLIGHTS:

• It was reported that Highly Pathogenic Avian Influenza (HPAI) was detected in US retail milk, but the FDA reaffirmed that the pasteurization process kills the virus.
• Class III futures took it on the chin today with the May contract down 35 cents to $17.78. Volume was heavy once again.
• Class IV futures saw some double-digit losses as well. The HPAI news likely had some traders exiting longs and possibly adding to shorts on both classes.
• All four spot markets were lower today with cheese and whey down a penny, butter down a quarter cent, and powder down a penny and a half.

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Author

John Heinberg