Market News- POET: Portland 03/31/21 9:13:20 AM
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March 31, 2021
- The long awaited March stocks and Planting Intentions report will be released this morning at Noon. The trade is expecting 93.2MM corn acres and 89.9MM soybean acres. The current USDA baseline estimates are 92MM and 90MM, respectively. As is usually the case, this is expected to be a very volatile report. The weekly corn straddle is pricing in a move of +/- 23 cpb…nearly a limit move. The weekly soybean straddle is also pricing in a big move of +/- 47 cpb.
- Soybean oil has continued to see incredible volatility with another limit down move yesterday. In fact, 4 of the last 7 trading days have seen a limit move (one up limit move, and 3 down limit moves). The limit up move on 3/22 seemed to mark a blowoff top - and the selloff began the very next day on news that US cash soybean values have reached levels that incentivized cargoes from Argentina for late summer.
- European traders reported that China purchased up to 60 cargos (150MM bu) of Ukraine corn for Oct/Nov. Ukraine has historically been the largest supplier of Chinese corn imports - but purchases this far out are fairly uncommon. I'd personally take this as a sign that Chinese demand for corn will remain strong - and that they'll be back for US new crop corn in the coming months.
- South American weather continues to show completely dry conditions for the bulk of Brazil's Safrinha growing region through April 7th. Both the EU and GFS models are indicating that Mato Grosso will receive decent rains in the 10-15 day forecast, however the southern half of Brazil looks to remain dry (which accounts for 50% of 2nd season corn production).
- Corn prices continue to flag underneath the 50% retracement from the 2012 high to 2020 low. A close above $5.76 is needed to re-ignite the bullish momentum - likely targeting $6.40 (61.8% retracement). The $4.95-$5.00 level should provide good support on a breakdown of the flag.
March 29, 2021
- There were rumors earlier last week of Argentine soybean oil working into the US, something that hasn't happened since 2017 when the anti-dumping tariffs were imposed. The US has a 75% tariff on argie biodiesel and a 19% tariff on argie soybean oil, so the logistics of such a move are pretty hard to believe. Hearing the cargos were booked for June/July timeslot..Argie SBO is $100/MT cheaper than US FOB SBO, but the $40 freight and import duty of $240/ton make it completely uneconomical, so appears purely a function of a bottleneck on US refining capacity. The soybean oil market was certainly volatile last week…closing limit up early in the week only to close limit down for two consecutive days to close the week (after the news of Argie soy oil working to the US).
- Friday's COT report showed funds adding 18k contracts to their corn long position - now long +388k contracts. This would put them near a record long position heading into a major USDA report, so while corn fundamentals are still constructive from a balance sheet perspective, the fund length is certainly a caution flag heading into a major data dump this week.
- The trade is estimating Mar 1 corn stocks at 7.76B bushels, down 185MM bu YoY and the lowest Mar 1 stocks since 2015. Corn acres are seen at 93.2MM acres and soybean acres are seen at 89.96MM acres. For reference, the USDA baseline estimates are at 92MM and 90 for corn and soybeans, respectively.
- Brazil's IMEA estimating soybean harvest in Mato Grosso at 97% complete and corn planting at 99% complete. Brazil's Safras also raised their soybean production estimate by 1MMT to 134MMT.
- The South American forecast continues to show limited moisture for Brazil's Safrinha growing region over the next 12 days, with high temps reaching into the lower 90's. The extended forecast does show some moisture returning to Central Brazil, although amounts are less than an inch which won't be nearly enough. We'll likely see the trade shift focus to the concerning SA growing conditions post-stocks report as moisture will be badly needed after April 10th.