Morning report: Volatility has run rampant recently, but grain prices might not see dramatic moves today. (Comments are updated by 7:30 a.m. Central Time.)
Corn: Up 1 to 2 cents
Soybeans: Up 12 to 14 cents
Wheat: Up 3 to 13 cents
*Prices as of 6:50am CST.
Grains were mixed overnight as traders continue to shuffle through a bevy of factors that are keeping prices near historic highs – including poor U.S. winter wheat crop quality, expected delays to planting, and overseas struggles for Ukraine’s production and exports. The overall environment remains quite bullish but is also susceptible to the occasional round of technical selling and profit-taking. Overnight action suggests the rare “quiet” session may be in store on Wednesday, with corn, soybean and wheat prices all testing mild to moderate gains ahead of today’s action.
Overseas stock markets were mixed but mostly higher. Asian markets saw China sinking 1.25% while Japan closed nearly 1% higher. European markets were up 0.4% to 1.4% in midday trading. On Wall St., Dow futures moved 67 points higher to 34,908 as investors await the next batch of corporate Q1 earnings reports out later today.
Energy futures were mostly higher heading into Wednesday’s session. Crude oil firmed 0.75% to $103 per barrel on mild demand optimism. Diesel shifted 0.5% higher, with gasoline edging fractionally lower. The U.S. Dollar softened moderately.
The latest 72-hour precipitation map from NOAA shows ample rain in store for large portions of the Midwest and Plains, with parts of North Dakota stretching through northern Indiana likely to see 1″ or more between today and Saturday. Official 6-to-10-day forecasts show drier-than-normal conditions will return to the Plains and upper Midwest between April 25 and April 29, with seasonally cool weather prevalent across much of the Corn Belt during this time.
On Tuesday, commodity funds were net buyers of soybeans (+1,000) and soyoil (+1,000) contracts but were net sellers of corn (-7,000), soymeal (-3,000) and CBOT wheat (-8,500).
Corn
Corn prices eased slightly in overnight trading as traders assess the latest headlines out of Ukraine and await fresh supply and demand data. Some of that will arrive later today, in the form of the U.S. Energy Information Administration’s weekly ethanol production data. And USDA will offer its next round of grain export numbers early tomorrow morning. For now, nearby contracts are hovering just above $8 per bushel – a level last seen a decade ago amid a once-in-a-generation drought.
On Tuesday, corn basis bids were steady to mixed after sliding 2 to 4 cents lower at two ethanol plants while firming 1 to 9 cents higher at three other Midwestern locations.
Ethanol production was disappointing last week, falling below the 1-million-barrel-per-day benchmark for just the second time in 2022 with a daily average of 995,000 barrels through April 8. Time will tell if the Biden Administration’s announcement of allowing year-round use of E15 will move the needle in a more positive direction.
Earlier this week, USDA noted that corn plantings were at 4% through April 17. That was below the average trade guess of 5%, last year’s pace of 7%, and the prior five-year average of 6%. Prices will remain highly sensitive to planting progress moving forward, especially with rainy weather continuing to land on the Corn Belt over the next few weeks.
Yesterday, the European Commission reported that EU corn imports for the 2021/22 marketing year are trending slightly higher than last year’s pace, reaching 502.7 million bushels through April 17.
The preliminary report from the CBOT showed daily futures volume moving to 402,280, with open interest firming by 2,873. Options volume moved to 166,589 and slightly favors calls (84,776) versus puts (81,813). Implied volatility for near-the-money May contracts is 30.9% and expire in just two days.
Soybeans
Soybean prices tested modest gains overnight as Brazil concludes a largely disappointing season, while the U.S. could see acres surpass corn plantings for just the third time on record. Traders also continue to monitor the war in Ukraine, which has led to a massive runup in prices since late February. While the situation has more benefited corn and wheat prices, soybeans have benefitted from that spillover strength, along with support from rising energy prices and vegetable oil shortfalls overseas.
Soymeal and soyoil prices were also firm overnight. Soymeal made moderate inroads, trending around 1% higher. Soyoil gains were much more modest, with around 0.1% gains prior to the open today.
On Tuesday, soybean basis bids were mostly steady across the central U.S. on Tuesday but did move 2 cents higher at an Ohio elevator and 5 cents higher at an Illinois river terminal yesterday.
Chinese officials said they expect the country’s soybean production to improve by 26% as the world’s top soybean buyer looks to be slightly less reliant on the oilseed. The increase would bring Chinese soybean production to 758 million bushels. Import needs will still come in at 3.493 billion bushels, however. The U.S. and Brazil supply the vast majority of China’s soybean imports.
But in March, Chinese imports of U.S. soybeans tumbled to less than half of year-ago results, with 123.8 million bushels. Cumulative totals for the first three months of 2022 are trending 30% lower year-over-year. In contrast, Brazilian imports in Q1 soared 370% to 234.1 million bushels. Poor crush margins continue to hamper overall sales trends.
Brazil’s Anec is estimating the country will export 440.2 million bushels of soybeans in April, which is slightly below its prior projection a week ago. Anec also anticipates Brazilian soymeal exports will reach 1.956 million metric tons this month.
European Union soybean imports during the 2021/22 marketing year have reached 413.0 million bushels through April 17, which is slightly below last year’s pace so far. EU soymeal imports are also trending slightly lower year-over-year, at 13.02 million metric tons.
The preliminary report from CBOT showed daily futures volume moving to 190,947 and open interest firming by 8,159. Options volume was at 61,887 and slightly favors puts (32,199) over calls (29,688). Implied volatility for near-the-money May contracts moved to 23.9% and expire in 2 days.
Wheat
Wheat prices tested small to moderate gains overnight as the grain remains in a very favorable position amid poor U.S. crop quality and severe challenges for Ukrainian production and exports. Prices remain below but very close to multiyear highs for now. Kansas City HRW contracts fared the best overnight, trending 1% higher. Chicago and Minneapolis contracts were also firm.
European Union soft wheat exports during the 2021/22 marketing year reached 781.2 million bushels through April 17, which is a year-over-year decline of 4.6% so far. EU barley exports are also tracking slightly below last year’s pace, with 291.7 million bushels.
Japan issued a regular tender to purchase 1.0 million bushels of food-quality wheat from Australia that closes on Thursday. The grain is for shipment in August.
Jordan passed on its international tender to purchase 4.4 million bushels of wheat, which closed earlier today. The country has struggled to close deals on similar tenders in recent months, especially as prices have heated up since late February. Jordan is expected to issue a similar tender that will close a week from today.
The preliminary report from CBOT showed daily SRW volume moving to 81,339, with open interest dropping by 2,327. Options volume moved to 17,989 and moderately favors calls (10,426) over puts (7,563). Implied volatility for May near-the-money options remains high, at 42%, and expires in 2 days.
Volume in HRW wheat moved to 30,958, with open interest trending 646 lower. Options volume is at 1,846 and moderately favors calls (1,188) versus puts (658).
