Morning Summary: It’s another chilly start to the week early Monday morning with temperatures in the 30s and 40s as far west as the Rocky Mountains and south through Oklahoma, then all the way east to the Atlantic Ocean. Given rains that fell over parts of the US Plains and Midwest this past 3-day holiday weekend, and not forgetting the blizzard that buried the US Northern and Canadian Plains, spring planting season will remain on hold for the time being. Isn’t it amazing how Punxsutawney Phil had it right again when he said spring would be late? As for news, not much has changed though Russia has upped its attacks on Ukraine after the latter sank the former’s prized warship late last week. The US dollar index is showing strength early and gold is also rallying as both try to lay claim to the title “safe-haven market”. US Treasury yields continue to climb, not surprising given the outlook for interest rate increases by the US Federal Reserve, with the much-watched 10-year hitting 2.875%. Energies have taken a bit of a breather with Brent crude down $0.20 and WTI off $0.25. On the other hand, natural gas held firm overnight with the spot-month contract still showing a gain of 20 cents (2.7%).
Corn: It promises to be another busy week in the corn market, on paper if not in the field. The overnight session saw May gain as much as 10.25 cents as it poked its head above $8.00 for the first time. The overnight high of $8.0050 took out the peak posted by the March issue of $8.00 on March 4. Meanwhile, last Thursday saw the cmdty National Corn Price Index (NCPI, weighted national average cash price) calculated at $7.65, a new high weekly close. As for the basis market, the cmdty National Corn Basis Index (NCBI, weighted national average) closed last week at 24.5 cents under May futures while my theoretical calculation was 18.0 cents under July, both bullish levels as the official roll to July futures gets larger on the horizon on May 2. Further out, July gained as much as 9.75 cents overnight, also hitting a new contract high of $7.9350. Last Friday’s CFTC Commitments of Traders report (legacy, futures only) showed noncommercial adding 8,500 contracts to their net-long futures position. The bottom line is buying continues to come from commercial and noncommercial traders in both old-crop and new-crop markets. Speaking of new-crop, December also hit a new contract high of $7.4425 overnight, and new contract highs are not usually viewed as bearish.
Soybeans: The soybean market posted a strong rally overnight with May gaining as much as 16.0 cents before giving roughly a dime back at this writing. Trade volume was generally light with May registering 9,800 contracts changing hands through early Monday morning. July rallied as much as 16.5 cents but was holding onto only 4.5 cents of its move pre-dawn. Unlike corn, contracts did not post new highs overnight, giving the market the look of getting a bit top-heavy. My concern has been and continues to be the possibility of old-crop export sales being canceled or rolled forward to new-crop. To this point those concerns have been unfounded as the US continues to make additional old-crop sales. Last Friday USDA announced sales of 10.9 mb of old-crop soybeans and 19.8 mb of new-crop soybeans to China and unknown destinations (see Quick Takes for details). This was not a huge surprise given the strength of the May futures contract versus July late last week. We’ve also seen the cmdty National Soybean Price Index slowly losing ground to both the May and July futures contracts, indicating basis has been weakening. This puts the spotlight on Monday’s weekly export inspections number for the week ending Thursday, April 14.
Wheat: The wheat sector was showing double-digit gains to start the week and given the weather I talked about in the opening, rightfully so. Minneapolis (HRS) was the leader as old-crop May rallied as much 29.25 cents and was still 25.0 cents higher, while July also showed a 25.0 cent gain. It should be noted new-crop September added as much as 25.0 cents overnight though logic would’ve told us it easily could’ve led the charge. But then again, it’s usually foolhardy to apply logic to wheat. The bottom line is spring wheat remains incredibly bullish with no signs of changing any time soon. New-crop July Kansas City (HRW) posted a somewhat subdued 25.0-cent rally overnight, and I say it that way given much of the US Southern Plains growing area has seen numerous sub-freezing morning temperatures of late. If there were still grizzled old floor traders running the show, those who remember years like the Easter freeze of 1996, then the less than energetic overnight rally would make more sense. It’s possible these folks have helped write the algorithms that keep Watson cautious of getting overly bullish wheat on potential spring freeze damage.