New contract highs for new crop corn and soybeans while wheat stalls.
New crop corn and soybeans are the bullish leaders overnight, making new contract highs and maintaining the bulk of their overnight strength. Wheat futures turned lower on declining Russian fob offers, and as Russia's looming floating tax structure does provide an incentive for elevated sales in June. Spot Russian fob wheat this AM is quoted below $250/MT, vs a recent peak of $290/MT in February. Other world wheat cash markets have followed the Black Sea lower. Old crop corn made new contract highs and then stalled at that value near 575, while old crop soybeans stalled just under the March 8 contract highs and went into retreat, as South America fills immediate soybean demand. Keep in mind the trade has become used to sharp selloffs after the last 3 crop reports this year and are hesitant, fearing that action.
Seeding is now accelerating across the Delta/Southwest, and will be difficult to switch acres from minor crops at this stage. It's the job of the new crop pricing to slow demand and increase acreage worldwide, including in South America next Oct-Nov. Exceptional Midwest summer weather will be needed if acreage is not added to the current corn/soybean acreage numbers. Any concerning weather scare will create further spikes in current pricing. Interior US corn/soy basis levels are steady/higher following Wednesday's limit move. Central IL soy basis sits at $.30/Bu over for Apr-Jun arrival. Even in pockets of KS spot, soy basis is up $.10/Bu to $.25 over for spring delivery. C IL corn basis is quoted at $.22-.25 over into June. Farmers will be even more reluctant sellers given confirmation is the need for rationing. Crop markets cannot afford even modest N Hemisphere weather adversity May onward.
Another day of heat & dryness was recorded across Brazil's winter corn belt on Wednesday and this pattern goes unchanged into April 7. Temps will be consistently in the upper 80s/low 90s, with meaningful Brazilian precip confined to Mato Grosso and northern Goias. Major producing states Mato Grosso do Sul and Parana will stay arid throughout the next two weeks. High-pressure Ridging in Brazil does relax early next week to allow better rain to drop southward into Northern Brazil. Yet, the EU, GFS and Canadian models are in broad agreement that dryness returns to the whole safrinha belt in the 11-15 day period. Concern over safrinha yield potential stays elevated. This is partially due to drier than normal two-week forecasts and heightened as soil moisture shortages are currently widespread. Rainfall in Central & Northern Brazil will be critical in the second half of April.
Cattle futures had a volatile session after the crop report's release yesterday, with live cattle recovering to close firm and feeder cattle recovering substantially off of near $5 losses. Cash cattle trade for Wednesday remained slow on light demand. But sales were quoted as high as $118 in NE or $3 higher for the week. Elsewhere in the Plains, cattle markets were quiet, with feedlots holding out for similar prices. The outlook stays higher at the end of the week. The cash feeder index has been well supported as deferred fat cattle have offset corn prices so far in 2021. The feeder index at $140 is fairly valued with cattle/corn spread on a per head basis. But back month cattle need to keep up with corn to support higher feeder prices.