Classic Turn-around Tuesday after a hard down Monday.
Grain futures found the classic turnaround Tuesday, recovering overnight as the May contracts' roll-out comes to an end by Wednesday, and the basis continues to improve. End users are seeing the advantage of the buy in the corn break, hoping there might be deliveries, but that has a minimal possibility. Malaysian palm oil futures rallied with gains of 59 ringgits in May futures to 4,021 as rising export demand kept seasonal increases in domestic production in check. Indian and Chinese demand added to the overnight rally. May Paris wheat is trading up €2.50 at €214.00/MT on tightening supplies of domestic wheat and large cash premiums of corn. More wheat is being used in EU feed rations based on the heady price of domestic corn. China's July Dalian corn rose 3 cents/Bu to $10.45/Bu while July soymeal fell $9.40/MT to $512.90/MT. Livestock feed demand is tepid amid declining margins.
It was announced this morning that the FDA would seek to pause the use of Johnson's & Johnson's 1 dose vaccine amid blood clotting concern. This caused a pause in stock index futures at 6 AM along with energy futures, but have since stabilized. Concerns of the reopening's are alleviated as infectious rates in the country are not overall concerning.
China's trade jumped in March, with exports climbing more than 30% from a year earlier in dollar terms. This added to the signs of a global economic recovery with the world's vaccination pace picking up. China imported 7.77 MMTs of soybeans in March, up 82% from last year. For the 1st quarter, China imported 21.2 MMTs of soybeans which was up a hefty 19% from the prior year. China also imported 6.73 MMTs of corn and 2.92 MMTs of wheat in the January-March quarter, which were record large. Massive grain and soy imports are continuing in March US corn exports record large while Brazil loaded out 13.5 MMTs of soybeans.
The winter corn areas of Brazil hold in a warm/dry weather pattern for another 5-6 days. Concern for Brazil's 2nd corn crop is growing due to drought. The forecast offers limited Central Brazilian rainfall for the next 5 days with widely scattered showers returning across Mato Grosso early next week. Mato Grosso rain totals will range from .25-1.25″ with locally heavier amounts. Rainfall is forecast at .1-.6″ across MGDS, Parana and Goias with coverage less than 50%. This leaves the 70% of the Brazilian winter corn area parched, with the 11-15 day period offering a return to below normal rainfall and warming temperatures.
Cattle futures again drifted lower on Monday while feeder cattle found support from the correction in corn prices. Cash markets were quiet on Monday, and active trade is expected to hold off until at least midweek. Feedlots hope to build on last week's momentum and finally capture a larger share of the enormous packer kill margins. Slaughter margins last week soared to $471/head. The boxed beef rally slowed on Monday with cutout values mixed. The choice-value was down $.76 while select gained $2.09. This may be marking a seasonal high in beef values.