New contract highs for Spring Wheat at Dec corn.
Grain futures worked higher overnight on concerning US and world weather. The Northern US/Plains, the Brazilian winter corn area and Northern Europe are all enduring some measure of drought. This has the CBOT adding weather premium to price ahead with domestic US cash markets rising on a pure lack of supply. The northern Plains and Southern Canadian Prairies are into a seven-month drought that has dropped moisture levels to record lows. Compounding that shortage of soil moisture is cold temps and lite snows. Spring wheat/grain seeding becomes more critical if seed is not in moist ground by May 15th. The drought watch is on across the N Plain/Prairies.
In Brazil, their 2nd corn crop is dealing with the dry April that heads into a normally dry May for pollination due to the late planted crop. The forecasts offer limited rain for the next 2 weeks amid near to above normal temperatures with highs holding in the 80’s to lower 90’s. The dry season looks to start on a timely basis in early May leaving the 2021 Brazilian corn crop with limited soil moisture ahead of the crop’s reproductive period that runs from late April into early June. Yield losses could be substantial while Brazilian cash corn prices have pushed to new highs above $7.35/Bu this AM. Any loss of the 2021 Brazilian corn crop will be directed right to the US with nearly a 1:1 relationship in terms of what Brazil does not export from August into January the US will.
On Friday, the White House nominated Robert Bonnie as Under Secretary of Farm Production and Conservation programs. Mr Bonnie has been Biden’s climate czar and the USDA position will offer him broad authority and funding to shape USDA’s Climate Policy. Biofuels look to be prominently featured in the early years, with Gov’t carbon markets to follow. Additional acres into the CRP and rising biofuel demand will tighten future US corn/soyoil stocks.
It was a sharply lower week in the cattle futures market when it ended, while the cash trade ranged from $120 in the TX Panhandle up to $123-124 in Nebraska and the N Midwest. The Texas trade was steady with the previous week, while the Nebraska trade was steady to $1 higher. The early week outlook is steady/firm on the last seasonal push in beef prices to the upside. Boxed beef prices ended last week with gains. The choice cutout value moved up $3.88 to $276.05 on strength in loin/rib prices, while select values were $5.03 higher for the week at $269.10. Cattle futures are at major support and should see a mild recovery from current valuations. June cattle will likely struggle to climb above the 122.00-123.00 range.