Heavy liquidation overnight after Tuesday morning's high looks substantial.

Yesterday's weak close and the reality of our premium cash prices to the world market values tripped liquidation into the evening session when the volume is not as substantial as the day session. This created wipeout moves with July corn trading down the 25 cent limit for a period of time. Renewed buying in the May corn contract overnight helped lift the markets off their lows. Any weak shorts are now out of the market, so that aspect of the rally is behind us going into first notice day Friday. As the pressure on May shorts to exit is diminished by 1st notice day, a two-sided CBOT looks to develop into the May 12TH WASDE report. US farmers are active in getting corn and soybean seed in the ground, with reports that some Central IL farmers will finish spring seeding this week.

There is potential for Argentine soy oil to be imported into the US, as Argentina soyoil is trading 10 cents under May CBOT futures while the US rail market is 5-6 cents over. Such a massive spread is highly unusual and opens the door for potential US imports. The current price rise has marked a substantial high watermark for prices in corn, soybeans and wheat. That will likely create retracement targets to bounce to now with a more sideways trading action. This means rallies will be sold, and for now these rallies could be minor.

EIA will be out with weekly ethanol data later this morning, but the struggle of the bulls is the US Gulf's premium to over world exporters as a US new crop is being quickly seeded. Argentine fob corn is $.90/Bu below the US Gulf this morning. This makes new CBOT purchases difficult without a confirmed new crop US weather problem.

The Brazilian weather forecast is arid for the next two weeks as hope fades for winter corn yields. Brazilian corn will enter its reproductive phase starting late this week and continue into late May under a dire flash drought. A sub 100 MMMTs 2021 Brazilian total corn crop is forecast due to drought stress.

The US weather forecast is slightly drier from yesterday, but enough rain looks to fall to spark active seed germination. Several spring storm systems will transverse the Central US over the next 10 days to produce near to above normal rain. The rainfall even makes it into the drier areas of Nebraska and Iowa, but 10-day totals will be .5-1.50″. There are signs of the jet stream shifting northward, so there will be rain chances for the Dakotas during the 11-15 day period. Whether the rains fall in the locations and quantities forecast will be closely followed. For now, improved warm/wetter weather is offered for the Central US.

The cash cattle trade was quiet on Tuesday, with better interest expected later today. The boxed beef trade was sharply higher on Tuesday. The choice cutout jumped $5.79 to a new rally high of $290.99, and select was $5.18 higher at $279.53. Usually, such a move would have CME futures opening higher and closing with solid gains. The balance between slaughter capacity and the fed cattle inventory has swung sharply in the packer's favor. Cattle prices have become disconnected from beef prices in the last two years. Feedyards are behind on marketings since the Holcomb fire in 2019. The 2020 covid shutdowns made the problem infinitely worse. Carcass weights are above last year's record, and packers are not competing for supply. The cattle feeder has lost leverage as beef prices are hitting historic levels.