Soybeans Rise to New Highs as Weather Stays Dry
By Kirk Maltais
--Soybeans for July delivery rose 1.8% to $15.71 1/2 a bushel,
its highest close since October 2012, on the Chicago Board of Trade
Thursday. Dry conditions in North and South America squeezed supply
amid robust demand.
--Corn for July delivery rose 1.6% to $7.20 a bushel, its
highest close since March 2013.
--Wheat for July delivery rose 1.5% to $7.55 1/4 a bushel, its
highest close since February 2013.
Not Enough: While rainfall is expected throughout much of the
U.S. Midwest this weekend, the northern plains is only expected to
receive moderate rainfall, said DTN. That's bad news considering
the already existing dryness of the area. This was a factor pushing
grains higher across the board. "Soil moisture and drought concern
are building in this portion of the Midwest," said DTN.
Additionally, cold temperatures expected this weekend carries the
risk of frost -- "unfavorable for row crop progress" according to
DTN. Drought conditions in Brazil also lifted grain futures trading
Supply Squeeze: Soybean futures led grains higher Thursday. A
tight supply globally and robust demand is supportting futures as
they charge toward all-time highs. "The market is trending higher
with the trade mostly orderly," said Doug Bergman of RCM
Alternatives. "With the U.S. on pace to deplete bean supplies this
summer along with the fact the U.S. is not set up to import
meaningful quantities of beans suggests the bean market is headed
for more volatility and higher prices in the coming months."
Who's Got the Oil?: The strong demand story surrounding soybean
oil also provided a lift for soybean futures Thursday, and may keep
providing them with support. "The edible oil markets remain hot
amidst enthusiasm over the next generation of fuels, called
renewable fuels," said Arlan Suderman of StoneX. "The edible oil
markets breathed new life into the soybean market today, pushing
new-crop contracts to new highs for this bull market, while the
nearby contracts remain just below recent eight-year highs." Tight
supply of soybean oil is expected to continue well into next year,
according to the United Soybean Board.
Below Expectations: Export sales of U.S. corn were far weaker
than expected by traders, amid a large reduction in sales for the
2020/21 marketing year. While not creating a lasting impact on corn
futures trading today, the slim tonnage may be a sign that demand
rationing has started. For the 2020/21 and 2021/22 marketing years,
corn sales totaled 243,600 metric tons for the week ended April 29.
The primary driver for the low figure is a cancellation of 559,100
tons that were previously booked for delivery in the 2020/21
marketing year for unknown destinations. Grains traders surveyed by
The Wall Street Journal had forecast sales to total anywhere from
550,000 tons to 1.2 million tons.
Domestic Slide: Shipments of U.S. grains fell slightly off from
the previous week, according to the USDA. In its Grains
Transportation Report published Thursday, the USDA says that U.S.
Class I railroads originated 25,467 grain carloads for the week
ended April 24 -- down 3% from the previous week but up 18% from
the same time last year. Meanwhile, barge grain movements for the
week ended May 1 totaled 671,536 tons, down 30% from last week but
1% higher than last year. Grain futures have been rallying in
recent weeks, with row crop futures near all-time highs.
--The CFTC will release its weekly commitment of traders report
at 3:30 p.m. ET Friday.
--Tyson Foods Inc. will release first-quarter earnings before
the stock market opens Monday.
--The USDA will release its weekly export inspections report at
11 a.m. ET Monday.
--The USDA will release its weekly crop progress report at 4
p.m. ET Monday.
Write to Kirk Maltais at firstname.lastname@example.org
(END) Dow Jones Newswires
May 06, 2021 15:11 ET (19:11 GMT)
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