Thursday’s commentary discussed (based on the close in grain and oilseed markets) how the situation was ripe for an active Friday session, just needing a catalyst. The complex saw it happen, with a number of rumors regarding trade deals with China among other things, sending contracts on a run for much of the session. Outside markets were much quieter, with most of the attention on grains.
Midday: Wheat leads at midday with sharp gains, with corn following suit, with firmer soybeans as well.
Corn trade is 7 to 8 cents higher at midday with trade firming back to the high end of the range with the end of the sorghum tariffs and better trade optimism. Wet weather is expected over the weekend for much of the western belt with warm conditions returning after that.
The second-crop areas of Brazil should catch some showers to mitigate some stress but the crop size will likely keep trending lower. Ethanol margins remain stable with the energy complex near the upper end of the range, with Memorial Day demand just around the corner, and futures edging back to $1.50.
On the July chart we moved back through at the 20-day at $3.99 1/2 with the next level of support is 50-day at 3.94 which we tested to start the week, with resistance at the recent high at $4.08.
Soybean trade is 2 to 5 cents higher at midday with trade trying to reestablish itself over the $10.00 area with support from grain offsetting the large cancellations seen today with 949,000 metric tons of sales cancelled. We did see 56,000 metric tons of old crop, and 112,000 booked as well today with some fresh sales emerging with the break.
Meal is flat to $1 higher and oil is 40 to 50 points higher. South America’s recent pattern should remain intact near term, with the ral and Peso remaining near record lows to boost export competitiveness, with harvest moving towards the home stretch in Argentina. Crush margins have narrowed with meal some $30 a ton off the highs.
On the July chart, trade is back below the 200-day at $10.16 with the next level of support the recent low at $9.93.
Wheat trade is 11 to 20 cents higher with trade returning focus to US weather issues and broader optimism about grain demand coming forward. The dollar remains near the upper end of the range, crimping US competitiveness on the world market until more milling quality wheat is available.
Warmer weather should help to boost maturity with the crop still well behind normal, with further stress likely if not combined with rain, and the rain is not combined with hail. Spring wheat should continue catching up with some acres likely rolling to other crops as we get later in spring.
The Black Sea area will continue to dominate export trade with weather issues limited for the moment, and better rain potential over the weekend. Black Sea values are moving back towards $200 a ton.
On the July Kansas City contract support is the 20-day at $5.29 that we are back above with the upper Bollinger Band at $5.65 resistance.