Another round of new contract highs in the grains

The rally in the grains has pushed Minneapolis wheat, corn, soybeans, and soybean oil to highs not seen in 8 to 10 years.

Spring wheat planting progress was better than expected by April 19, 2021. Winter wheat’s crop rating was unchanged for the second week in a row. Conditions were left unchanged for all of the major producing states except Montana which saw a 5% increase in the good/excellent category. (Erin Ehnle Brown / Grand Vale Creative LLC)

The rally in the grains has pushed Minneapolis wheat, corn, soybeans, and soybean oil to highs not seen in eight to 10 years. Corn and soybeans have seen the strongest performance with weather concerns and strong demand the main supporting factors.

The grains traded with solid gains on Monday, April 19, with Minneapolis wheat and corn trading to new contract highs while soybeans made good test of its high. Weather was the main supporting factor in Monday’s run. But all of the markets faded their gains by the close with Minneapolis wheat slipping to end steady, Chicago wheat lower, while Kansas City wheat, corn, and soybeans ended in the black.

The selloff was due to expectations for negative Crop Progress report numbers or traders were hedging their bets that the numbers from the report might be better than expected. They weren’t, except for spring wheat planting progress.

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Monday’s Crop Progress report did confirm slow planting progress and a small recovery in soil moisture. Spring wheat planting progress was better than expected. As of Sunday night, 19% of the nation’s spring wheat was planted, which was 2% to 4% above expectations. North Dakota has 13% in the ground versus 5% average; South Dakota is 46% planted versus 26% average and Minnesota is 10% done versus 8% average.


Corn was estimated to be 8% planted, equal to the five-year average, but 2% to 3% below expectations. Not much planting was accomplished in the Plains or western Corn Belt, but the central and eastern Corn Belt did see decent progress. Soybean planting was estimated at 3% completed versus 2% average, right in line with expectations.

Winter wheat’s crop rating was unchanged for the second week in a row. Conditions were left unchanged for all of the major producing states except Montana, which saw a 5% increase in the good/excellent category. This was in line with estimates.

Topsoil moisture levels improved for the second week in a row, adding 2% to 69% surplus to adequate. Of interest, North Dakota improved 2%, Montana: +12%, Oklahoma +10%, and Texas: +17%. The states that saw declines: Iowa: -8%, Missouri: -1%, Illinois: -3%, Indiana: -5%. Subsoil moisture condition also improved 1% to 65% surplus to adequate.

Weather continues to be the issue as cold temps remain in the forecast for the Plains and Corn Belt. The rain/snow mix is expected to continue to move across the Plains and into the Corn Belt. This will not be good for the winter wheat crop that is near heading out, or for any newly planted corn.

To add to the U.S. weather concerns, Brazil’s adverse weather continues as well. Hot and dry conditions are expected to remain in place through the middle of May. This will continue to adversely affect the safrina corn crop. Production estimates are already starting to decline as officials are now estimating the total Brazilian corn crop at 104 million metric tons, down 1 million metric tons from last month.

The big news that hit the market on Tuesday, April 20, came from Brazil. Brazil removed its import tariffs on corn, soybeans and soybean products. That was a bold move, especially with harvest nearing completion. It is a sign that Brazil will be importing corn and soybeans to meet commitments. It is also a way to control price inflation as prices of corn and soybeans in country are high and Brazil is needing to lower prices.

Tuesday’s rally in the grains pushed the markets through strong resistance levels. A close above $14.50 in the old crop soybeans now opens up soybeans to test the $15.50 level and a close above $6 in corn opens old crop corn to test $6.50. There have been only a few times in history the grains have been this high, so technically the grains have opportunity.

Fundamentally the grains are starting to look rocky. Supplies of corn and soybeans remain extremely tight and it is going to take an almost perfect growing season to correct that issue (especially with USDA estimated acreage). But it is only the end of April. A lot of crop has been planted in late May so there is still time to get the crop planted. But it will take a change in the weather pattern and, so far, that is not expected through the middle of May.


Bull spreading took charge of the grain markets late in the week. Bull spreading is when the front months have more strength than the deferred months. It is a sign of strong demand now. To add to the bull spreading, corn and soybeans are inverted. An inverted market means the front month is higher than the following month. It is also a solid sign of strong demand. In this case, producers are better to sell old crop now and if you want ownership, they should look to re-own in the lower deferred contracts.

Basis levels remain tight as end users aggressively try to pry any remaining corn out of the bin. The inverted market (May is 12 cents above July) is telling producers to sell cash corn now. IHS Markit lowered their production estimate for the safrina crop 5.5 million metric tons to 79.5 million metric tons. Officials are also estimating harvest progress for Brazil’s first corn crop at 79% complete versus 76% average. In export news, Mexico was in and bought 114,300 metric tons of U.S. corn overnight.

Support in corn also spilled over from the firm soybeans complex as corn needs to stay lock step with soybeans or face losing potential acreage. Tight supplies and strong demand continue to add support. Ethanol production was estimated at 941,000 barrels per day, unchanged from the previous week. Stocks were estimated at 20.45 million barrels, down 71,000 barrels from the previous week. Gasoline demand is at the highest levels since August 2020.

A sharply lower U.S. dollar added support as did speculative buying. Cold and wet conditions are slowing corn planting and could result in the switching of acres to soybeans, which limited session strength early in the week.

In other news for soybeans, China expects their hog inventories to get back to normal levels this summer and soybean imports are expected to increase 2.2% to 103 million metric tons. Brazil’s soybean harvest is at 88% complete versus 89% average. Support also came from tight old crop supplies as end users need farmers to sell. Spillover support came from the rally in soybean oil as that market hit levels not seen in 10 years.

Cattle have not performed well over the past week and are now sitting in an oversold market conditions and in need of a recovery. Pressure started off coming from the lean hog sell off but is now being attributed to the recent surge in world pandemic cases, which is causing the U.S. stock market to backtrack slightly. The surge in cases is causing concerns about the ability to stay on the expected recovery path (which will impact beef demand). The lack of a cash trade this week continues to pressure the cattle.

Position squaring ahead of USDA’s April Cattle on Feed report added pressure, and it is likely that some traders were frightened by the average trade estimates. Early estimates for the report are: On Feed: 106%, Placed: 134% and Marketing: 101%. The big increases are not relative to last year as last year’s numbers were COVID-19 influenced.

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