We are rapidly closing in on the end of another month as April comes to a close. The weather in March and April fooled a lot of us in agriculture as it had appeared that we were going to see an early spring. Some areas were able to get in the fields early and start planting progress, but in the end, Mother Nature threw enough obstacles to result in planting actually being closer to normal. That in itself is friendly as the potential for above trend line yields fades the closer you get to normal planting dates. This has also resulted in a sharp increase in market volatility.

Volatility has been the name of the game for the grains in April. And the volatility increased greatly the last half of the month. Increased volatility could possibly indicate a change in the trend. The trend for the grains as of late is straight up. Another side effect of increased volatility is increased margin requirements, which were increased in the middle of April. Another side effect is increased daily trading limits, which will increase May 3.

The run in the grains has been nothing short of amazing. How many would have expected to see Minneapolis wheat above $7.50, corn above $6.50, and soybeans above $15.50, not to mention canola above $900? And technically the grains do not appear to be showing signs of slowing down. We hate to sound like a broken record, but the same news continues to drive the grains: technical buying, decent demand and weather.

The U.S. Department of Agriculture export inspections estimate for the week ending April 23 did show continued strong demand in corn as shipments remained above 1 million metric tons. Wheat and soybeans shipments have slowed but still remain above the pace needed to make USDA’s expectations.

The April 26 Crop Progress report did not bring anything new to the table for corn and soybeans, but it was a bit friendly wheat. Planting progress came in close to expectations as corn was at 17% planted, soybeans at 8% planted and spring wheat was 28% planted. Winter wheat conditions were friendly at 49% good/excellent, which was 3% below expectations. Of the five major winter wheat producing states, only Colorado saw conditions improve. Colorado increased 4% while Kansas was unchanged, Montana slipped 10%, Oklahoma dropped 9% and Texas slipped 10%.

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Brazil’s harvest is making progress but slowing down slightly. As of April 23, Brazil’s soybean harvest was 91% completed versus 93% average. The first corn crop harvest was reported at 83% completed versus 82% average.

Weather is the other major driver in the grains, not only in the U.S. but also Brazil. The seven-day forecast for the U.S. shows dry conditions for the Northern Plains and western Corn Belt but good rains for the Southern Plains and central/eastern Corn Belt. Temps were expected to start to warm up in the Northern Plains the last week of April, which will result in rapid planting progress. Producers in the eastern part of North Dakota and western Minnesota have been holding off on planting corn due to the cold soil temps, but now with a warmer forecast, it will give producers the green light to go.

The six-to-10-day forecast is calling for above normal temps for the entire continental U.S., with much above temps hitting the Southern Plains. Precipitation is expected to be above normal for North Dakota, South Dakota, Minnesota, Wisconsin and Michigan but below normal for everywhere else.

To add to the early week market push, the weather forecast for the second crop corn region of Brazil has warm dry conditions dominating through the middle of May, which is also the time frame that most of the corn will be entering into their pollination stage. Late in the week, one forecast started to hint of potential moisture in the second half of May.

The grains did not see a straight up performance the last week of April, as technical selling and profit taking dominated the grains midweek. One cannot expect the market to push higher every day, so a little correction is healthy. But what was interesting was all of the grains opened the session lower on Wednesday and traded down about the same amount (17 to 25 cents), all of the grains had about the same trading range overnight (21 to 28 cent trading range) and all are sitting at about the same spot in the trading range, just off the low end. Usually, the grains are not in such unison.

The biggest question from the week’s performance: have the grains topped? Not likely. But one can argue that the top might be getting close. Volatility has certainly increased, which is one sign of a topping action. But there has not been any change in the drought in the Northern Plains nor has there been any change in Brazil’s forecast. And demand has remained firm, with more export sales of corn and soybeans being reported the last week of April.

Supplies remain tight as end users try desperately to acquire the last few kernels of the 2020 crop. Ethanol demand remains strong, and with ethanol stocks at the lowest level in five years and with the start of the summer driving season fast approaching, plants are going to be looking at increasing ethanol production. Last week was another strong week for ethanol production as production was estimated at 945,000 barrels per day, up 4,000 barrels from the previous week. Stocks were estimated at 19.74 million, 711,000 barrels lower than the previous week and a new 26 week low. And if Brazil’s second corn crop continues to decrease in size, that will put even more demand on the remaining U.S. inventory.

Stats Canada released its 2021 acreage estimate. All wheat acreage was estimated at 23.26 million versus expectations of 23.7 million and versus 24.98 million last year. Spring wheat acreage was estimated at 16.34 million versus 17.93 million last year. Durum acreage was estimated at 5.71 million versus expectation of 5.5 million and versus 5.69 million last year. Canola planted acres were estimated at 21.5 million, higher than last year’s 20.8 million but 1.1 million acres lower than the average trade estimate of 22.6 million. The lower acreage estimate was enough to push old crop canola above $900 per metric ton and to a new all-time contract high.

Cattle struggled this week. Economic concerns due to the talk of tax increases and concerns that the U.S. recovery will stall out because of surges in COVID-19 cases kept the cattle markets on the defense. Cattle were able to start the week firm from last Friday’s friendly Cattle on Feed report, but that strength was short-lived. Cash traded lower this week at $120, which added to the defensive trading.

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