Rose on Grain – CME Corn & Beans Finish Higher, Wheat Lower

April 26, 2022 6:16 am
Published by

Louis W. Rose IV

Corn:

CME July corn futures gained 5¼ cents last week to finish at 789.  We did not recommend trading any bias last week for corn, wheat, or beans.  CME corn has commenced the new week higher, again moving above 800.

The corn market finished near unchanged last week as strengthening US currency, weakening US export data, the war in Ukraine, and expectations for lower US area Vs the USDA’s annual Prospective Planting Report applied pressure to both longs and shorts last week.

Domestically, sowing across the southern US continues, but we continue to hear of planned reductions in acreage in favor of soybeans and cotton – mostly soybeans.

Net export sales and shipments were lower Vs the previous sales period at approximately 35M and 47M bu, respectively.  Sales were ahead of the pace required to meet the USDA’s projection while shipments were off the pace requirement.  The US is 89% committed and 58% shipped Vs the USDA’s target.  Sales are well ahead the average expected pace for this point of the season; shipments are near on par with their expected pace.

Internationally, the war in Ukraine continues to support the corn (and wheat) market, with significant fighting in the east of the country suggesting that a significant amount of planned area committed to the crop will not be sown.  Early May will bring fresh official estimates and forecasts from across South America.

CFTC Commitments of Traders data for the week April 19 (futures only) showed that the trade modestly increased its net short position Vs the previous assay period at approximately 3.81B bu; large specs increased their net long slightly to around 1.82B bu.  

For an in-depth analysis of CFTC data see our weekly COT analysis and commentary.

For this week, the weekly technical analysis for and money flow into the July contract are bullish, with the market moving further into overbought territory.  Weekly USDA export data, weather reports, geopolitical events are major factors for this week for corn, wheat, and beans.

Soybeans:

CME July soybeans gained 22¾ cents last week to finish at 1688.  CME soybeans have commenced the new week higher. 

CME soybeans higher despite weakening US export data, strengthening US currency, and the prospect for higher-than-normal US acreage.  The old crop domestic balance sheet is very, very tight and continues to support the market.

Domestically, sowing is underway across the US (especially the southern US) and will continue as weather permits.  We currently believe southern acreage will be significantly to notably higher Vs 2021.

Net export sales were lower while shipments were higher Vs the previous assay period at approximately 17M and 33M bu, respectively.  Sales and shipments were well ahead of the pace required to meet the USDA’s projection.  The US is 100% committed and 81% shipped Vs the USDA’s target.  Sales are notably ahead the average expected pace for this point of the season; shipments are off slightly, regarding expected pace.

Internationally, many private estimates from across South America continue to show an expectation for a smaller than originally expected crop.

CFTC Commitments of Traders data for the week ending April 19 (futures only) showed that the trade added slightly to its aggregate net short position Vs the previous assay period to approximately 1.48B bu while large specs trimmed their net long to around 857M bu.

For this week, the weekly technical analysis for and money flow into the July contract remain bullish, with the market again approaching overbought.

CME Wheat:

CME SRW July futures lost 29¼ cents last week at 1075¼.  CME wheat has commenced the new week a bit higher. 

CME wheat finished lower, despite the exceptionally poor condition of the US crop and the war in Ukraine, on noticeable decreasing demand for SRW stocks,

Domestically, dryness across much of the Great Plains has seriously reduced 2022 production potential and much of this season’s crop across the region will likely be abandoned.  There is no relief in sight from the drought within the near- to medium-term weather forecasts.  The US wheat crop has been rated in abysmal condition, which continues to worsen, with now only 27% rated in good, or better, condition.  This is most likely a record low with respect to years when such data has been collected.

Net export sales were lower while shipments were higher Vs the previous assay period at approximately 1M and 19M bu, respectively.  Both sales and shipments were off the average weekly pace required to meet the USDA’s official target.  The US is 88% committed and 76% shipped Vs the USDA’s target.  Sales are just ahead of the average long-term pace for this point of the season while shipments are significantly off their expected pace.  SRW sales were notably weaker at around 530 bu.

Internationally, the war in Ukraine continues to remind all market participants of just how integral the Black Sea region is to world wheat production and exports.  The normal logistics for the world wheat trade are about to get a makeover.

CFTC Commitments of Traders data for the week ending April 19 (futures only) showed that the trade trimmed its aggregate net short position to approximately 457M bu while large specs reduced their aggregate net long to around 74M bu.

For this week, the weekly technical analysis for and money flow into the July contract remain supportive to bullish.  

Have a great week!

    Subscribe to be notified when this post is updated!

    ---

    This Market Report constitutes copyrighted material and may not be reproduced in any manner, either in part or in whole, without prior written consent from Rose Commodity Group. However, redistribution via forwarding of the full link to the report is permitted. Quotations (limit 3) from the report are permitted, so long as they are accompanied by attribution to Rose Commodity Group and a link to the full report.

    ---

    This publication is presented for informational purposes only. While the information contained herein is believed to be accurate and factual, the possibility of error exists. Commodity trading is an inherently risky proposition and there is no guarantee that trades based on the information enclosed herein will result in profitable outcomes.

    This post was written by Louis Rose