Rose on Grain – CME Corn & Wheat Finish Higher, Increased Soybean Acreage Likely

April 19, 2022 1:41 pm
Published by

Louis W. Rose IV

Corn:

CME July corn futures gained 24 cents last week to finish at 783¾.  We did not recommend trading any bias last week for corn, wheat, or beans.  CME corn has commenced the new week higher, moving above 800.

The corn market finished higher on strengthening US export data, the war in Ukraine, and expectations for lower US area Vs the USDA’s annual Prospective Planting Report.

Domestically, sowing across the southern US continues, but we continue to hear of planned reductions in acreage in favor of soybeans and cotton.  The unusual continuance of winter weather across the northern tier of US states has hindered fieldwork.

Net export sales were higher while shipments were lower Vs the previous sales period at approximately 52M and 61M bu, respectively.  Sales and shipments were ahead of the pace required to meet the USDA’s projection.  The US is 88% committed and 56% 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 some now expecting that a significant amount of planned area committed to the crop will not be planted.  Private estimates of this season’s South American crop continue to move lower, which should further support CME futures.

CFTC Commitments of Traders data for the week April 12 (futures only) showed that the trade held its net short position little changed Vs the previous assay period at approximately 3.73B bu; large specs increased their net long to around 1.78B 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 now overbought.  Weekly USDA export data, weather reports, geopolitical events are major factors for this week.

Soybeans:

CME July soybeans lost 2¾ cents last week to finish at 1665¼.  CME soybeans have commenced the new week higher. 

CME soybeans near unchanged lower on weakening US export data, strengthening US currency, and the prospect for higher Us acreage.

Domestically, sowing is underway across 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 and shipments were lower Vs the previous assay period at approximately 20M and 30M bu, respectively.  Sales and shipments were well ahead of the pace required to meet the USDA’s projection.  The US is 100% committed and 79% shipped Vs the USDA’s target.  Sales are notably ahead the average expected pace for this point of the season; shipments are off slightly with respect to the expected pace.

Internationally, 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 12 (futures only) showed that the trade trimmed its aggregate net short position Vs the previous assay period to approximately 1.46B bu while large specs increased their net long to around 863M bu.

For this week, the weekly technical analysis for and money flow into the July contract remain bullish, with the market no again approaching overbought.

CME Wheat:

CME SRW July futures gained 48 cents last week at 1104½.  CME wheat has commenced the new week a bit higher. 

CME wheat finished higher in sympathy with other grains and on noticeable increasing demand for SRW stocks, the poor condition of the US crop, and the war in Ukraine.

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, with only 30% rated in good, or better, condition.

Net export sales were lower while shipments were slightly higher Vs the previous assay period at approximately 4M and 13M 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 74% shipped Vs the USDA’s target.  Sales are modestly ahead of the average long-term pace for this point of the season while shipments are significantly off their expected pace.  SRW sales were weak strong at more than 2M 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.

CFTC Commitments of Traders data for the week ending April 12 (futures only) showed that the trade increased its aggregate net short position to approximately 464M bu while large specs reduced their aggregate net long to around 85M bu.

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

Have a great week!

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    This post was written by Louis Rose