Soybean futures rallied to their highest level since the summer of 2014 following USDA’s May 10 Supply & Demand Report that featured sharper-than-expected cuts to U.S. and global carryovers for 2015-16 and 2016-17. Profit-taking and spread unwinding with the corn market trimmed gains the second half of the week, but soybeans still posted strong weekly gains. USDA’s report data was friendlier than expected for corn, which, along with the spreading action with soybeans, allowed the market to post weekly gains. Wheat futures were mixed for the week, with SRW contracts slightly higher, HRW near unchanged and spring wheat contracts slightly lower. Cattle futures gapped higher to start the week, but filled those gaps by week’s end in most contracts despite sharply higher cash cattle prices in the Plains. Price action was highly choppy in the lean hog market and futures showed little net change for the week.
Soybean trading margins raised again. For a third time in less than three weeks, CME Group raised margins required to trade soybean futures at the exchange. Meal trading margins were also raised May 11. Soybean margins are now 53.3% higher than they were on April 21.
Winter wheat crop: 1.427 billion bu. USDA’s first survey-based winter wheat crop estimate is 57 million bu. bigger than last year’s crop. The winter wheat yield is estimated at 47.8 bu. per acre. The HRW crop peg at 862.5 million bu. is up 35.5 million bu. from last year. The SRW crop estimate at 356.6 million bu. is down 2.4 million bu. from 2015. The white winter wheat crop forecast at 208 million bu. is 24 million bu. above year-ago. USDA’s all-wheat estimate of 1.998 billion bu. implies a spring wheat and durum crop of 571 million bushels. The all-wheat national average yield is projected at 46.7 bu. per acre.
Slower week of planting progress. Cool, wet conditions across a good portion of the Corn Belt limited planting progress last week. We anticipate around three-quarters of the corn crop and just over one-third of the soybean crop will be reported planted as of May 15. That would be in line with the average pace for corn planting and slightly ahead of normal for soybeans. With the corn planting pace slowed by excessive wetness in the far eastern and far western Corn Belt, some intended corn acres are likely to be switched to soybeans. We project corn acres will be down around 800,000 acres and soybean plantings up around one million acres from March intentions.
Cold air mass hits Upper Midwest. Frost and freeze advisories were in effect across the Upper Midwest late last week, as overnight lows dropped into the upper 20s to mid-30s across the region Friday and were expected again Saturday morning. Some areas in the Dakotas and western Minnesota were expected to see temps drop into the mid-20s. Corn, soybean and spring wheat crop damage was likely minimal. The crop most at risk of damage is winter wheat.
Odds now favor La Niña by summer. El Niño is coming to an end and a “brief” ENSO-neutral period will be followed by the expected onset of La Niña, likely by sometime this summer, according to the U.S. Climate Prediction Center (CPC). While La Niña seems inevitable, CPC says, there is “uncertainty over the timing and intensity” of the event. The U.S. forecast center now puts 52% odds La Niña will be established by the June through August timeframe and 65% odds it will arrive by July through September.
Argy port strike a ‘temporary disruption’ Workers at Argentina’s Rosario port, which handles more than three-quarters of the country’s grain exports, went on strike Friday, demanding higher wages. Pro Farmer South American Consultant Dr. Michael Cordonnier says this should be only a temporary disruption to exports, though it comes at a time when Argentine soy shipments have already been slowed by harvest delays.
Corn export sales stay strong. Foreign buyers bought 1.105 million metric tons of U.S. old-crop corn and 150,400 metric tons (MT) of 2016-17 corn during the week ended May 5. Weekly soybean exports sales were disappointing at just 212,400 MT for 2015-16 and 6,900 MT for 2016-17. But USDA announced daily sales Friday morning of 280,000 MT of old-crop beans and 140,000 MT of new-crop beans to unknown destinations.
Another major agribusiness merger? Bayer and BASF are each reportedly looking into a possible takeover of Monsanto. Any deal would face global antitrust scrutiny. A merger of Bayer and Monsanto would control nearly one-third of the global crop-chemicals market. A joining of BASF and Monsanto would control roughly 27% of that market.