FIRST NOTICE DAY SELL OFF

Written By Sebastian Frost

MARKET UPDATE

Prefer to Listen? Audio Version

Futures Prices Close

Overview

Grains lower across the board for first notice day.

Soybeans lead the way lower, hammered -19 cents as they were pressured with a few negative demand headlines, as well as a negative first notice day to go along with lower action in soymeal and soy oil. Planting also came in faster than normal which added some slight additional pressure.

Wheat was lower due to rains in southern Russia leading to profit taking, as well as a slight negative first notice day.

Corn simply followed the rest of the markets lower.


First Notice Day

First notice day was friendly for corn and winter wheat wheat, negative for beans, and slightly negative for Chicago wheat.

As for beans there were 533 contracts delivered against May futures. This had a pretty negative effect on beans.

Bean oil had 2,101 contracts delivered, this helped push bean oil to it's lowest levels since January 2021.

Chicago wheat saw a big 1,151 contracts delivered compared to the trade expecting just 250 to 500. Again a slight negative for that market.

For May corn there were 0 deliveries. There was also 0 for winter wheat. Friendly for both.

The is the first first notice day since September where the grain markets didn’t make new lows.

More deliveries = Negative for markets

Light deliveries = Friendly for markets

If there is a large number of deliveries that means that supplies nearby is abundant and is a bearish sign. If they are light, it means the physical owner of the commodity wants to hold on to the real product, which is a friendly sign.


Argentina Labor Strikes

The other big headline was the Argentina strikes on a bill that introduced a reduction to minimum salary.

This initially sent soybean meal higher, and along with first notice day helped push bean oil to the lowest prices since January of 2021 as mentioned.

The more they crush to get meal, the more oil they are going to get and they just don’t have a place to sell the oil. So this could help push meal higher and oil lower until it gets resolved.

The strikes are a slightly friendly factor for soybeans, but overall I do not think this is a major factor. We see these strikes from Argentina nearly every single year.


US Planting Progress & Weather

Now taking a look at US weather and planting progress.

Corn and bean planting came in as expected, but ahead of average. Spring wheat planting pace is the fastest since 2021 and was faster than expected and the average pace.

The faster than usual planting has added some pressure to both soybeans as well as spring wheat.

Here was the planting progress numbers from Karen Braun & Kevin Van Trump:

It appears that rains could slow things until around May 11th or so.

Right now we are ahead of pace in planting, so perhaps we fall slightly behind the next few weeks.

These recent numbers did not take into effect the recent rains. So next Monday we could see numbers slow up.

However, after that I believe we will start to ramp things up and shouldn’t be too far behind and will probably still be right around average pace.

So I personally do not see delayed planting as an issue. A lot of times delayed planting talk can be somewhat blown out of proportion. If the forecasts hold true, we will see slight delays and producers planting later than they might like, but overall no real concerns.

If planting were to somehow fall drastically behind, the market would likely not take notice for a few more weeks. Again I do not think that is in the cards, but if it happened that is what you could expect. These markets did not find life until May 13th back in 2019.

We got some good rains in the corn belt, and rain is expected to return over the western to central corn belt while being drier to the eastern corn belt.


Let's dive into the rest of today's update....

Today's Main Takeaways

Corn

Every year for the past 20 years, corn futures have traded higher than where they closed April at.

The largest increase was $3.00 which isn't in the cards this year, but the average increase is +70 cents. Which is a possibility. +70 cents onto December corn today ($4.70) would bring us to $5.40.

However, 75% of the time corn futures do end up lower than where they were at the end of April at harvest. With an average of -25 cents lower.

I am not saying either of these will happen, I am pointing out that historically we go higher from here and make our highs typically in June, and then we trade lower into harvest usually.

The funds are still short -250k contracts of corn.

So far they have covered around +40k contracts, yet futures have only rallied a dime or so. Why is this?

This is because……….

The rest of this is subscriber-only. Subscribe to keep reading & get every update along with 1 on 1 market plans.

IN REST OF TODAYS UPDATE

  • Funds have covered +40k contracts of corn but we only rallied a dime.. Why?

  • What area we need to break on the charts

  • Targets for corn and soybeans

  • Who should reward wheat rally

  • Why funds might cover corn

  • Why are soybeans falling?

TRY 30 DAYS FREE

Be prepared for all of the opportunities. Be comfortable. Get our daily updates & 1 on 1 market planning. Try completely free.

Want to Talk?

Our phones are open 24/7 for you guys if you ever need anything or want to discuss your operation.

(605) 295-3100

sfrost@dailymarketminute.com

Hedge Account

Interested in a hedge account? Use the link below to set up an account or shoot Jeremey a call at (605)295-3100 or Wade at (605)870-0091

LEARN MORE

Sebastian Frost
Previous

BE PATIENT & READY FOR THESE OPPORTUNITIES
Next

WHEAT TAKES A BREATHER