Chicago corn, soybeans and wheat futures were all higher in overnight trade. The weaker US dollar had a bit to do with it, contributing roughly AUD$3.00 to a AUD$9.00 rally in nearby SRW wheat.
The rally was fuelled by dry conditions in the US spring wheat belt and cooler temperatures potentially slowing corn planting. Increasing ethanol demand in the US was also viewed as bullish corn prices. Gasoline demand in the US is expected to rise as COVID vaccination programs help lift travel restrictions and allow the population to move more freely in the USA. Moving into the US summer will also help limit the spread of COVID somewhat.
The rapid expansion in the processing capability of the S.American ethanol market will take more corn away from the feed sector. Not really enough to worry about at the moment but any additional demand for corn is now going to push prices higher as the Chinese continue to struggle to fill the feed grain gap left by a poor corn crop in 2020. Ethanol plants in Brazil are expanding to use more corn as opposed to the more commonly used sugar cane.
Wheat futures rallied on the back of cold dry conditions in the US spring wheat belt. It should be noted that the planting pace of spring wheat is actually higher than average as there has been no delays. Sowing the wheat into limited moisture will mean 2 things, they need rain soon and if it does rain the crop will be off to a good start. The 7 day forecast for the Dakota’s and the Canadian Prairies remains relatively dry with falls of around 2-10mm possible. Keep an eye on the weekly crop condition report over the next 4-5 weeks, that’s what they will trade on.