ZMI ALPHA:3 Big Things Today, March 15, 2021

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ZMI ALPHA:3 Big Things Today, March 15, 2021

1. Soybean Futures Modestly Lower in Overnight Trading

Soybean futures were slightly lower in overnight trading as investors weigh weak demand for U.S. supplies against continued weather woes in parts of South America.

Exporters still haven’t reported a sale of 100,000 metric tons or more of any U.S. agricultural product since March 2, according to the Department of Agriculture.

Prior to that it was Feb. 12 when the USDA last reported a sale of 100,000 metric tons or more.

Underpinning prices, however, is extremely wet weather in Brazil, the world’s largest exporter of soybeans, and dry weather in Argentina. The ongoing weather woes have been boosting prices for weeks.

The Buenos Aires Grain Exchange reduced its outlook for soybeans and corn to 44 million and 45 million metric tons, respectively, amid dry weather in the country. Those forecasts are down from the 46 million tons expected previously.

Rains over the weekend fell in parts of Mato Grosso, Goias, and northern Mato Grosso do Sul in Brazil. That is further delaying the soybean harvest.

The excessive rainfall also is slowing collection of the corn crop, according to weather and media reports.

Still, Brazilian consultancy CONAB said in a report last week that it expects domestic soybean production at 135.1 million metric tons, up slightly from the previous outlook.

Corn output is pegged at 108 million metric tons, which would be a record if realized, CONAB said. That’s well above the previous year’s total as the weak first crop is expected to be offset by a strong second crop, the agency said.  

Soybean futures for May delivery fell 2¾¢ to $14.10½ a bushel overnight on the Chicago Board of Trade. Soymeal fell $1 to $399.70 a short ton, and soy oil gained 0.29¢ to 55.65¢ a pound.

Corn was unchanged at $5.39 a bushel.

Wheat futures for May delivery rose 3¢ to $6.41½ a bushel, while Kansas City futures added ¾¢ to $6.04¼ a bushel.

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2. Speculative Investors Raise Net-Long Positions in Corn and Beans

Money managers raised their net-long positions, or bets on higher prices, in corn and beans last week while reducing their bullish positions in wheat, according to the Commodity Futures Trading Commission.

Investors increased their bullish bet in corn to a net 338,982 futures contracts in the seven days that ended on March 9, the CFTC said in a report. That’s up from 330,839 contracts a week earlier.

Speculators also bumped their net longs in soybeans to 146,538 futures contracts last week, the agency said. That’s up from 143,329 contracts the previous week.

Adverse weather in parts of Brazil and Argentina are keeping some investors bullish on the commodities.

In wheat, investors reduced their net-long positions in both soft-red and hard-red winter futures, according to the CFTC.

Investors held a net-long positions of 47,625 hard-red winter wheat futures as of March 9, down from 51,684 contracts seven days earlier.

Hedge funds and other large money managers reduced their bullish position to a net-22,276 soft-red winter wheat futures contracts last week, the CFTC said in its report.

The weekly Commitments of Traders report from the Commodity Futures Trading Commission shows trader positions in futures markets.

The report provides positions held by commercial traders, or those using futures to hedge their physical assets; noncommercial traders, or money managers (also called large speculators); and nonreportables, or small speculators.

A net-long position indicates more traders are betting on higher prices, while a net-short position means more are betting futures will decline.

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3. Blizzards Hitting From Central South Dakota to Northern Iowa

Blizzard warnings have been issued for a large chunk of land stretching from central South Dakota into northern Illinois, according to the National Weather Service.

Snowfall is nearing an end in parts of central South Dakota with still another 1 to 3 inches possible, the NWS said in a report early this morning.

In northeastern Iowa, meanwhile, a strong storm is moving across the region where most of the accumulations will be north of Interstate 80.

“Northern Iowa will see snow accumulations exceed 6 inches with areas,” the agency said. “The heaviest snow will fall before noon today, impacting the morning commute with snow rates over an inch per hour over much of the warned area.”

Wet snow is expected with 5 to 8 inches possible along with wind gusts of up to 35 mph, the NWS said.

The winds may cause blowing snow, which will reduce visibility to less than .5 mile at times. Snow may exceed 1.5 inches an hour, the agency said.

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