By Kirk Maltais
--Soybeans for July delivery rose 0.8% to $8.45 a bushel on the Chicago Board of Trade Monday, with traders reacting to news on progress in a possible vaccine for coronavirus with optimism about a U.S. economic recovery.
--Corn for July delivery rose 0.5% to $3.20 3/4 a bushel.
--Wheat for July delivery fell 0.7% to $4.97 a bushel.
Vaccine Hopes: Biotech company Moderna Inc. provided a spark for markets across the board, including commodities like crude oil. Positive results from its early human tests of a possible coronavirus vaccine also created upside for grains futures trading on the CBOT Monday. "It is impossible to tell if this Moderna vaccine will be the one, but it is clear that the drug making companies are putting a majority of their resources in finding treatments and vaccines for the coronavirus," said Craig Turner of Daniels Trading.
Wheat Worries: Wheat futures on the CBOT closed Monday trading at their lowest level since October 2019. The chief factor pushing wheat prices down is the sheer amount of supply on the world export market, with quotas put in place due to the coronavirus pandemic not tightening the market as much as previously believed. "The market remains on the defensive and is having trouble dealing with the fact that global supplies are burdensome," said RJO Futures. In its latest WASDE report, the USDA said world inventories of wheat are expected to climb roughly 15 million metric tons in the 2020/21 marketing year, to a total of roughly 310 million tons.
Long Shadow: The CFTC's commitment of traders report Friday showed managed money firms were building long positions in soybeans as of May 12, closing nearly 8,000 short contracts and adding roughly 13,500 long contracts. Managed money firms are now net long in CBOT soybeans by 31,037 contracts, well above the previous weeks' net long of 9,486 contracts. The growth of the long position suggests funds expect major Chinese export buying to ramp up in the coming weeks and months. "China is reportedly urging food companies to boost inventories of grains and oilseeds ahead of a possible second wave of coronavirus cases and to get ahead of any further supply chain disruptions caused by the global pandemic," said Doug Bergman of RCM Alternatives.
Weather Premium: Corn futures on the CBOT are being powered more by expectations for how supportive U.S. spring weather has been for the formidable crop being planted this year instead of how slowly the ethanol industry may return to pre-coronavirus levels. "We feel at current prices there is some weather premium/crop risk priced in," says Marex Spectron. "The rally in crude and petroleum demand picking up slightly has some ethanol plants looking at starting back up, not something that moves the needle in our opinion," said the firm.
Stockpile Stall: The prices of most staple agricultural goods fell last week, in part from less coronavirus-related stockpiling, said Capital Economics in a note. "The drop in wheat prices can also be attributed to wetter weather in the northern hemisphere, which has partially allayed fears of a drought-induced decline in supply," the firm said. It adds that it anticipates the wheat market will shift into a large surplus in the 2020-21 marketing year and that already-high stocks will rise further, which should put downward pressure on prices in the remainder of this year.
--The EIA releases its weekly update on ethanol production and inventories at 10:30 a.m. ET Wednesday.
--The USDA will release its latest weekly export sales numbers at 8:30 a.m. ET Thursday.
--The USDA will release its monthly cold storage report at 3 p.m. ET Thursday.
Lucy Craymer contributed to this article.