CBOT May corn futures prices closed limit up Thursday as old crop supplies struggle to keep up with demand. That momentum also has pushed the May contract to trade at a 19-cent inverse to the July contract, underlining the near-term tightness of supplies.
For soybeans, the May-July spread also is trading at a 19-cent inverse. Such price levels for corn and soy haven’t been seen since 2013, as shown by Gro’s Futures Spread App, which allows for a graphical representation of spreads on a seasonal basis.
Cash bids are also at their highest levels since 2013, as seen via Gro’s array of cash data, and are now well above $6/bushel for corn and $15/bushel for soybeans across much of the Midwest. Gro has long predicted that both corn and soybean supplies are tighter than the USDA has estimated.
Gro will soon be enhancing our Futures Spread App by adding Basis prices, which are the difference between a futures price and a local cash price. Basis prices are a leading indicator for spreads and futures, and provide clues about supply and demand.
Brazil’s soybean crop highlights the global squeeze on supplies. Brazil’s FOB export prices remain near their January highs despite a record soy harvest. Brazil recently extended its suspension of import tariffs on soybeans, corn, and other products to attract more imports and control high domestic prices.
The USDA FAS just increased China’s 2020/21 corn import demand to 28 million tonnes, on continued feed demand and a need to restock reserves. The new estimate could spur an upward revision by the USDA, which projected 24 million tonnes in the April WASDE.
Looking ahead to the next crop (2021/22), the US needs all the additional acres of corn and soybeans that farmers reportedly intend to plant to match demand. But given current and forecasted weather conditions, it's not clear if plantings will be high enough.
This insight was powered by the Gro platform, which enables better and faster decisions about factors affecting the entire global agricultural ecosystem. Gro organizes over 40,000 datasets from sources around the world into a unified ontology, which allows users to derive valuable insights such as this one. You can explore the data available on Gro with a free account, or please get in touch if you would like to learn more about a specific crop, region, or business issue.