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Grain Commentary: 05.30.23

Corn futures were 3-4 cents lower overnight, soybeans were 12-14 cents lower, and wheat was down 7-9 cents as US weather forecasts turned wetter. The US dollar and energies were weaker while the equity market was higher.

 

Today’s Reports: Crop Progress, Export Inspections

 

  • US debt ceiling deal tentatively reached
  • Safras pegs 22/23 Brazil corn production at 137 mmt
  • More attention falling on grain quality

 

Month end positioning will build in today’s session. While the spot contracts do not go into delivery this month, traders still tend to shore up positions for their balance sheets. Given recent market activity this could easily lead to a flushing of weak short positions to give the market a bump. Fundamentally the market is hanging on weather for most of its supports as demand remains less than ideal. Traders are already holding large short positions in the grain and have liquidated most of their soybean position which does favor at least some buying. Most of the attention today will fall on weather outlooks following the extended weekend. More regions of the US are reporting drier conditions and the need for precipitation soon. While soils are not in drought condition for the most part, this can change quickly, and given the lack of risk premium can give us a futures rebound. We will see the updated planting progress data this afternoon and corn planting is expected to be mostly complete. The focus will be on North Dakota where last week’s progress showed roughly 2.5 million acres remained unplanted. We are now at the insurance plant date which may cause a sizable portion of these to remain unplanted, especially given our current market values and this year’s insurance floors.

 

Highlights

* Ukraine YTD grain exports 44.6 mmt

* Ukraine exports -4.6% from last year

* Favorable domestic processing margins support basis

* Weather favorable for EU crops

* China/Russia building political relations

* China/Russia also promoting trade

* G7 members look to reduce Chinese dependency

* Mexico accuses US of delaying imports

* US rail movement -4.8% last week

* Barge movement up from recent levels

 

Corn

* Planting est 90-95%

* Initial crop condition expected this afternoon

* Analysts raise Safrinha crop est 5 mmt

* China wheat harvest to further diminish corn use

* SAM offers $10-$20 under US

 

Soybeans

* Planting est 80-85%

* Canada to expand crush capacity 5 mmt

* US overpriced in global market

* SAM soy $35 to $45 under US

* Brazil harvest pressure lifting

 

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