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Grain Comments: 03-12-2024

Good morning.

CBOT markets are mostly lower to start Tuesday. Brazil’s CONAB will be out with a fresh look at production estimates for the country at 7am central time this morning, and this will likely determine market tone for the day. Traders need a reason to either exit shorts or add to them, and this morning’s data provides the next opportunity for that reason to surface. Corn futures are 2-3 cents lower; soybean futures are 1-2 cents lower, and the Chicago wheat market is down 4-5 cents. Products are mixed, soybean meal is up around $1/ton, while soybean oil is down 30 points. Outside markets are mixed as well, crude oil futures are up 10-20 cents/bbl, the Dow Jones index is unchanged, and the US$ index is also unchanged.

March deliveries for Tuesday included 68 contracts of soybean meal, 80 contracts of soybean oil, 26 contracts of corn, 14 contracts of soybeans, and 2 contracts of Chicago wheat. March last trading day is Thursday.

Other than this morning’s CONAB report, traders will be watching the macro markets, as today’s US inflation/CPI data will likely be market moving to the financial world.

Trade is looking for CONAB to show soybean production for Brazil at 148.37 mmt’s, vs 149.4 last month. Planted hectares expected to show 45.28 mil ha’s, vs 45.09 in February. This is according to a group of Bloomberg analysts.

The same group sees total corn production at 115.9 mmt’s, vs 113.7 mmt’s last month. Planted hectares are seen at 21.02 mil, compared with 20.44 last month.

Economists expect this morning’s headline annual inflation number to come in steady m/m at 3.1%, while core inflation is expected to drop to 3.7% this month, from 3.9% in February.

Other financial headlines Tuesday includes a surprise rate cut in Argentina, as policymakers cut the country’s benchmark lending rate from 100% to 80% in an announcement late Monday.

Officials cited a number of factors for the cut, even as annual inflation remains above 250%. This comes following discussion with the IMF over Argentina’s 44$ bil loan, where authorities insisted on keeping interest rates above inflation to encourage saving.

Argentina also announced a massive voluntary debt swap program on Monday; In short, the program entails attempting to exchange upwards of $65 billion USD in Treasury notes that are set to expire this year, for ones maturing between 2025 and 2028. The move is seen as a bid to push back repayments on the country’s debt. +

The Russian Grain Union announced overnight that only 4% of its winter cereal grains were in poor condition, compared to 6% on average. Prices of 12.5% pro-Russian wheat were quoted at $198/ton on an FOB basis, remaining below the $200 mark.

Winter wheat conditions in Kansas were steady on the week at 53% g/ex. Oklahoma was also seen steady at 65%, while Texas improved 1% to 44% g/ex.

Tyson Foods announced Monday they were permanently shuttering a pork plant in Perry, Iowa, eliminating jobs for nearly 1,200 workers. The plant is set to shut down on June 28th of this year.

No major changes were seen to overnight weather runs; Brazil continues to run on the dry side with the best rains occurring in the far South. Argentina forecast is non-threatening with normal/above normal rains and normal/above normal temps.

A weak front moves through the Midwest Tuesday night into Wednesday, possibly bringing isolated showers. A larger system moves through Thursday into the weekend, bringing storms and cooler air.

Have a great day!

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