Grain Comments: 04-03-2023

Good morning:

OPEC surprised the crude oil market with a production cut announcement yesterday and WTI’s $5/bbl gain provided the grains with a clear path higher to open the week. With the USDA March 31 reports here and gone, it’s time for the trade to concentrate on planting weather; that’s bullish for now but the cold and wet rut could be improving by mid-month.

Rain and snow remain scattered around the Midwest and northern Plains, rebuilding again for tomorrow and Wednesday with a similar event likely to Friday—snow in the north, rains and storms for most, with the central and southern Plains skipped once again. Extended maps are much more varied now, but the overall cold and wet pattern appears to be gone, with drier conditions in particular into the 6-10 day and warmer weather on tap for the 11-15.

Brazil will see better rains ahead for the 6–10-day period to aid drier northeastern safrinha corn areas, wetter in the center-south this week.

Last Friday’s USDA stocks and acreage data is likely to be a factor again in today’s trade. The most notable figure from the data was soybean inventory which was at the low end of expectations and indicates rationing is still needed. One thing worth nothing on the acreage numbers is that data was collected several weeks ago, and weather is less favorable for early seeding across several regions of the US. Now that we are past this release trade will again focus on actual planting reports and weather outlooks for price discovery. Corn planting is actively taking place in southern US states, and we are now seeing soybeans going in as well. In fact, most states in the Deep South are reporting above normal planting rates. This is expected to slow as fieldwork moves north, but how much is being debated. Conditions in the Midwest have improved, and delays may not be significant. The most attention remains on the Dakotas and Minnesota where there is still heavy snow cover. The market tends to be slow to react to delayed plantings, but this year may be an exception given the tight stocks to use on all commodities. The United States is seeing elevated demand for its corn which is also becoming more of a factor in market outlooks. Today marks the first trading day of the quarter which may elevate managed money participation in the markets and generate selling opportunities.

Have a great day!