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Grain Comments: 04-11-2024

Good morning.

Markets are mixed at the CBOT in anticipation of today’s supply and demand updates from both Conab and the USDA. Getting pushed to the back burner today is weekly export sales, which are again anticipated to not be very stellar this week. Beyond today’s data, market direction will be all about US weather and how quickly planting progresses in the coming weeks. Corn futures are trading 1-2 cents higher, soybean futures are trading 5-6 cents lower, and the Chicago wheat market is down 3-4 cents. Products are mixed, soybean meal is up $1-2/ton, and soybean oil is trading 70-80 points lower. Outside markets are mostly lower, crude oil futures are trading 40-50 cents/bbl lower, the Dow Jones index is down 175 points, and the US$ index is unchanged.

This morning’s weekly export sales report is expected to show corn sales in a range of 750k-1.3 mil mt’s, soybean sales in a range of 200k-600k mt’s, and wheat sales in a range of (100k)-250k mt’s.

Totals for all three crops are seen similar to recent weeks, with moderate corn sales and fairly poor soybean and wheat sales. Export pace would suggest a possibility that USDA lowers soybean exports and raises corn exports in today’s report.

Argentina’s Rosario Grains Exchange late Wednesday revised its corn production estimate for the country lower by 6.5 mmt’s, and now projects total output to reach 50.5 mmt’s. This is now below both the USDA and the BAGE.

Like BAGE last week, the Exchange cited late-season disease pressure as the reason for the production cut. Our source in Brazil has confirmed there has definitely been Argentine yield loss in the last 30 days.

China’s ag ministry increased its estimate for corn and cotton imports in the 2023/24 season in its April outlook report released early Thursday. The ministry sees corn imports at 20 mmt’s, up from 17.5 in March; and cotton imports are seen at 2.3 mmt’s, up from 2 mmt’s last month.

According to Brazil’s Ag Minister, the country will maintain tariffs on US ethanol despite “tough” complaints from the Biden admin. “We cannot risk making things more precarious for Brazilian producers,” said the Minister at a sugarcane conference on Wednesday.

US authorities have been pushing Brazil to remove the tariffs implemented by former President Lula. The Minister also said one option may be that Brazil would decrease tariffs in exchange for an increase in the US domestic gasoline blend mandate.

Following yesterday’s surprise CPI data, interest rate futures markets all but eliminated any chance of a June rate cut by the Fed, and now see a less than 50% chance that a cut is made in July. This despite policy makers continuing to indicate as many as three cuts were still possible just last month.

Traders do, however, still see a near 75% chance that the ECB will cut rates in its policy decision today, despite developments in the US yesterday.

In war-related news, the US has warned Israel of an imminent retaliatory attack that has been expected for weeks. And Russia launched a major missile/drone strike that hit a major Ukrainian power plant near Kyiv.

Both the GFS and the EU weather models have made a significant shift in moisture overnight, nearly eliminating it for the SE in the next week. This is welcome following heavy rains in the last 72 hours. The wettest areas are now seen in the Great Lake States in the next 10 days.

Temps are seen to be slightly cooler today and tomorrow but will warm up for the Eastern half of the country beyond Friday. Models do, however, see cold air returning in the two-week period.

Central Brazil trended slightly dryer overnight, with heaviest rains seen in the dry areas of Parana and MGDS. Heat remains confined to a small pocket in the far North.

Have a great day!

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