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Grain Comments: 04-17-2024

Good morning.

Markets are again quiet at the CBOT, and no this is not a broken record. Similarly to Monday night, corn has a roughly 2 cent trading range, soybeans have a 6-cent trading range, and the Chicago wheat market has a 7-8 cent trading range. Participants simply have no desire to build big new positions with a new growing season dead ahead, and the ongoing tensions in the Middle East. We would however caution against being lulled to sleep in this market environment though, as the variables present leave traders susceptible to surprises. Corn futures are trading unchanged to a penny higher; soybean futures are trading up a penny to down a penny, and the Chicago wheat market is trading 3-4 cents higher. Products are mixed, soybean meal is trading $1-2/ton higher, while soybean oil is trading 10-20 points lower. Outside markets are mixed, crude oil futures are down 40-50 cents/bbl, the Dow Jones index is up 120 points, and the US$ index is down 10 points.

Market fundamentals have grown stagnant in recent days. There were again no real updates to the Middle East situation overnight; Saudi Arabia and the UAE have echoed both American and European sentiments that restraint must be shown by Israel to avoid a wider conflict.

There were several international wheat crop adjustments between late yesterday and this morning: France’s farm ministry sees 2024/2025 soft wheat production at 30-31 mmt’s, compared with 35 mmt’s last year, citing less acres and adverse weather to begin the season.

The German Association of Farm Co-ops sees wheat production for this season at 20.16 mmt’s, which would be around 6% lower than last year. The estimate is however higher than their March forecast.

And then Russia and Ukraine both updated total grain production forecasts: Russia sees all grain output for the season at 132 mmt’s, down from roughly 145 mmt’s in 2023; and Ukraine sees total grain output at 52 mmt’s, down from 58 mmt’s last year.

This morning’s weekly ethanol production report is expected to show daily production for the week ending April 12th in a range of 1.033-1.051 mil bbls. Stocks are seen between 25.958-26.196 mil bbls. Both would be in line with recent weeks.

Anec sees Brazilian soybean exports reaching 13.74 mmt’s in April, up from their estimate of 12.73 mmt’s last week. Meal exports are seen at 2.58 mmt’s vs 2.45 last week, and corn exports are still seen at 26.728 mmt’s, unchanged from last week.

US President Joe Biden has announced a plan to triple tariffs on some Chinese steel and aluminum during a visit to Pittsburgh on Wednesday. The move is seen as a way to shore up America’s steel sector, and also sway votes from its workers in an election year.

Fed Chair Jerome Powell late on Tuesday echoed sentiments from his colleagues in recent days, saying “The recent data have clearly not given us greater confidence and instead indicate that it’s likely to take longer than expected to achieve that confidence.”

Most economists now see the chance at a June rate cut as a pipe dream, and there are actually some rumors circulating that the next policy move may in fact be a rate hike, as opposed to a cut.

Weather maps have turned slightly dryer for the Northern Midwest in the overnight runs, while the South/Southeast look to pick up additional moisture in the coming 10 days.

The GFS keeps rains around for the Ohio River Valley, so this will need monitoring over the next week.

24-hour precipitation maps show rainfall totals of 0.5-3″ covering much of Iowa and the Southern half of Minnesota, which was viewed as extremely beneficial. Planting progress will be slowed here in the short term, but net results are still positive.

Cooler air is still seen covering most of the Eastern US into this weekend and the first half of next week, before temps are seen again returning to above average by the end of the month.

South American forecasts also trended drier overnight, as the first signs of the monsoon abating are beginning to show up. Rains are still seen in the far North over the next week but have been significantly downgraded for Southern areas.

Forecasts do show a chance at a storm system moving through Argentina next week, but confidence in location/amounts this far out is low. Some dryness will be welcome in Southern Brazil and Northern Argentina where heavy rains have been seen over the last two weeks.

Have a great day!

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