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Grain Comments: 04-22-2024

Good morning.

Markets are mixed to start a new week in Chicago, with wheat being the upside leader on continued Russian attacks on the port area of Odessa in Southern Ukraine. Corn and soybeans are unchanged to slightly lower as the trade awaits this afternoon’s crop progress numbers to see how much planting progress was made in the last week. Like last week, price discovery in the coming days will be focused geopolitical tensions and weather forecasts. Funds continue to sit on near record combined short positions in the row crop markets, which leaves the trade susceptible to short covering should Mother Nature not provide an ideal start to the growing season. Corn futures are trading unchanged to a penny lower, soybean futures are down 3-4 cents, and the Chicago wheat market is up 6-7 cents. Products are mixed, soybean meal is down $3-4/ton, and soybean oil is up around 30 points. Outside markets are mixed also, crude oil futures are down 80 cents/bbl, the Dow Jones index is up 200 points, and the US$ index is up 15 points.

Last week’s COT report showed funds in the week ending April 16th were sellers of 16,014 contracts of corn, and sellers of 28,565 contracts of soybeans.

Managed money is now seen short 279,570 combined contracts of corn futures/options and is seen short 167,875 combined contracts of soybean futures and options.

Friday’s cattle on feed report for April came in slightly below trade expectations, which should be supportive of prices to start this week; April 1 on feed was seen at 11.821 mil head, or 101% of last year. Trade had expected 102%.

March placements were seen at 1.746 mil head, which was 88% of last year, while March marketings were seen at 1.706 mil head, or 86% of last year. Both placements and marketings were around 2% below the average trade guess.

India’s wheat reserves as of April 1 were seen at 7.5 mmt’s, down from 8.35 mmt’s last year and the lowest in the last 16 years. Average wheat stocks at the beginning of April, which is the start of the new crop year, over the last decade have been 16.7 mmt’s.

Ukraine announced over the weekend that Russian missiles had hit several grain storage facilities in the Pivdennyi port in Ukraine’s Odessa region. The missiles destroyed grain storage facilities and their contents, which were to be sold into Asia and Africa according to Ukrainian President Volodymyr Zelensky.

According to Ukraine’s Ministry of Infrastructure, this marks the 39th separate attack on port infrastructure facilities in the Odessa region since the war began.

In other Russian news, President Vladimir Putin over the weekend ordered his government to present proposals to facilitate grain trading with other countries including India and China. The plan also includes Brazil and South Africa, among others.

The idea is for this group of countries, which are otherwise known as BRICS, to allow buyers to purchase products directly from producers, an idea which Putin has already publicly backed.

US Federally inspected beef production was up 2.8% in the week ending April 20th to 524 mil lbs. Pork production in the week was up 0.3% to 536 mil lbs. YTD beef production is down 2.8%, and pork production is up 0.2%.

Most of the corn belt saw dry weather over the weekend, which was conducive to fieldwork/planting where soils weren’t too wet. The South and Southeast were wet with rainfall seen anywhere from 0.5″ to 3″ in Texas and the Delta region.

Both the EU and the GFS models see rain for a majority of the corn belt this week, with the EU model being slightly further to the West with its precipitation location. A small disturbance is seen for the Northern Midwest tonight into Tuesday, with a larger trough of low pressure coming into the area into the weekend/next week. Additionally, the GFS model sees a third system developing in the middle of next week.

Temps begin to warm in the West first part of this week, with warmer weather returning to the Eastern US by the end of this week. Long range forecasts are now showing a chance at below normal temps again after the first week of May, which is a new development that will need monitoring.

South American forecasts have continued to trend worse over the weekend. Temps are seen above average in Central/Southern Brazil over the next 10 days with little/no moisture advertised. And heavy rains in Argentina will look to further slow harvest. Safrinha corn areas that did not receive abundant moisture over the last two/three weeks will be negatively impacted.

Have a great day!

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