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Grain Comments: 05-06-2024

Good morning.

Markets are starting the new week lower at the CBOT as weekend rains across Western Kansas have caused an extraction of weather premium in Chicago wheat futures. Corn and soybeans are being pulled lower as well, but with China coming back from holiday this week, buying is expected to emerge during the day session. Friday’s WASDE report will provide the first look at balance sheets for the upcoming season, and will likely be the name of the game as far as the ag trade is concerned this week. Corn futures are trading 1-2 cents lower, soybean futures are trading 3-4 cents lower, and the Chicago wheat market is down 8-10 cents. Products are mixed, soybean meal is down $1/ton, and soybean oil is up 30-40 points. Outside markets are higher to start the new week, crude oil futures are up 70-80 cents/bbl, the Dow Jones index is up 100 points, and the US$ index is unchanged.

Friday afternoon’s COT report showed that for the week ending April 30th, managed money traders bought 20,506 contracts of corn futures/options, sold 222 contracts of soybean futures/options, and bought 28,318 contracts of wheat futures/options.

The funds are now seen short 218,040 contracts of corn, short 149,236 contracts of soybeans, and short 47,866 contracts of wheat. This is the smallest wheat short position since last July.

This afternoon’s planting progress update is expected to show corn planting between 40-45% complete, and soybean planting between 25-30% complete as of yesterday.

While flooding in Southern Brazil is causing harvest delays of row crops, it is also causing significant disruptions to livestock operations; several chicken and pork slaughtering/packing facilities have all but shuttered operations as they face dwindling animal feedstocks.

According to the head of a local poultry lobby, some 12 chicken processors have been affected, while the head of a local pork lobby says five pork processors have had to alter operations.

On the non-business/market side, Reuters is reporting that the death toll in Rio Grande do Sol has reached 78, while more than 115,000 people have been displaced due to the flooding.

Canada announced late on Friday that it would be implementing new import requirements on US breeding cattle due to the H5N1 bird flu virus.

The new measures include a negative HPAI test result for lactating dairy cattle, testing of milk at the retail level to look for viral fragments of HPAI, and voluntary testing of cows that are not presenting with clinical signs of the virus, according to a statement by the Canadian Food Inspection Agency.

The US Federally inspected pork production in the week ending May 4th was up 1.3% from last week at 520 mil lbs. Beef production was seen up 1.0% at 524 mil lbs. YTD beef production is down 2.3%, while pork production is up 0.1%.

Last week’s jobs data again has traders and economists pricing in two rate cuts for the year. Early last week that number was one, as ‘higher for longer’ began to be the market worry. Trade will be light in the UK and Japan Monday as traders there are on holiday.

Israel over the weekend told Palestinians to begin evacuating the city of Rafah in South Gaza in what appeared to be preparation for a long-awaited assault on Hamas holdouts in the city. Cease-fire talks have continued to regularly fall apart.

Heaviest rains over the last 48 hours were seen in the South/Southeast, with totals 1-3″ seen from Texas to the Carolina’s and as far north as Southern Illinois. Totals in SW KS ranged from trace to an inch generally. Most of the Northern Corn Belt stayed relatively dry save for a few scattered showers.

A system moves across the Plains into the Northern Corn Belt today into Tuesday, with two additional systems seen for the Eastern half of the Midwest at the end of this week and first part of next week.

The EU and GFS models continue to not have a lot of agreement on precipitation amounts/locations beyond 5 days, which keeps confidence low.

Temps will be cooler in the West/warmer in the East this week, before cool air makes its way toward the East coast, and we get a flip going into the weekend. A cooler/drier pattern is still seen for the Eastern US beyond the middle of next week.

Have a great day!


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