Grain Comments: 05-08-2023

Good morning:

The switch has flipped to “bullish” on the Black Sea deal to open the week as trade concerns grow with only ten days to go until the expiration of the agreement and Russian concerns/complaints/actions increasing. Rains skipped dry HRW areas over the weekend but fell in HRS planting areas to again slow that campaign. The soybean complex is bouncing this morning as well with tailwinds from crude oil. Corn is the laggard, with speculators clearly favoring the bearish side as indicated by the CFTC on Friday.

Weekend rains were solid for basically all but the southern Plains, with KS, OK, and the panhandles dry but good coverage of a half-inch of rain or more for most of the Midwest. Rain continues in the ECB today and fire right back up again in the WCB tomorrow, lingering through the work week. 6–10-day maps are running drier today with that system having moved out to the far east and northeast, though the far southern U.S. (including TX and OK) will see some chances during that time frame. 11–15-day forecasts remain dry, with temperatures running safely above normal over the next two weeks.

Brazil again saw rains far south over the weekend with the north/northeast dry, and the dry overall trend remains with moisture shortages likely increasing for safrinha corn areas going forward.

Two main factors will likely drive this week’s trade. Early trade will be heavily influenced by planting progress and crop reports from across the Corn Belt. The planting pace remains above normal and recent weather has likely accelerated this rate. Given current outlooks the only region of the US that is still being monitored on its progress is the Upper Plains, mainly North Dakota, where snow melt has caused flooding. The rest of the US is seeing conditions that will allow seeding to wrap up ahead of schedule. This will shift market attention to long-range weather outlooks and what conditions the crops may be subjected to. One benefit of the early planting is crops may avoid late-season heat. As the week progresses, we are going to see more positioning for the May WASDE report. This is the most watched of the year as it will contain the first look at official new crop balance sheets. For the most part trade is expecting to see larger crops than in the 2022/23 year, and larger ending stocks as well. This is especially the case on corn where some models show ending stocks nearly doubling from this year. Soybean and wheat ending stocks will likely increase as well, but both may remain at levels where price rationing will still be needed.

Have a great day!