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Grain Comments: 05-08-2024

Good morning.

Markets are lower in overnight trade for the third night in a row this week to start Wednesday. Night session losses have been bought on the reopen the previous two days, so we will see if that trend continues again this morning. Fundamentally, the trade is squarely focused on Friday’s numbers and what the new crop balance sheet will look like. Minor adjustments are anticipated on the old crop side, with the biggest point of interest being South American crop estimates. Corn futures this morning are down 1-2 cents, soybean futures are down 3-4 cents, and the Chicago wheat market is down 4-5 cents. Products are mixed, soybean meal is up $2-3/ton, and soybean oil is down 50 points. Outside markets are also mixed, crude oil futures are trading 80-90 cents/bbl lower, the Dow Jones index is down 20 points, and the US$ index is up 10 points. WTI front month crude oil futures traded to their lowest level since the second week of March overnight.

This morning’s weekly ethanol production report is expected to show daily production in a range of 990k-1.050 mil bbls, while stocks for the week ended May 3rd are seen in a range of 25.0-25.688 mil bbls.

Production would be up slightly from recent weeks, while stocks would be slightly lower. This would be the fifth straight weekly decline in ethanol stocks if accurate.

Argentina’s oilseed workers are expected to strike again on Thursday according to sources. Oilseed union SOEA will join other unions in protesting proposed labor reforms by President Milei.

ANEC is reporting that Brazilian grain truckers are having to travel as much as 400 additional kilometers on alternate roads in order to circumvent the flooding and get product to port.

One of the main rail lines into the port is also shut down due to the flooding, further hampering the logistical situation. According to the port authority at Rio Grande port, operations are normal as of now, but interruptions are possible with more rain forecast.

Brazil’s Ag Minister said in an interview that the government was preparing a temporary measure to allow Conab to import around 1 mmt of rice to avoid a significant price impact due to the flooding.

China announced on Wednesday it would be auctioning off 30,000 mt’s of frozen pork from state reserves on Thursday, May 9th.

European stock markets were higher in early trade on Wednesday, which pulled US markets slightly higher. Traders today will be watching for Fed comments today, as well as continued private earnings. Data will be otherwise absent today.

The US announced they were pausing a shipment of weapons to Israel amid concerns over the potential military offensive in Rafah, which President Biden opposes.

Global temperature set new record highs for the month of April for the eleventh consecutive month. And on a 12-month basis including April, temps were some 1.61 degrees Celsius above the average from 1850-1900.

One more storm system makes its way through the Eastern Midwest today into Thursday, with 0.5″ – 2″ possible. The GFS is then slightly wetter in the 10-day period, but both models see a drier pattern emerging through the end of next week.

The storm prediction center has a large area of Southern MO into KY and TN under a moderate convective outlook for Wednesday, which is the second highest threat level for severe weather; these areas will be most likely to get strong storms this afternoon.

Temps will be cool West/warm East for one more day before the cold air begins to shift Eastward. Areas generally East of the Mississippi will then be slightly below average into this weekend, before warm air returns for the majority of the country by next Tuesday.

Long range models have trended slightly wetter across the Southern portion of the Midwest, which will need monitoring. The Corn Belt needs dry weather over the next three weeks to get the crop in. Confidence beyond a week remains low, however.

The South American forecast trended slightly drier overnight for far Southern Brazil, which was a welcome change. Temps have also moderated, as Argentina sees more mild air while Brazil sees things a little bit more on the cooler side over the next 10 days. Confirmation of these changes will be looked for in today’s midday runs.

Have a great day.

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