Grain Comments: 05-11-2023

Good morning:

New crop November soybeans hit a ten-month low overnight with December corn testing its own recent 16-month bottom, reflecting the trade’s confidence in strong 2023 production here in the U.S.

Rain fell in the far west and south over the past 24 hours, with action moving into the northern belt this morning and throughout the Plains and Midwest through the weekend. Extended maps continue to run dry, with a bit less heat.

The developing El Nino weather pattern is starting to become more of a market topic. Forecasters now believe there is a 60% chance of the El Nino being fully in place by the end of the month. They believe there is an 80% chance of the El Nino still being in place through the end of September. The question is what this may mean for US crop production as the event will still be in place to finish out the season. This can easily bring a hot, dry finish to the US growing season and impact production. The current market is mostly void of risk premium and funds are heavily short the grains which could easily lead to a rally on any adverse weather forecast. Funds have trimmed their long soybean position in recent weeks and to see buying there would be less of a surprise given the tight stocks to use the US will have this year. Analysts are still projecting a considerable increase to ending stocks of all three major crops this year which is tempering the reaction to these long-range weather models. The majority of today’s session will be spent getting final positions in place ahead of the monthly WASDE report which will be released tomorrow at 11:00 AM CT. All interest in this report will fall on new crop US balance sheets and South American production.

Have a great day!