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Grain Comments: 05-13-2024

Good morning.

Markets have traded lower in the overnight session to start the new week, as traders take profits on long positions. This afternoon’s planting progress report looks to show decent progress made over the last week, though numbers are still likely to be behind 5-year averages. And following Monday, storm systems will impact the South and Southern Midwest every 2-3 days, again slowing planting operations. Corn futures are trading 2-3 cents lower, soybean futures are trading 3-4 cents lower, and the Chicago wheat market is trading 1-2 cents higher. Products are mixed, soybean meal is trading $3-4/ton lower, and soybean oil is trading around 50 points higher. Outside markets are mostly higher, crude oil futures are up 50-60 cents/bbl, the Dow Jones index is up 70 points, and the US$ index is down 15 points.

Friday afternoon’s COT report showed managed money traders were massive buyers in the week ending May 7th. Funds were buyers of 115,527 combined contracts of corn futures/options, buyers of 107,783 combined contracts of soybeans, and buyers of 5,507 combined contracts in Chicago wheat.

The buying in soybeans was the largest one-week buying spree by managed money traders on record. Funds are now seen short 102,513 contracts of corn, short 41,453 contracts of soybeans, and short 42,360 contracts of wheat. Combined net buying was the largest weekly total since summer of 2017.

Bottom line from Friday’s report: New crop corn/wheat balance sheets are seen tighter now than they were going into the report, while the soybean situation looks rather burdensome without a US 2024 weather problem.

StoneX on Friday estimated soy crop losses out of RGDS due to flooding at 3 mmt’s, trimming their total production estimate to 147.8 mmt’s. The group also mentioned further cuts were possible in June due to ongoing rainfall.

In comparison, the USDA on Friday estimated the losses from flooding at roughly 1 mmt. This general 1-3 mmt ballpark has been the average guess of most traders, with nobody quite sure what total losses will amount to.

According to La Nacion, Argentina announced over the weekend they would be scrapping export quota systems for corn and wheat that had been implemented by the previous regime. Farm lobbies cheered the decision.

As of Sunday, Russia’s ag ministry had not reduced its estimate of the 2024 Russian wheat crop following recent freezing temps but did mention future cuts were possible. This comes as three key grain regions declared a state of emergency last week due to May frosts, and more cold temps were witnessed over the weekend.

The US federally inspected pork production in the week ending May 11th was down 0.9% from last week at 515 mil lbs., while beef production was unchanged at 527 mil lbs. YTD pork production is up 0.1%, while beef production is down 2.1%.

Financial markets this week will have their attention squarely focused on Wednesday’s inflation report. Economists see the report showing possible moderation for the first time in six months, with the average guess being around 3.6% vs 3.8% last month.

IDF forces continued pounding the Southern Gazan city of Rafah over the weekend, while also recapturing territory in the North that they had claimed months ago. Not a lot of updates in the past 48 hours as fighting continues.

The heaviest weekend rains were seen in the Southwest and Northeast; specifically, some of the dry areas of W KS received 0.5″ to 1.5″ over the last 48 hours, which was desperately needed. Eastern TX into LA continues to be too wet, with another 2-4″ seen over the weekend.

Weather forecasts continue to show a progressive pattern through the next week, with continued planting delays likely. Storms will move through the Midwest every 2-3 days, with exact locations/amounts hard to predict. Rainfall bias does favor the Southern half of the US.

Radar data shows rains falling in parts of NE/KS/IA/MO this morning, with storms seen making their way East into Monday night/Tuesday. Another smaller system sweeps across the Northern Corn Belt towards the end of the week, with a third seen by early next week.

The EU model sees rainfall totals of anywhere from 0.25″ to 2.5″ for the majority of the Corn Belt through Friday, while the GFS sees slightly heavier totals mainly through Southern MO and Southern IL.

Temps this week will be a bit of a mixed bag, with most of the Corn Belt seeing average to below average temps into the end of the week, before warmer air takes over going into the weekend.

Long range models have again trended wetter over the weekend which will need monitoring over the next week to 10 days. Confidence beyond a week remains low, but a wetter pattern into the start of June is not desired by the US producer.

Have a great day!

 

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