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Grain Comments: 05-23-2024

Good morning.

Quiet start to Thursday as the overnight markets have been mixed in light volume. Fund traders are likely close to net even in the grain space and will need to see some confirmation of record US 2024/25 crops before re-entering heavy shorts. Global weather has provided a seasonal base, but the needs fed constantly and this story will lose traction at some point. Price direction from here is all about US summer weather. Corn futures are trading 1-2 cents higher, soybean futures are trading 5-7 cents higher, and the Chicago wheat market is up 1-2 cents. Products are higher, soybean meal is up $2-2.50/ton, and soybean oil is trading 20 points higher. Outside markets are also mostly higher, crude oil futures are up 50 cents/bbl, the Dow Jones index is up 100 points, and the US$ index is down 25 points.

This morning’s weekly export sales report is expected to show corn sales for the week ending May 16th in a range of 500k-1.2 mil mt’s, soybean sales in a range of 275k-550k mt’s, and wheat sales in a range of (100k)-100k mt’s.

Of note, the trade also sees 200k-650k mt’s of new crop wheat sales, as well as 250k-450k of new crop corn sales. New crop soybean sales are seen at 0-200k mt’s.

Friday afternoon’s cattle on feed report is expected to show the feedlot herd as of May 1 at 11.556 mil head, which would be down 0.8% from last year. April placements are seen at 1.662 mil head, down 5.4%, while April marketings are seen at 1.857 mil head, up 9.3%.

According to the US CDCP (Centers for Disease Control and Prevention), a second human case of bird flu has been confirmed in Michigan. The group said in a statement it has not seen evidence of human-to-human transmission and that it has tested close to 40 people since March. The worker had regular exposure to infected cattle.

Agroconsult, a Brazilian agribusiness consultancy, estimated the nation’s second corn crop at 96.7 mmt’s on Wednesday, which would be down 10.5% from last year. The group kicks off a country-wide field tour this week.

The Illinois Wheat Association estimated the state yield for the 2024 wheat crop at 104.8 bpa based on findings from a crop tour conducted in the Southern part of the state on Tuesday.

The number compares to last year’s tour-based estimate of 97.1 bpa, and the USDA’s current estimate of 83 bpa. 2023 saw a state-record wheat yield of 87 bpa. The tour surveyed 58 fields.

Not a lot to note out of yesterday afternoon’s Fed minutes; some hawkish policy makers expressed willingness to lift rates again, if necessary, but that the meeting was before April’s cooler than expected data took some of the bite out of those ideas. “Higher for longer” remains the theme.

Stock index futures will likely see some measure of support on Thursday from better-than-expected earnings report out of Nvidia Wednesday afternoon. The company forecasts Q2 revenue at some $28 billion, nearly $2 billion above expectations.

Short-term, the forecast remains mostly the same as recent days; a low-pressure system moves out of the mountains tonight into Friday bringing rain and storms to the Northern/Western Corn Belt. The GFS is wetter in IN/OH, while the EU is wetter in KS/MO. Both see 1-3″ generally speaking through Sunday night.

Week-two forecasts have trended wetter overnight, which again brings into question the pattern shift the models are trying to bring in for the first week of June. The CPC, the EU, and the GFS all expanded an area in the Central Plains of possible wetter conditions in the 8–14-day period. This development will continue to need monitoring.

On the temp side, the cool West/warm East pattern remains into early next week before cooler air moves into the East and more ridging is seen in the West. This still fits the pattern change story, which adds to the uncertainty in the forecast.

Internationally, models continue to push more warm air into Russian wheat areas, but moisture is confined to areas South of the Black Sea. This moisture needs to expand Eastward.

In Australia, the EU model has added moisture to North/Central areas in the 10-day period, but this is not a heavy ag area in the country. Temps continue to run seasonally hot.

The South American forecast is beginning to move the heaviest rains off the coast of RGDS in Southern Brazil and out into the ocean; rains are still seen in the area, but that there is beginning to be some fluctuation in forecast locations is a welcome development. East/Central Brazil remains hot/dry.

And models are seeing cooler air reaching further South into Brazil than what was seen yesterday. Argentina remains in a cooler pattern for another 10 days, with scattered showers seen for most of the area.

Have a great day.

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