Grain Comments: 05-24-2023

Good morning:

The path of least resistance remains lower for the grains, with the 2023 crop off to a good start for most, and U.S. supplies generally ignored in most export markets. Soybeans in particular are taking it on the chin with China slow to secure new-crop U.S. exports, snapping up as much of Brazil’s record harvest as they can. Wheat exports have slowed from the Black Sea up into the deal deadline last week and with Russia protesting almost daily, but U.S. export prices are still non-competitive on the world market.

Rains remain scattered and mostly confined to southern crop areas this morning, after a similar pattern over the past 24 hours; the next two weeks show rains stopping in the Plains and WCB, heaviest in western NE/KS/OK/TX, with the central and eastern Midwest dry. Temperatures will remain warm right up through the first week of June now.

Brazil was dry again over the past 24 hours, but rains will fire up in the south Friday and spread across southern states over the weekend, then shift into the north and northeast next week for the 6–10-day time frame.

Trade is showing more interest in new crop balance sheets than old crops, which is not uncommon at this time of the marketing year. One of the biggest differences is the stocks to use forecasts. World corn reserves are forecast to be the highest in four years at the end of the 2023/24 year. Soybean reserves are expected to be the highest in five years. These forecasts are based off of current demand and thoughts of record production in both the United States and South America. Wheat stocks are forecast to drop to their lowest level in nine years but still cover projected usage. Even if crops are not as large as projected, changes to demand will also impact ending stocks. The USDA is currently using some very large demand numbers in their balance sheets. This is from a historical tendency for demand to increase in years with larger crops as commodity values tend to slip lower in such times. While this can happen the state of the global economic markets may limit import buying interest this year. This is especially the case for the leading commodity buyer China who has shown a slower recovery from Covid than anticipated. Even without economic concerns the larger inventory projections have reduced any interest of forward contracting by global importers.

Have a great day!