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Grain Comments: 05-24-2024

Good morning.

Another relatively quiet night of trade to wrap up the week has been had at the CBOT, with all three principal crop markets lower in light volume. Traders will be interested in this afternoon’s commitment of traders report to gauge just how close to net-even managed money has gotten in the last week. Otherwise, weather forecasts and the ability to get the remaining corn and soybean acres seeded before June 1 will continue to be the primary drivers of price in Chicago ag futures. Corn futures are trading unchanged to a half cent higher; soybean futures are trading either side of unchanged, and the Chicago wheat market is down 4-5 cents. Products are quiet, soybean meal is unchanged to 50 cents higher, and soybean oil is up around 20 points. Outside markets are mixed, crude oil futures are down 10 cents/bbl, the Dow Jones index is up 20 points, and the US$ index is down 25 points.

The Buenos Aires Grain Exchange, in a weekly report, did not make any adjustments to Argentina corn or soybean production this week. They estimated corn harvest at 28.2% complete, up from 25.4% last week, and soybean harvest was seen at 77.9% complete, up from 63.7% last week.

While conditions decline during harvest naturally, the amount of the corn crop in the good/excellent category has fallen to just 11%, while the poor/very poor category is at 49%.

The International Grains Council (IGC) on Thursday lowered its estimate of the 2024/25 global corn crop to 1.220 bil mt’s, down 6 mmt’s from its previous forecast. Cuts were seen primarily in Argentina.

Same group also lowered their estimate of the global wheat production forecast by 3 mmt’s to 795 mmt’s, with the biggest reductions coming out of Russia.

Global corn ending stocks were estimated at 281 mmt’s (down 10 mmt’s from previous), soybean ending stocks were estimated at 78 mmt’s (up 3 mmt’s), and wheat ending stocks were estimated at 260 mmt’s (up 1 mmt).

The USDA, in a posted statement, has warned that ag trade with Canada could face disruptions if Canadian rail workers move forward with a planned strike. The strike was set to begin May 22nd but has been delayed due to government intervention.

“If an outage occurs, it would halt rail movements in Canada and could significantly impact US agricultural trade, producers, and consumers,” says the USDA. Canada imported roughly $28.2 bil in US goods in 2023, while being the leading destination for US ethanol.

Barge shipments down the Mississippi River for the week ending May 18th were seen at 710k tons, up from 490k tons in the previous week. Corn shipments were up 26% from last week at 484k tons, and soybean shipments were up 132.2% from last week at 209k tons.

The Republican-led US House of Representatives Ag Committee passed its version of a $1.5 trillion farm spending bill late Thursday night with few Democratic votes. The Bill now has to be reconciled with a Senate bill led by Democrats; without strong bipartisan support, the House version has a slim chance of actually becoming law.

The May Cattle on Feed report will be out after the close this afternoon. Traders see total feedlot herd as of May 1 down 0.8% from last year. Placements in April are seen 5.4% lower y/y, and marketings are seen up 9.3%.

Stock index futures look to close the week lower as rate cut bets continue to wane. Traders continue to see the odds of a September rate cut dropping, with the latest comments from officials signaling a hike was not off the table at this point.

The active weather pattern through the Midwest looks to continue into the weekend; a low-pressure system brings storms and rain to generally the upper Midwest today, while another system has a more Southerly aim Sunday into Monday.

The GFS is wetter to the East through Monday than the EU model, but both see totals of 0.5″ to 4″ through the Midwest into Monday night. Next week looks to be dryer beyond Monday, with another 2–4-day dry window being forecast.

Week two forecasts continue to fluctuate, with the overnight runs diverging on agreement. The EU and GFS models see rains in the central part of the country but are dryer than yesterday’s runs, while the CPC forecast has expanded its wet bias all the way up to the Great Lakes states and the Canadian border.

The Russian/Black Sea wheat region will continue to be mostly dry over the next 10 days. Rains are seen South of the Black Sea, but otherwise miss the primary growing areas. Temps are continuing to see a warmer bias into next week.

The EU model trended hotter in Australia over night, but also trended wetter for almost the whole of the country. Rains will need to show up for the Australian wheat crop.

And the South American forecast is finally beginning to show signs of a change for Southern Brazil. Models are still wet near Rio Grande do Sul in the 10-day period, but the heaviest rains are now seen off the coast.

Argentina has also trended drier, while the cool air that has settled in over the past 10 days is seen returning to more normal levels next week. Brazil continues to have a warmer than average bias.

As a reminder, there will be no markets at the CBOT on Sunday night or Monday morning, with the trade resuming at 7pm Central time Monday evening.

Have a good and safe three-day weekend!

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