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Grain Comments: 05-28-2024

Good morning.

Markets are mixed at the CBOT to start the last week of May; the grains are higher while soybeans and soybean meal sag. Corn and wheat gapped higher to start Monday evening as the trade continues to price in a smaller Russian wheat crop, as well as a potential decline in US corn acres due to weather. The gaps aren’t open on the charts, but the key for Monday will be whether new buying emerges in wheat above last week’s highs. Corn futures are trading 1-3 cents higher, soybean futures are trading 3-6 cents lower, and the Chicago wheat market is up 1-6 cents. Products are mixed, soybean meal is down $2-3/ton, and soybean oil is up 40-50 points. Outside markets are also mixed, crude oil is trading around $1.10/bbl higher, the Dow Jones index is down 30 points, and the US$ index is down 40 points.

The CFTC Commitment of Traders report for the week ending May 21st showed fund traders in the week were net sellers of 49,991 combined contracts of corn futures/options, buyers of 16,239 combined soybean contracts, and buyers of 3,658 combined contracts of Chicago wheat.

Managed money is now seen net-short 121,162 contracts in corn, net-short 26,426 contracts in soybeans, and net-short 24,593 contracts in Chicago wheat.

In soy products, funds for the week bought 15,291 soybean oil contracts, and bought 1,734 soybean meal contracts. This makes them net-short 46,521 contracts in the oil, while being long 100,944 contracts of meal.

While no longer at the forefront of the trade, private analysts continue to adjust estimates for crops in South America; Datagro on Friday pegged Brazil’s soybean crop at 147.57 mmt’s, down from their previous estimate of 147.96 mmt’s.

For corn, Brazil’s AgRural late last week estimated total corn production for the country at 118.4 mmt’s, while consultancy Safras y Mercado estimated the total corn crop at 123.31 mmt’s. These compared to the USDA at 122.0 mmt’s.

Private Russian firm IKAR over the weekend lowered their estimate of the Russian wheat crop to 81.5 mmt’s, down from their previous estimate of 83.5 mmt’s. They gave a range of 78-84 mmt’s.

And the Russian Grain Union now sees at least 1.5 mil hectares of crop land being damaged by frost, with that number possibly being as much as 2 mil.

The Ukrainian Grain Association cut their estimate of the 2024 grain/oilseed harvest to 74.6 mmt’s, down from 76.1 mil previously. The group cited a reduction in planted area, unfavorable price conditions, and relatively expensive port logistics as reasons for the cut. 2023 harvest was 82.8 mmt’s.

Friday afternoon’s Cattle on Feed report for May showed the feedlot herd at the first of the month was 11.554 mil head, down 0.9% vs last year. Placements in April were seen at 1.656 mil head (down 5.8%), while marketings for April were seen at 1.872 mil head (up 9.8%).

The US Federally inspected beef production in the week ended May 25th was up 1.7% on the week at 516 mil lbs. Pork production at 511 mil lbs. was down 1.3%. YTD beef production is down 2% from last year, while pork production is up 0.2%.

Stock index futures look to see a host of data this week, starting with today’s consumer confidence reading. GDP on Thursday, as well as the PCE price index on Friday, will give traders plenty to chew on by week’s end.

Weekend weather remained active across the Midwest; 72-hour precipitation maps show totals 3-6″ across the Southern Corn Belt, while totals elsewhere ranged generally from 0.1″ to 3″. There were also 60 tornado reports between last Friday and yesterday.

This week looks to be mostly dry for a majority of the Corn Belt, which should help to wrap up planting efforts for a lot of producers. A low-pressure trough brings storms through the mid-section by the weekend, with models seeing the heaviest totals in the West and Southern Plains.

Week-two forecasts have again trended drier over the weekend, which raises confidence as it pertains to a coming pattern shift. Beyond the weekend, both models see an above average chance of drier than normal weather for most of the country into the first week of June.

Temps will be average to below average for a majority of the country this week, before heat returns early next week. The West coast maintains a warmer bias throughout the week, with this air spreading East as the week goes on.

Some positive developments on the international front over the weekend; Russian wheat areas trended warmer and wetter, though still not wet overall. Australia is seen average temp-wise, and above average on precipitation for the next 10 days.

And South America finally sees a let up in rains in the South in the coming week. 10-day precipitation maps have a drier bias for almost the whole of Brazil and Argentina. Temp forecasts have also returned warmer temps to Argentina in the 10-day period, while Brazil keeps its slightly warmer than normal bias.

Have a great day.

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