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Grain Comments: 05-30-2024

Good morning.

More of the same at the CBOT to start Thursday, with wheat futures being the downside leader. It seems the trade has priced in the low end of Russian production and will now see where the crop goes from here. The US harvest should begin in the next two weeks, which will also act to limit the upside in the future’s short term. Elsewhere, the Dow is down another 350 points this morning, which brings its three-day losses to near 1,000 points as of this writing. Corn futures are trading up a penny/down a penny, soybean futures are trading up a penny/down a penny, and the Chicago wheat market is down 5-6 cents. Products are mixed, soybean meal is up $1.50-2.50/ton, and soybean oil is down 70-80 points. Outside markets are lower, crude oil futures are down 20 cents/bbl, the Dow Jones index is down 350 points, and the US$ index is down 20 points.

This morning’s weekly ethanol production report, delayed a day for the holiday, is expected to show daily production for the week ending May 24th in a range of 1.000 to 1.024 mil bbls. Stocks are seen between 23.8 and 24.312 mil bbls.

The weekly export sales report that is typically out on Thursday mornings will also be released a day later this week due to the holiday.

According to data from Ukraine’s ag ministry, grain exports in the month of May are up 2 mmt’s from May of last year. Cumulative exports for the marketing year started July 1 are seen at 46.4 mmt’s, compared to 44.9 mmt’s in the same period last year.

The Indian government Wednesday announced plans to remove a 40% import tax on wheat to encourage purchases for the first time in six years. The move is to replenish reserves and stabilize domestic prices following three years of poor crops.

A Morgan Stanley analyst estimates the soy loss from flooding in Brazil’s South at roughly 5 mmt’s, up slightly from most previous loss estimates. The analyst sees harvest losses of approx. 3 mmt’s, while storage losses total 2 mmt’s.

ConocoPhillips, the top independent producer of gas and oil in the US, reached an agreement Wednesday with Marathon Oil to buy the company for $22.5 bil. Marathon shares were up 9% on Wednesday, while ConocoPhillips was down 4%.

On similar lines, Saudi Arabia is set to potentially announce a landmark secondary share offering in oil giant Aramco later today, pending final approval.

Global equity markets are starting their worst week since mid-April as realization sets in that Fed rate cuts are not likely to occur anytime real soon. Treasury yields are near their highest levels of the year, which also hinders investor confidence.

Rainfall Wednesday was seen on both sides of the country, while the mid-section was left mostly dry. Scattered storms were seen across OH/PA, and also in a line from Western ND down to the Panhandles. A good chunk of Western KS received anywhere from 0.1″ to 3″.

Models continue to advertise two more storm systems over the next 10 days, with the heaviest totals seen in the South/Southeast, as well as the Northern Plains. Temps will be average to below average through this weekend, before warm air moves back in for most of the country by the middle of next week.

Beyond next week, the EU, the GFS and the CPC all see a drier pattern emerging with ridging for the central US. A pocket of the South/Central Plains will see normal to above normal rainfall, while the North and East look to be dry. It is the location of this ridge that will be closely watched by farmers and ag traders.

Both the GFS and the EU continue to trend wetter in the 10-day period for Russian/Black Sea wheat areas, with the EU being the wetter of the two. Both models see temps above too much above average over the same time period.

The EU is cooler/wetter in Australia than the GFS model, but neither are overly threatening. Australia’s weather bureau sees a wetter pattern emerging for the second half of summer, which would be positive for crop development.

And lastly, the South American forecast continues to trend warmer and drier in the 10-day period, which will be welcome. Temps will be seasonally warm in Southern Brazil/Argentina, which will aid with both harvest and drying out from the floods.

Have a great day!

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