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Grain Comments: 06-03-2024

Good morning.

The first overnight session of the new month has seen a bit of a mixed bag on price action so far; wheat futures are higher, getting back some of late last week’s losses, while the soy complex is lower, and corn is caught in the middle. The Midwest looks to have a drier bias this week, which producers say is welcome and should help crops that have started out in wetter than desired conditions in some areas. And this afternoon’s crop progress update will give us the season’s first look at corn condition ratings, which the trade assumes will be above average. Corn futures are trading around a penny lower, soybean futures are down 7-9 cents, and the Chicago wheat market is up 8-9 cents. Products are lower, soybean meal is down $2-3/ton, and soybean oil is down 50 points. Outside markets are mixed/quiet to start the week; crude oil futures are up 10 cents/bbl, the Dow Jones index is down 10 points, and the US$ index is down 5 points.

China’s COFCO International landed its first shipment of deforestation-free soybeans late last week, marking what the industry sees as a milestone for a country that has in the past prioritized price over sustainability in its farm imports.

Friday afternoon’s CFTC Commitment of Traders report showed that for the week ending May 28th, fund traders were buyers of 12,208 contracts of soybeans, while being sellers of 12,315 contracts of corn, and sellers of 838 contracts of Chicago wheat.

Managed money fund traders are now seen net-short 133,477 contracts of corn, net-short 14,218 contracts of soybeans, and net-short 25,431 contracts of Chicago wheat.

In soy products, managed money bought 4,674 contracts of soybean oil, and bought 17,338 contracts of soybean meal. This makes them net-short 41,844 contracts of oil, and net-long 118,282 contracts of soybean meal.

As of May 27th, French soft wheat was rated 61% g/ex; this was down 2% from the previous week. Corn planting in the country has reached 85%, up 8% on the week.

The USDA will release its monthly Fats and Oilseeds report, as well as the monthly Grain Crushings report, this afternoon at 2pm central time. Analysts see April soy crush at 175.5 mil bu, down 13.9% from March, and down 6.1% from April 2023.

Soy oil stocks as of April 30th are seen at 2.229 bil lbs., which would be down 5.9% from the end of March, and down 12.2% from the end of April 2023. Analysts said processor downtime for seasonal maintenance and repairs slashed crushing rates during April.

A Rabobank analyst sees Australia’s wheat crop at 27.4 mmt’s in the 2024/25 season, up 5.7% from last year. He also sees exports out of the country reaching 19.8 mmt’s according to an article out Monday.

Consultancy Strategie Grains sees the EU’s rapeseed output decreasing by some 10% from last year due to wet weather in France and frosts in central Europe.

The US federally inspected beef production in the week ending June 1 was seen at 516 mil lbs., up 1.7% from last week. Pork production was seen at 511 mil lbs., down 1.3%. YTD beef production is down 2%, while pork production is up 0.2%.

Parts of the river Rhine in Germany were closed to cargo shipping on Monday after heavy rains caused water levels to rise, according to navigation authorities. The high-water levels leave insufficient overhead space to sail under bridges.

Claudia Sheinbaum has been elected as the first female president of Mexico after a landslide victory. The peso was lower on the news, as investors have concerns over meddling in the economy due to the ruling Morena party having a ‘supermajority’ in the Senate.

OPEC+ announced plans over the weekend to extend production cuts well into 2025, as the group seeks to shore up the market amid tepid demand growth and rising US production.

The weekend saw scattered rainfall across almost the whole of the Midwest. Generally speaking, totals were heavier in the West and lighter in the East, while the South/Delta again got pounded with 2-6″. W KS also picked up good rains which should be beneficial to crops in this area.

The heaviest totals across the Corn Belt were witnessed in NE/MN, where totals generally ranged from 1-4″. Some local areas saw upwards of 5-7″.

Forecasts see scattered storms across mainly the Northern Corn Belt this week, while most of the Midwest looks to trend drier. This will be a welcome development following weeks of wet weather, and amid a lack of extreme heat.

Models continue to see ridging in the West starting mid-week this week, which will bring cooler/drier weather to most of the Corn Belt. Ridge-riding storms will impact areas along the ridge’s Northern edge, which makes its exact location important.

Forecasts trended warmer over the weekend for Russian wheat areas, while the EU continues to be the wetter of the two in this area. But even the EU model was slightly drier than was seen at the end of last week.

Minimal updates for South America; almost the entirety of Argentina and Brazil will be dry for the next 10 days, save for areas in the far North, while temps look to run some 5-10 degrees Celsius above average in S Brazil/N Argentina.

Have a great day.

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