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Grain Comments: 06-04-2024

Good morning.

Monday’s selling has spilled over into Tuesday as prices across the commodity space are again lower. Crude oil is down another $1.30/bbl this morning, putting it roughly $8 off the highs scored just four trading sessions ago. And the US corn crop is off to one of the better starts in recent years, which along with ongoing broader macro themes looks to keep the upside in prices relatively limited at this point. Choppy trade likely persists until more is known about US 2024 summer weather. Corn futures are trading 1-2 cents lower, soybean futures are trading either side of unchanged, and the Chicago wheat market is down 2-3 cents. Products are lower, soybean meal is down around 50 cents/ton, and soybean oil is down 10 points. Outside markets are lower, crude oil futures are down around $1.30/bbl, the Dow Jones index is down 150 points, and the US$ index is up 15 points.

Monday afternoon’s weekly crop progress report showed corn planting at 91% complete, while the initial condition ratings showed 75% of the crop rated good/excellent. This is the sixth best start to the corn crop in the last 20 years, and the highest since 2021. Emergence was 74%.

At the state level in the g/ex category, Illinois is starting this year 22% better than 2023 at 72%, Michigan is 30% better at 76%, Missouri (66%) and Ohio (84%) are up 20%, and Nebraska (80%) and South Dakota (82%) are up 17%. Iowa is up just 1% at 73% g/ex.

Soybeans were seen 78% planted as of Sunday, while emergence was at 55%. Condition ratings will start for the soybean crop next week.

On the wheat side, winter wheat was seen at 49% in the g/ex category, up 1% from last week. Heading was seen at 83%, while harvest was seen at 6% complete. Spring wheat was estimated to be 94% planted, with 78% of the crop emerging and 74% of the crop rated g/ex.

Private ag consultancy StoneX lowered their estimate of Brazil’s second corn crop on Monday to 93.5 mmt’s, down 3.9% from their previous estimate. They estimated the total corn crop at 121.75 mmt’s, down from 125.6 mmt’s previously.

Same group sees the Brazil soybean crop at 149 mmt’s; this down 1.2% from previous estimate, mostly due to losses caused by flooding in Rio Grande do Sul.

According to comments from the CIARA-CEC chamber of oilseed producers and grain exporters on Monday, Argentine grain exporters brought in just $2.612 bil in May, down 37% from same month last year.

Sources from the chamber said the figures reflect the “new foreign exchange regime for exports in place since December 2023, international prices, the impact of weather on the pace of corn and soybean harvest, and the farmer’s terms of trade.”

The trading arm of Cofco International Ltd., China’s largest food company, is looking to sell its last Chicago grain terminal according to sources familiar with the matter. The move comes following Cofco’s unloading of its Milwaukee terminal last year.

Stock index futures and equity markets on Tuesday will be given guidance by this morning’s monthly job openings report. Economists see the report showing a drop in job openings, as the labor market likely stayed tight.

Stock markets in India were sharply lower on Monday, as initial tallies showed Prime Minister Narendra Modi’s ruling party was struggling to win a majority of seats in national elections. Exit polls showed he was on pace for a landslide victory.

The country’s NSE Nifty 50 index was down as much as 8.5%, which is the biggest single day slide in more than four years.

Storms look to be moving through the South/Southeast this morning, with a broader low pressure trough bringing storms and rainfall farther to the North on Wednesday. The EU model is slightly drier over the next 48 hours than previously, with totals of just 0.5″ to 1″ forecast for most of the Eastern Corn Belt.

Week two forecasts continue to also trend drier, with all three of the GFS, the EU, and the CPC models in good agreement. Temps in the West begin warming today and tomorrow, with highs reaching the mid-100’s by the end of the week.

The East will be average to below average temp-wise over the next week. The GFS is showing a return to cooler air in the West and warmer in the East in the 10–15-day period, which will need monitoring.

The EU model is again trying to trend moderately wetter for Russian wheat areas East of the Black Sea, but the GFS won’t come onboard and remains dry. No update to the temp outlook, with temps seen some 10-15 degrees F above average over the next 10 days.

Have a great day.

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