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Grain Comments: 06-05-2023

Good morning:

Corn dominated overnight trade volume once again and is building a higher high and low on top of Friday’s rally; the trade still has yet to see any real change in a hot and dry U.S. weather pattern. The same persistence remains in the Black Sea arguments—an impasse is sounding likely.

Rain coverage was decent over the weekend with the heaviest action concentrated in the southern Plains as expected, but some decent accumulation was seen in the central Plains and WCB as well, sneaking over for some scattered coverage in the central belt. The overall pattern remains this week with some better amounts possible in the central Midwest; rains hold west in the 6-10 with slightly more varied possibilities during the 11–15-day period, but the overall hot and mostly dry belt trend remains well through mid-month.

Two factors will be key in this week’s trade activity. One will be weather as crops are now starting to get to a point where precipitation is needed. The US has seen dry conditions across the Corn Belt but now is when actual drought conditions are starting to become a factor in price discovery. This is especially with funds short, and the market is void of risk premium. The USDA is predicting record yields on corn and soybeans and if any stress starts to build, we will see these projections come into question. As the week progresses, we will start to see more positioning for the June WASDE report that will be released on Friday the 9th. It is unlikely we will see many changes to the new crop balance sheets that were published in May. We may see some changes to the old crop balance sheets though, mainly on corn and soybeans. Export demand for corn has been less than ideal since the May release and to see another reduction would not come as a surprise. We are also seeing lower ethanol demand. Soybean sales have also slowed in recent weeks, but the loss of business is much less than on corn. Trade will remain focused on old crop stocks to use which is still expected to be in a rationing position on the soy complex.

 

Have a great day!

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