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Grain Comments: 06-05-2024

Good morning.

Mixed/light volume has been the story in the overnight trade to start Wednesday. Following two lower days to start the week, markets are trying to stabilize at mid-week, though new buying seems to be slow to enter the space. Open interest has been going up in corn futures since last week, which, if anything, signals managed money is potentially re-entering some of their short position. Above average crop conditions and a non-threatening forecast have led to an extraction of risk premium in the last several trading sessions. Corn futures are 1-2 cents lower, soybean futures are 1-2 cents higher, and the Chicago wheat market is down a penny. Products are mixed, soybean meal is up around 50 cents/ton, and soybean oil is down 10 points. Outside markets are mostly higher, crude oil futures are up 10-20 cents/bbl, the Dow Jones index is up 50 points, and the US$ index is up 25 points.

This morning’s weekly ethanol production report is expected to show daily production for the week ending May 31st in a range of 1.068-1.073 mil bbls. Stocks are seen between 23.207-23.407 mil bbls. Both figures would be similar to last week.

The EU’s soft wheat exports through June 2nd are down roughly 5% from the same period last year at 28.2 mmt’s; barley exports are seen 13% lower y/y at 5.44 mmt’s. Corn imports are seen at 17.1 mmt’s, down 32% from last year.

India’s ag ministry on Tuesday slightly raised their estimate of the 2024 wheat crop to 112.9 mmt’s, up slightly from their previous estimate of 112.0, and up from last year’s production total of 110.6 mmt’s. USDA currently pegs the crop at 114 mmt’s.

Indian corn production is seen at 35.67 mmt’s, oilseed production is seen at 39.59 mmt’s, cotton production is estimated at 32.52 mil bales, and sugar cane production is seen at 442.52 mmt’s.

Russian Ag Minister Oksana Lut said at a government meeting with President Putin that he still sees grain output from the country at 132 mmt’s, with exports seen at 60 mmt’s for the coming season.

Roughly three-fourths of economists polled expect a rate cut out of the Bank of Canada on Wednesday, while money markets see a better than 80% chance of such a cut.

Most in the financial world also expect a rate cut from the European Central Bank on Thursday, meaning four of the G7 economies would be in ‘easing mode’.

Other financial news includes a potential rival to the NYSE gaining traction in Texas. A group backed by BlackRock and Citadel Securities, among others, has raised roughly $120 mil, and plans to file registration documents with the SEC later this year for the ‘Texas Stock Exchange’.

Radar shows storms moving East through the heart of the Midwest this morning, with a line from NE Texas all the way up through Wisconsin and into the Great Lakes. The models this morning is overall drier than what was offered yesterday for the coming 24 hours.

The EU model sees rainfall totals of just 0.1″ to1″ for most of the Eastern Corn Belt through early Thursday morning. The GFS is marginally wetter but both models are fairly similar in how they see coming precipitation on Wednesday.

Following the exit of today’s storms, a 48-hour dry period emerges before another small disturbance is seen for the South/Southeast this weekend. Week-two forecasts continue to see a drier pattern as a Western US ridge provides a shift from the active Spring weather we’ve had to date.

High temps reach the low/mid 100’s in parts of CA/NM/AZ starting today and look to remain some 10-20 degrees F above average at least through the middle of next week. The East will see average to slightly below average temps during this time.

Like a broken record, it is the duration of this high-pressure ridge and how far North it stretches that is of the utmost importance to Midwest producers. The GFS continues to show cooler air moving back into the Pacific Northwest in the 10–15-day period, but confidence this far out remains low.

Internationally, same story for Russian wheat areas and the Eastern Black Sea region; models are trying to bring rains in for the Southern growing regions, but most of the primary production area remains in a drier bias while temps are much above average.

Far Southern Argentina has trended wetter overnight, but otherwise no change for South America as well. Brazil looks to be dry over the coming 10 days save for areas in/around the Amazon in the far North, while temps will be some 10-15 degrees F above avg in the Central and Southern parts of the country.

The South American weather pattern looks to aid with the remaining harvest but will be adverse to Argentine farmers who are trying to get their winter wheat crop in the ground. Big picture wise, La Niña does not bode well for Argentine producers.

Have a great day.

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