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Grain Comments: 06-07-2023

Good morning:

Corn is pushing back towards moving highs but looks like it might need more fundamental help to leg up further; traders are not expecting bullish aid from the report Friday, with carry outs seen higher across the board.

National winter wheat ratings are putting in an impressive counter-seasonal spring run, now up a full ten points from its late-April low of 26% good/excellent, in just six weeks. Beneficial rains have sat over the Plains for weeks, breaking a long-standing drought; major HRW production state Kansas remains at a paltry 12% g/ex (though that’s up two points this week at least), compared to 29% last year (an ugly crop in its own right) and the 42% five-year average. That average was 45% g/ex before last year’s weak crop.

Rain remained light and scattered over the past 24 hours but are lingering in the ECB this morning; five-day coverage looks strong for all but Minnesota, still heaviest in the central/southern Plains. Extended maps are now more varied both temperature and precipitation wise, with NWS forecasts in particular bringing better rain chances to the Midwest in both the 6-10- & 8-14-day periods.

It is no secret the United States has suffered from poor corn demand all marketing year. Not only have export sales trailed expectations, but ethanol use is also off from initial projections. We are now starting to see soybean exports slow as Brazil continues to push out its record crop. Given the size of the soybean crop coming out of Brazil we may see this pressure right up to the next US harvest and potentially beyond. The question now is what it will take to see demand increase. The easiest way would be through crop loss in other parts of the globe, but this does not appear likely for another year. This means it will take price to bring the US additional export business. What is concerning is that even with price pressure the United States has suffered from export cancellations rather than additional sales. This is evidence of the declining market share that we have been witnessing for the past several years. Growing geopolitical difference are also limiting demand for US offers, mainly with the world’s leading importer China. Several countries are also forming new bilateral trade partnerships that the US is not a part of.

 

Have a great day!

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