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Grain Comments: 06-13-2024

Good morning.

Ag futures are quiet to start Thursday morning as yesterday’s USDA update did little to alter pre-existing trends in grain and soy markets. Traders will be back to watching weather forecasts after this morning’s Conab update on Brazil crop sizes. Like yesterday’s WASDE report, the trade isn’t looking for a lot of surprises out of this update – but recent adverse weather in the Southern part of the country has opened the door to possible surprise adjustments. Corn futures are trading 2-3 cents higher, soybean futures are trading either side of unchanged, and the Chicago wheat market is up 3-4 cents. Products are mixed, soybean meal is up $1-2/ton, and soybean oil is down 20-30 points. Outside markets are mixed as well, crude oil futures are down 50-60 cents/bbl, the Dow Jones index is down 140 points, and the US$ index is up 30 points. The S&P and the NASDAQ are both higher this morning.

Conab’s June crop report will be the main data piece on the docket for Thursday; traders expect the report to show a slightly smaller soybean estimate from last month at 146.98 mmt’s, while their corn production estimate is expected to increase to 112.64 mmt’s.

This morning’s weekly export sales report for the week ending June 6th is expected to show old crop corn sales in a range of 700k-1.25 mil mt’s, old crop soybean sales in a range of 150k-550k mt’s, and old crop wheat sales in a range of (200k)-100k mt’s.

New crop corn and soybean sales are both seen between 0 and 200,000 mt’s, while new crop wheat sales are seen between 250k-600k mt’s.

According to a statement released yesterday, avian influenza was detected in a dairy cattle herd in Sioux County, IA. This comes following an outbreak at an egg-laying chicken farm in the same county at the end of May.

Argentina’s oilseed union SOEA decided to cancel the labor strike that was planned to start today. The union announced last week it had planned to strike as soon as the Senate began debates on President Milei’s reform package, which includes changes to some labor regulations.

Government officials asked the union to forego the strike, and SOEA Secretary General Daniel Succi said they were simply “complying with the order.”

As it pertains to the debates on the reform bill, the Senate approved the omnibus bill in a second round of razor-thin voting; the vice President broke a 36-36 tie to allow approval. However, additional income tax legislation was rejected and sent back to the lower house.

Analysis firm Strategie Grains trimmed their forecast of the EU 2024/25 wheat crop on Wednesday; the group lowered their production estimate from 123.5 mmt’s last month, to 121.8 mmt’s.

Same group sees Russian wheat production between 78 and 80 mmt’s, down from their previous estimate of 89.9 mmt’s, citing late frosts and drought. USDA yesterday pegged the crop at 83 mmt’s.

Mexico’s government sees corn production totaling roughly 25.15 mmt’s this year, down 9% from last year. White corn production, which makes up roughly 85% of total production, is seen falling 10% compared to last year.

Officials say more than three fourths of the country faced moderate to exceptional drought conditions, while disease and pests also had an inverse affect. Sinaloa, the country’s number one white corn producing state, is expected to see production cut by nearly 30% this year.

Stock index futures will be keyed Thursday by this morning’s PPI data, following another day of record closes in both the S&P and the NASDAQ. Data is expected to show a 0.1% increase in May, vs April’s 0.5% increase. Weekly jobless data will also be out this morning.

Though the central bank effectively pushed rate cuts out all the way to December, traders are still pricing in a roughly 65% chance of a quarter-point cut in September, and full expect a cut by the November meeting.

Weather models are slightly farther to the West with moisture in the coming week, but otherwise continue to offer the same general pattern. A storm system brings moisture to the Northern Midwest and Great Lakes region today into early Friday morning, before a mostly dry weekend is seen for the Eastern Corn Belt.

High temps in cattle country today will reach into triple digits, while most of the Mississippi River Valley sees highs in the low to mid 90’s. Heat lingers through the weekend and into next week, before a low-pressure trough brings cooler air back into the Northwest.

Week-two forecasts also trended wetter in the West overnight, though moisture further out continues to favor the Northern half of the country as ridge-riding storms slide across the Northern half of the high-pressure ridge.

A pattern shift looks apparent for Russian wheat areas, which will be welcome by producers there. The overnight EU model has again trended wetter, though Southern areas are still seen with more scattered showers as opposed to the North. Temps stay hot.

Again, little change for the South American forecast; a band of heavy rain impacts areas of Southern Brazil and Uruguay over the next week to 10 days, while the remainder of Brazil is dry. Argentina sees average to slightly above average moisture.

Heat is seen abating slightly beyond 5 days, but temps will continue to run above average at least into the end of next week.

Have a great day.

 

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