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Grain Comments: 06-25-2024

Good morning.

Lower overnight markets to start Tuesday as the soy complex gives back some of yesterday’s gains. Funds remain heavily short the grain space for mid-June, even as US Midwest weather has been less than ideal over the last month. We reiterate that Mother Nature is the biggest long-term driver of price, but on the bullish side, the weather scare will have to be big enough to make fund managers nervous about their positions and cause significant short covering. Technically, both old and new crop corn are hovering right above their Spring lows this morning, which are areas that the bull camp needs to see held. Corn futures are trading 4-5 cents lower, soybean futures are trading 2-9 cents lower, and the Chicago wheat market is down 3-5 cents. Products are lower, soybean meal is down $1-3/ton, and soybean oil is down around 20 points. Outside markets are mostly lower, crude oil futures are down 40-50 cents/bbl, the Dow Jones index is down 50 points, and the US$ index is up 10 points.

Data out after the close on Monday included both the CFTC commitment of traders report for the week ending June 18th, as well as the most recent crop progress update.

The CFTC report showed managed money traders were net buyers of 20,817 contracts of corn, net sellers of 30,090 contracts of soybeans, and net sellers of 7,616 contracts of Chicago wheat. Funds are now seen short 191,462 contracts of corn, short 105,970 contracts of soybeans, and short 52,732 contracts of Chicago wheat.

In soy products, funds were sellers of 9,128 contracts of soybean oil, and were buyers of 6,371 contracts of soybean meal. This makes them net-short 84,973 contracts of oil, and net-long 99,279 contracts of meal.

The weekly crop progress update showed corn g/ex ratings as of Sunday down 3% from last week at 69% g/ex. Emergence reached 97%, while silking was seen at 4% in its first update of the season.

At the state level, North Carolina was down 22% in the g/ex category w/w, Ohio was down 13%, and Indiana was down 8%. Kentucky saw a 5% increase in its ratings, while Iowa was up 3% and Missouri was up 2%. Nebraska was the only other state with an increase on the week, coming in up 1%.

Soybean g/ex ratings also declined by 3% over the past week, coming in at 67%. Emergence was up 8% on the week to 90%, while the blooming category came in at 8% in its first reading of the year.

Like corn, North Carolina led the declines with a 27% reduction in the g/ex category, while Indiana dropped 10%, and Ohio dropped 9%. Tennessee saw an 8% increase, while Missouri was up 6%. These were the only two states with improving soy conditions on the week.

For wheat, winter wheat harvest advanced 13% on the week to 40% complete. G/ex conditions were up 3% from last week at 52%. Spring wheat ratings, however, came in at 71% g/ex, which was down 5% from last week. The trade had expected a 1% decline.

Old/new crop soybean spreads have traded out to new highs again this morning, as the global soybean picture for the 2024/25 season continues to show a rather loose balance sheet. Both SN/SU and SN/SX traded out to a 52-cent inverse overnight.

The EU’s Joint Research Centre Monitoring Agricultural Resources (JRC MARS) has lowered its estimate of the 2024 EU soft wheat yield to 5.86 tons/hectare, down from last month’s estimate of 5.92 t/ha. This matches the five-year average.

The same group sees EU rapeseed yields in the coming season declining to 3.16 t/ha, down 0.05 tons from their previous estimate, and just below the five-year average of 3.17 t/ha.

The USDA’s monthly poultry slaughter report for May showed total poultry slaughter was down 2.2% from last year at 5.92 bil lbs. Simultaneously released was the chicken and eggs report for May, which showed US egg production in May was down 2% from last year at 9.1 bil eggs.

The Biden Administration issued a major disaster declaration for Iowa and ordered federal aid to supplement recovery efforts in the counties of Clay, Emmet, Lyon, Plymouth, and Sioux. Damage assessments are continuing in other areas, with additional assistance possible.

AI darling Nvidia has witnessed a three day sell-off of roughly $430 billion after briefly taking over Microsoft last week as the world’s most valuable company. The stock is down nearly 16% since last Thursday’s high but is slightly higher in pre-market trade this morning.

Otherwise, equity markets look to be mostly quiet again today amid a lack of fresh tradable data coming out of the US. Consumer confidence for the month of June is the only notable report on the docket for Tuesday, which economists see coming in 2 points lower than May’s 102 reading.

24-hour precipitation maps show the heaviest rainfall on Monday was focused generally on Northern Wisconsin, with totals of 1-3″ realized. The majority of the remaining Corn Belt was dry save for some scattered showers in the Northwest.

Models continue to see storms for the Eastern Corn Belt tonight into tomorrow, as a cold front moves South out of Canada. The EU is advertising 0.5″-2″ for most all of IN/OH, stretching West into parts of IL/IA/MO through Thursday morning.

High temps reach into the mid/upper 90’s again Tuesday for the Southern Midwest, before more mild temps are seen through the middle of the week. Temps will generally be average to slightly below average then through the weekend.

Warm air is also seen cooling off in Russian wheat areas over the next two weeks, though the models still don’t see very good chances for precipitation here. China/Australia/Brazil remain warm, while Argentina also sees a cooler outlook in the next 15 days.

South American precipitation continues to be limited to areas of Southern Brazil and Uruguay, where rainfall is unwanted. Argentina sees average to slightly below average precipitation, which is good for the newly seeded winter wheat crop.

Have a great day.

 

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