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Grain Comments: 06-26-2024

Good morning.

Ag futures are higher to start Wednesday as the early week selling pressure has abated for the time being. Today and tomorrow likely feature position squaring across the ag space, with Friday’s data from the USDA historically having a noted impact on price direction. Nobody wants to be caught too long or too short going into one of the more important data days of the Summer. Corn futures are trading 2-3 cents higher, soybean futures are trading 3-13 cents higher, and the Chicago wheat market is up 1-2 cents. The products are firm, soybean meal is up $1-5/ton, and soybean oil is trading 30-40 points higher. Outside markets are mostly higher as well, crude oil futures are up 50-60 cents/bbl, the Dow Jones index is down 90 points, and the US$ index is up 35 points. Spreads also continue to stay active, as old/new crop soybean spreads have again pushed out to new highs early this morning, up around 9 cents.

This morning’s weekly ethanol production report for the week ending June 21st is expected to show daily production in a range of 1.056-1.077 mil bbls, which would be up slightly from last week. Potential exists for production to come in lower than expected due to flooding causing plant shutdowns.

The USDA’s cold storage report for June, released late Tuesday, showed total red meat supplies in freezers as of May 31 at 929.67 mil lbs.; this was down 3% from the May reading, and down 5% from same month last year.

Total pounds of beef in freezers was down 3% on the month and down marginally from last year; frozen pork supplies were also down 3% m/m, and down 9% from last year; and stocks of pork bellies came in 7% lower on the month, and 14% lower than last year.

Statistics Canada is set to release its latest acreage estimates for the country tomorrow morning at 7:30am central time; the trade sees wheat area at 27.2 mil acres vs 27.0 in their March estimate and sees canola area at 21.5 mil acres vs 21.4 mil in March.

The USDA’s quarterly hogs and pigs report, due Thursday afternoon, is expected to show the US hog herd as of June 1 at 74.44 mil head, up 1.2% from last year. Hogs kept for breeding are seen down 2.3% y/y, while market hogs are seen up 1.5% y/y.

The Iowa Utilities Board on Tuesday announced initial approval for Summit Carbon Solutions’ proposed pipeline to run through 29 counties in the state of IA. The approval is a step in the right direction for Summit, who is two years behind on the project due to landowner opposition, as well as regulatory hurdles.

The company has said it needs approval from just three of the five proposed Midwest states to move ahead with the project, with IA being one of them. ND and SD are the other two states where approval is still pending.

Equity markets look to start stronger on Wednesday, bolstered by the EV sector, as automaker Rivian Automotive yesterday received up to a $5 billion cash infusion from Volkswagen.

The joint venture will see an initial $1 billion investment from VW, with up to $4 bil more over time. In exchange, VW will get access to Rivian’s tech for use in its own EV’s and will also get a partner to develop “next-gen” battery-powered vehicles and software.

And markets in the EU also started higher at mid-week after comments from an ECB policy maker hinted at possibly two more rate cuts coming still this year; Governing Council member Olli Rehn said expectations for two further cuts this year were “reasonable”.

Satellite data shows 24-hour rainfall totals of 0.1″-3″ for wide sections NE/IA/MO/IL stretching all the way to IN/MI/OH. Rain was lighter/more scattered further to the East, while local areas received more than 3″.

Storms look to again impact the Central Corn Belt today into night, with another round of storms taking a more Northerly track into the weekend. Both the EU and the GFS are slightly drier and further West with moisture through the end of the week than what was offered yesterday, seeing 0.5″ to 2″ with the heavier amounts likely in IA/MO.

Week-two forecasts continue to stay wet through the mid-section of the US, with dryness noted in the NW and the SE. On the temp side, models continue to advertise a SE US ridge in place for the first third of July, which keeps temps above average.

Short range temp forecasts see highs for much of the Corn Belt topping out in the low/mid 80’s on Wednesday, which will be a welcome change for crops that have had heat stress over the past 10 days. The far South stays hot, but otherwise temps are seen average to slightly below average into early next week.

Global forecasts from the EU model are again mostly unchanged from yesterday’s runs. Russian wheat areas and the Black Sea region see more mild temps over the next 10 days, with heat confined further West, yet moisture remains lacking.

China sees better rainfall chances in the North in the 10-day period, which is a development that will need monitoring. Temps here continue to be much above average.

For South America, Argentina remains cool and mostly dry, while Brazil remains warm and mostly dry. Storms in/around Uruguay are seen moving further East out into the Atlantic in the 10-day period, which will again be welcomed.

Have a great day.

 

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