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Grain Comments: 07-01-2024

Good morning.

Markets are mixed/lower to start the holiday shortened week at the CBOT. Corn and soybean futures tried to rally overnight but failed, while both are having inside days so far on the charts following Friday’s wide-ranging session. The USDA gave the trade an acreage number to work with for the rest of the summer, but the other part of the production equation (yield) is in the hands of Mother Nature. Next up for tradable data to the ag markets will be this afternoon’s crop progress update; after last week’s decline in ratings, farmers and market participants will be curious to see whether conditions declined further or stabilized in the last seven days. Corn futures are trading 2-3 cents lower, soybean futures are trading either side unchanged, and the Chicago wheat market is also trading either side unchanged. Products are mixed, soybean meal is down $1/ton, and soybean oil is up around 70 points. Outside markets are mixed, crude oil futures are up 40-50 cents/bbl, the Dow Jones index is up 100 points, and the US$ index is down 20 points. Gap lower open for the $ index last night.

Friday afternoon’s CFTC commitment of trader’s report showed that for the week ending June 25th, managed money traders were sellers of a combined 86,204 contracts of corn futures/options, sellers of a combined 23,693 contracts of soybean futures/options, and sellers of a combined 17,755 contracts of Chicago wheat futures/options.

This makes managed money net-short 277,666 contracts of corn, net-short 129,663 contracts of soybeans, and net-short 70,487 contracts of Chicago wheat. Of note, this was the largest week of managed money selling in corn since the week of May 2nd, 2023, when funds sold just under 103k contracts.

In soy products, funds were sellers of 23,510 contracts of soybean oil, and were sellers of 11,912 contracts of soybean meal. This makes them net-short 108,483 contracts of soybean oil, and net-long 87,367 contracts of soybean meal.

Of note, the fund net-short position in corn is record large for that particular week of June; and the fund net-long position in soybean meal is also record large for that particular week.

USDA Friday estimated corn planted acres at 91.48 mil vs 94.64 last year and 90.04 in March. June 1 stocks were seen at 4.993 bil bu vs 4.103 last year. 61% of this is located on farms compared to 54% last year.

The same group estimated soybean planted acres at 86.10 mil vs 83.60 last year and 86.51 in March. June 1 stocks were seen at 970 mil bu vs 796 last year. 48% of these were located on farms compared to 41% last year.

The trade sees US soybean crush in the month of May coming in at 193.85 mil bu’s in this afternoon’s monthly fats and oilseeds report from the USDA. This would be up 9.1% from the April reading, and up 2.4% from May of last year.

Soy oil stocks are estimated at 2.214 bil lbs. as of May 31st, which would be down 4.2% from last month’s reading, and down 7.2% from May 31 of last year. NOPA estimated May crush at 183.625 mil bu, while oil stocks were seen at 1.724 bil lbs. The report is out at 2pm central time on Monday.

According to the Rosario Board of Trade, Argentine farmers sold just 87k mt’s of soybeans per day in June, down 51% from the 177k tons sold per day in May. The board cited declining global soy prices, as well as a focus on corn sales as reasons for the decline.

India’s weather department says the country received 11% less rainfall in June compared to average, as the monsoon season came to a premature end at mid-month.

The US federally inspected beef production in the week ending June 29th was down 1.9% from last week at 516 mil lbs. Pork production on the week was unchanged at 522 mil lbs. YTD beef production is down 1.6%, while pork production is up 1.1%.

Financial markets look to start the week mostly quiet, as a lot of the weekend news was political in nature; the far-right National Rally party won the first round of parliamentary elections in France, will the Biden administration spent the weekend pushing back against calls for him to drop out of this year’s election due to his poor showing in last week’s debate.

The Supreme Court is also expected to make a ruling later on Monday on former President Donald Trump’s bid for immunity in a federal criminal case involving his efforts to overturn the 2020 election.

Otherwise, equity markets this week will see JOLTs jobs data on Tuesday, while the normal weekly jobs report will be a day early on Wednesday due to the holiday. National payrolls will also be out this week on Friday.

Weekend weather was mostly dry across the Northern half of the Midwest, while the East Coast all the way through the Southwest saw scattered storms/showers. Satellite data shows rainfall totals of 0.1″-2″ scattered through the Plains and Southeast, while the Northeast saw a broader 1-3″.

The pattern looks to remain active this week for the Northwestern Corn Belt; the EU model sees 1.5-2.5″ for areas of N MO/IA/MN/WI through Friday night, while the GFS model sees similar totals but has them slightly farther South and West into IL.

A cold front brought cooler temps to most of the country over the weekend, and the models see a cooler bias now for this week than what was offered to end last week; high temps for most of NE 1/4 of the US don’t reach 80 degrees Fahrenheit on Monday, while highs for the rest of the week are seen in the upper 70’s to mid-80’s.

Warm air stays confined mostly to the South/Southeast this week, where highs will be in the mid/upper 90’s, and even stretch into triple digits.

Extended range forecasts for the second week of July moderated slightly on heat over the weekend, but also trended drier in the Northern half of the Corn Belt. This will need monitoring this week.

As a reminder, there will be no markets on Thursday for the July 4th Independence Day holiday. There will also be no overnight markets Wednesday night or Thursday night, with trade resuming for the day session at 8:30am central time Friday morning.

Have a great day.

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