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Grain Comments: 07-02-2024

Good morning.

Soybean futures are following through on yesterday’s gains in early trade this morning, with the corn market being in tow and the wheat market slightly lower. Not a lot of groundbreaking information out of Monday afternoon’s crop progress report, which means markets likely continue to chop this week as volume thins ahead of Thursday’s holiday. Traders will be slow to aggressively push the market one way or the other until more is known about the season’s crop potential. Corn futures this morning is trading 2-4 cents higher, soybean futures are 12-15 cents higher, and the Chicago wheat market is down 4-5 cents. Products are higher, soybean meal is up $3-5/ton, and soybean oil is up 60-70 points. Outside markets are mixed, crude oil futures are up 50-70 cents/bbl, the Dow Jones index is down 130 points, and the US$ index is up 10 points. Spot crude oil futures have again made new highs for the move this morning and are now some $12/bbl above the lows made not even a month ago.

Yesterday afternoon’s weekly crop progress report showed a slight deterioration in corn conditions, while soybean conditions held steady on the week. 67% of both the corn and soybean crops are rated g/ex.

At the state level, the best rated corn crops are seen in Pennsylvania (87% g/ex), Nebraska (80% g/ex), and Missouri (78% g/ex). Iowa is rated 73% g/ex, while Illinois and Indiana are both at 65% g/ex.

Best rated soybean crops in Louisiana (83% g/ex), Nebraska (78% g/ex), and Missouri (76% g/ex). Iowa is rated 72% g/ex, while Illinois and Indiana are both rated at 62% g/ex.

Corn silking reached 11%, up from 4% last week, while soybeans blooming increased 12% from last week to 20%. 3% of the soybean crop is setting pods.

The report also showed winter wheat harvest at 54% complete, up from 40% last week, while conditions decreased 1% in the g/ex category to 51%. Spring wheat condition was 72% g/ex, up 1% from last week.

Mexico’s incoming government announced Monday they would be scrapping outgoing President Lopez Obrador’s plan to reduce imports of yellow corn and achieve self-sufficiency in its production according to sources familiar with the matter.

A member of newly elected President Claudia Sheinbaum’s cabinet said the country will focus on maintaining self-sufficiency in white corn production, which is a common food staple in Mexico. Yellow corn is used mostly for animal feed. “Our objective is not to reduce imports, our objective is to produce more,” said the Cabinet member.

The USDA’s monthly fats and oilseeds report, released after the close on Monday, showed soybean crush in the month of May at 191.987 mil bu’s; this was up 8% from April and up 1.4% from May 2023. Same report showed soybean oil stocks at 2.187 bil lbs., which was down 5.4% from April, and down 8.4% from May 2023.

Also, out after the close yesterday was the monthly grain crushing report, which showed corn used for ethanol in May totaled 453.680 mil bu’s; this was up 7.4% from April, and up 3.3% from May 2023. Total corn used in the month at 507.961 mil bu’s was similarly up 7.7% from April, and up 3.0% from May 2023.

The USDA ag attach√© in Brazil lowered their estimate of the 2023/24 soybean crop in the country to 150 mmt’s, citing recent floods in the far South, as well as lower yields across several other states. They also lowered their export forecast to 94 mmt’s, and increased their crush estimate to 55.1 mmt’s. The planted area was increased to 45.8 mil ha’s.

Same group sees 2024/25 soybean production in Brazil totaling 160 mmt’s on 46.3 million hectares of planted area. The big question for next year is whether planted area continues to expand.

Crude oil prices continue to work higher as tensions again increase in the Middle East, and Hurricane Beryl looks to cause destruction in the Caribbean. Beryl is, by date, the earliest ever category 5 storm in the area.

Economists see a further tightening of the US job market being illustrated in this morning’s JOLT’s labor market report, with 7.9 mil job openings expected. Other market happenings Tuesday includes a speech from Fed Chair Jerome Powell.

Rainfall on Monday was again confined to the North and Northwestern Corn Belt, where areas of Eastern NE/Western IA received 1-4″, with some locally heavier amounts. Surrounding states of KS, MO, MN, WI, and the Dakota’s also received anywhere from trace amounts to up to 2″.

Forecast continues to show a mostly cooler/drier bias for the Ohio river valley and the Eastern Corn Belt, while the West remains stuck in the same active pattern through the end of the week. All three of the GFS, the EU, and the CPC models are in good agreement on moisture for the next week.

Week-two forecasts continue to trend drier in the West/Northwest and wetter in the Southeast, as Western US high pressure ridging again returns. Long range forecasts see this ridge progressing back to the East by the middle/end of July, which is the only real area of concern in the current forecast.

Temps are seen slightly warmer in the East today and tomorrow compared to the past few days, before a cold front again brings more mild air in by late week. Most of the Corn Belt sees high temps no more than the mid 80’s into the first part of next week, while night-time lows continue to get into the 60’s.

The only update internationally is that the EU model 10-day precipitation forecast has again trended wetter overnight for the Eastern Black Sea Region, which is raising confidence in its solution. No changes for China or South America from yesterday’s runs.

As a reminder, there will be no markets on Thursday for the July 4th Independence Day holiday. There will also be no overnight markets tomorrow night (Wednesday) or Thursday night, with trade resuming for the day session at 8:30am central time Friday morning. Friday’s close is at the normal 1:20 pm central time.

Have a great day.

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