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Grain Comments: 07-03-2024

Good morning.

Ag markets are again mixed in the overnight trade, as volume this morning has begun to taper off from recent days for the holiday. Wednesday’s trade looks to again be choppy, with weather forecasts through the end of the month continuing to be the prevailing theme for corn and soybean traders. Corn futures are currently at or near multi-year lows, and it will take some sort of adverse weather development to get a rally started with funds continuing to add shorts. Corn futures this morning are trading 1-2 cents lower, soybean futures are trading 3-6 cents higher, and the Chicago wheat market is up a penny. Products are higher, again led by bean oil; soybean meal is trading $1-2/ton higher, and soybean oil is up another 40-50 points. The new overnight high on the August contract as of this writing is 47.68. Outside markets are mixed, crude oil futures are up 10-20 cents/bbl, the Dow Jones index is down 30 points, and the US$ index is down 10 points. The S&P on Tuesday closed above 5,500 for the first time ever and remains above this level so far this morning.

This morning’s weekly ethanol production report is expected to show daily production for the week ending June 28th in a range of 1.030-1.058 mil bbls, while stocks are seen between 23.150-23.423 mil bbls. Both figures are seen slightly below recent weeks.

Brazilian agribusiness consultancy Agroconsult sees corn harvest out of the country in the 2023/24 season at 126.5 mmt’s, down 10.7% from last year, but up nearly 4% from the current USDA estimate of 122.0 mmt’s.

The group sees planted area down 6.4% from last year at 21.4 mil hectares. They also estimate exports at 42.1 mmt’s, which would be down 23% from the 2022/23 season.

The same group also estimated 2024/25 soybean area at 46 mil hectares, which would be down from this year’s 46.4 mil ha’s. If realized, this would be the first year-over-year decline in soy area since 2006. Despite the smaller planted area, the group still sees production next year rebounding to 170 mmt’s, which would be a record.

Luiz Noto, COFCO International’s new CEO for grains and oilseeds in Brazil, said Tuesday that the firm would begin operations at its new terminal in Santos in the first half of 2025. He also said by the end of 2026 the company’s export capacity was expected to increase from 4.5 mmt’s to 14 mmt’s.

Argentina looks set to ship its first corn cargo to China in more than 15 years, as bilateral ag trade continues to expand between the two countries. Following an agreement on sanitary requirements last year, Argentina completed steps for final approval of corn exports a few weeks ago and has now begun shipping grain to Beijing.

According to the Minneapolis Grain Exchange (MGEX), stocks of hard spring wheat stored in Minnesota and Wisconsin warehouses were down 5.6% from last year at 10.954 mil bu’s as of June 30th. Stocks were also down 76k bu from the previous week.

Stock index futures will see a flurry of data on Wednesday before breaking the holiday; multiple employment gauges will be seen following yesterday’s JOLTs data, while durable goods/services and monthly trade balance updates are also on the docket.

The Fed is also set to release its meeting minutes from the June FOMC meeting, which economists will be closely watching for any signs that a rate cut may occur sooner than the currently predicted December timeframe.

Weather forecasts continue to fluctuate in regard to exact precipitation amounts/locations over the next week but continue to offer the same general pattern. Ridge riding storms continue to provide active weather for the Northwestern Corn Belt, with another 1-3″ seen in the last 24 hours for areas of N MO, E IA, W IL, and S WI.

Areas of N MO saw the heaviest rainfall totals yesterday, with some local areas receiving upwards of 6-8″. Radar data this morning shows storms again moving through this area and stretching into S IL through Wednesday.

Pattern looks to remain active into the weekend and the first part of next week, with both the EU and the GFS models seeing anywhere from 0.5-5″ for generally the Eastern two/thirds of the US over the next week. The West stays dry under the high-pressure ridge.

Week-two forecasts did not see much change, with the models still seeing a generally wetter bias for the South/Southeast, while the North/Northwest look to be in a drier bias. Heat is seen returning at the end of the week-two period, though temps will still be warmer in the West than the East.

Short-term, temps in the Central US look to be average to slightly below average over the next week, while the West coast stays well above average. Southern California sees highs on either side of 110 degrees Fahrenheit for the next week, while lows don’t get much below 80.

As a reminder, there will be no markets tomorrow for the July 4th Independence Day holiday. There will also be no overnight markets tonight or tomorrow 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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