Corn futures were 6-8 cents higher overnight, soybeans were up 10-12 cents, and wheat gained 6-8 cents as pre-holiday short covering developed. The US dollar softened while energies and equities were firm.
Today’s Reports: Personal Income Data
- US debt ceiling deal may be close
- Strong US dollar increasing global trade
- Drought expansion predicted for next week
We will likely see elevated managed money and trader positioning during today’s session. The markets are closed next Monday in observance of the Memorial Day Holiday and all three-day weekend tends to elevate position squaring. The Memorial Day break tends to increase this activity as it falls in the midst of the US planting and start of the growing season. While just one extra day will be taken off, it is easy to see a shift in weather outlooks at this time. The market is currently void of risk premium and more outlook models are pointing towards a drier start to the US growing season. While this does not mean we will see crop loss, the combination of historically tight stocks to use ratios, building domestic consumption, oversold technical indicators, and sizable short positions in the grains combine for the potential of a market rally. This does not mean we will see a spike in values, but at least should help limit additional selling pressure at this time. If we start to see wetter forecasts develop this will have just the opposite effect and additional selling could easily follow. It would not be surprising to see more month end positioning start to develop today as well.
Highlights
* Brazil sees elevated bird flu cases
* EU crop estimates keep rising
* Australia starting to turn dry
* El Nino already impacting global production
* Weaker ocean freight to elevate trade
* Brazil farmers pushing sales
* US new crop sales remain minimal
* Livestock producers holding animals longer
* Cheaper grain benefit all processing margins
* Markets closed next Monday
Corn
* Average ECB basis +11 ½ cents
* Average WCB spot basis +42 ¾ cents
* Brazil corn values post new lows
* Total SAM production to be lower
* Some see 4-6 mmt SAM loss from last year
Soybeans
* Average ECB spot basis -3 ¾ cents
* Average WCB basis -29 ¼ cents
* Crush margins continue to firm
* US only has 3 faster planting years
* US stocks/use to remain tight
Grain Commentary: 05.26.23
Corn futures were 6-8 cents higher overnight, soybeans were up 10-12 cents, and wheat gained 6-8 cents as pre-holiday short covering developed. The US dollar softened while energies and equities were firm.
Today’s Reports: Personal Income Data
We will likely see elevated managed money and trader positioning during today’s session. The markets are closed next Monday in observance of the Memorial Day Holiday and all three-day weekend tends to elevate position squaring. The Memorial Day break tends to increase this activity as it falls in the midst of the US planting and start of the growing season. While just one extra day will be taken off, it is easy to see a shift in weather outlooks at this time. The market is currently void of risk premium and more outlook models are pointing towards a drier start to the US growing season. While this does not mean we will see crop loss, the combination of historically tight stocks to use ratios, building domestic consumption, oversold technical indicators, and sizable short positions in the grains combine for the potential of a market rally. This does not mean we will see a spike in values, but at least should help limit additional selling pressure at this time. If we start to see wetter forecasts develop this will have just the opposite effect and additional selling could easily follow. It would not be surprising to see more month end positioning start to develop today as well.
Highlights
* Brazil sees elevated bird flu cases
* EU crop estimates keep rising
* Australia starting to turn dry
* El Nino already impacting global production
* Weaker ocean freight to elevate trade
* Brazil farmers pushing sales
* US new crop sales remain minimal
* Livestock producers holding animals longer
* Cheaper grain benefit all processing margins
* Markets closed next Monday
Corn
* Average ECB basis +11 ½ cents
* Average WCB spot basis +42 ¾ cents
* Brazil corn values post new lows
* Total SAM production to be lower
* Some see 4-6 mmt SAM loss from last year
Soybeans
* Average ECB spot basis -3 ¾ cents
* Average WCB basis -29 ¼ cents
* Crush margins continue to firm
* US only has 3 faster planting years
* US stocks/use to remain tight
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