Monday, May 20, 2024
Closing Markets: Corn: +8 old & new. Beans: +20 old & +14 new. Wheat: +38.
Market Recap:
Sharply higher trade was seen at the CBOT on Monday, with prices closing in the green pretty much across the board in the ag space. Global weather concerns continue to lead to both short covering and new buying, with soybean open interest increasing nearly 11,000 contracts during Monday's trade. Along with this, wheat futures again added war premium to begin the new week as Ukraine launched a missile strike on the Russian export facility at Novorossiysk over the weekend.
Products were higher, July bean meal closed at 374.10, up $5.30/ton, and July bean oil closed at 46.32, up 1.05. Outside day higher for meal, while oil traded its highest level since the middle of April. Livestock markets were mixed, June live cattle closed at 181.47, up 42 cents, August feeders closed at 258.47, down $1.37, and June hogs closed at 96.92, up 42 cents. Similar trends to the end of last week with cattle making new highs for the move and hogs making new lows for their move. Outside markets are mostly lower, crude oil futures are down 20-30 cents/bbl, the Dow Jones index is down 200 points, and the US$ index is up 15 points. Of note, the S&P and the NASDAQ are both trading higher on the day.
Spreads were mostly firmer, corn spreads traded a half cent lower in the CN/CU but a quarter cent to a penny stronger elsewhere, while soybean spreads traded generally 1-6 cents higher. SN/SU made new highs at 28 cents.
How markets open back up this evening, and whether today's rally can be held on to, will largely be a product of this afternoon's planting progress update. Traders see US corn planting at 67% complete and see soybean planting at 51% complete. These would be increases of 18% and 16% respectively from last week. Corn would still be behind the five-year average of 71%, while soybeans would be just above the five-year average of 49%. A year ago, this week the US was 81% planted on corn and 66% planted on soybeans. Trade is also looking for Spring wheat planting to come in at 76% complete this afternoon, up from 61% last week, while winter wheat conditions in the good/excellent category are seen increasing 1% from last week to 51%.
This morning's weekly export inspection report showed corn loadings for the week that were above trade expectations, but soybean and wheat totals that were rather disappointing. Corn inspections for the week ending May 16th totaled 1.211 mmt's, compared with trade guesses of 900k-1.20 mil mt's. Cumulative pace is up 29% on last year. Soybean inspections were seen at 184k mt's, compared with trade guesses of 200k-425k mt's. Baring revisions to this number next week, this was a marketing year low. Cumulative pace is 18% behind last year. And wheat inspections were seen at 206k mt's, compared with trade guesses of 300k-500k mt's. While not the lowest total of the marketing year, this was the lowest total since last November. Cumulative pace is 7% behind last year.
According to Brazilian hog farmer lobby ACSURS, it is estimated that hog farmers in Rio Grande do Sul lost roughly 12,600 animals in the recent flooding. After two weeks of compiling data, President of the lobby Valdecir Folador said some 30 farms were affected, including those who supplied pigs to global food processing giants BRF and JBS. The total hog population in the state is somewhere around 5 million, meaning roughly only 0.3% of the total herd had been lost. Folador did question though whether companies would see indirect losses in the future due to supply chain disruptions that cut access to food and water, which led to lower animal weights.
Not a lot of updates at mid-day on the situation in Iran. It is interesting to note the number of leaders of different nations that have either died, been killed, or had assassinations attempted on them in the last several months. Unlike the US, President Raisi was not in the highest seat of power in Iran, which belongs to Supreme Leader Ayatollah Ali Khamenei. The Supreme Leader is acting commander-in-chief of the military and has the final say on foreign policy; an endeavor that is largely defined by confrontation with the US and Israel. However, the killing of the both the President and the foreign minister is still a big deal, especially with the tensions in the wider Middle East at decade's high levels already. In a statement, the Supreme Leader said Iran should hold an election to find Raisi's replacement in the next 50 days.
The US Midwest weather pattern continues to be too wet for another week. Scattered storms have dotted the Western and Northern Corn Belt on Monday, with more rain seen for these areas Tuesday/Wednesday and again Friday/Saturday. Planting progress will be highly localized with the rain being scattered in nature and not one big system. Both the EU and GFS models have drier biases in the week two period, but confidence this far out remains low. The pattern shift models are attempting to bring in for the first part of June is the same shift they incorrectly tried to forecast for mid-May just a couple weeks ago. Temperatures have a warmer bias for the Eastern half of the US through the end of the week and into the week, while the West stays mostly cooler than normal.
Again, not a lot of change globally at midday as well. Russian/Black Sea wheat areas see a slightly warmer bias over the next 10 days than what has been had recently, but still have below normal chances at meaningful precipitation. Australia has also turned dryer in the 10-day period, which adds another country to the list of global wheat producers who are experiencing less than ideal weather. And the situation in South America remains unchanged as well. Paraguay/Uruguay/Southern Brazil continue to see flooding rains, while Central Brazil is dry. Temps are seasonally average in North/Central Brazil, above average in Eastern/Southeastern Brazil, and well below average through the whole of Argentina.
Global weather concerns look to continue to garner much of the market's attention in the short term.
Have a great evening!
Chelsey White
Emery Manager & Originator:: Topflight Grain Cooperative, Inc.
593 Emery Rd :: Maroa, IL 61756
Phone:: 217-794-2240
E-Mail:: cwhite@tfgrain.com
Web:: www.topflightgrain.com
This material should be construed as market commentary, merely observing economic, political and/or market conditions, and not intended to refer to any trading strategy, promotional element or quality of service provided by Topflight Grain Cooperative, Inc. Topflight Grain is not responsible for any redistribution of this material by third parties, or any trading decisions taken by persons not intended to view this material. Information contained herein was obtained from sources believed to be reliable but is not guaranteed as to its accuracy. Contact Topflight Grains designated personnel for specific trading advice to meet your trading preferences. These materials represent the opinions and viewpoints of the author, and do not necessarily reflect the viewpoints and trading strategies employed by Topflight Grain Cooperative, Inc.
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