• HEADLINES: USDA May report non-bearish to slightly positive, Chicago grains rally sharply; Russian 2024 wheat crop at 88 million mt, Brazilian 2025 soybean crop at massive 169 million mt.

• The USDA May WASDE and NASS production report was positive. The USDA did not offer any glaring bearish surprises and Chicago markets are back to trading US and world weather. WASDE forecast US 2024/25 corn end stocks at 2,102 million bu, 100 million bu above the current crop year using a record US corn yield of 181 bushels/acre. Such stocks were lower than traders expected on export increases of 50 million bu in old and 100 million bu in new.

• Even with the record corn yield, US 2024 corn production is forecast to be down 482 million bu due to smaller seeded acres. And wet Central US weather threatens to further delay the last 30-40% seeding of the 2024 corn crop.

• WASDE cut their estimate of 2024 Brazilian corn crop to 122 million mt (down 2 million), and Argentina to 53 million mt (down 2 million). We continue to look for additional cuts in S American corn production that can raise 2024/25 US corn exports to 2,300-2,400 million bu. This will pull 2024/25 US corn end stocks below 2,000 million bu in June. The WASDE report highlighted the corn price risk as being centred on “yield”.

• WASDE forecast that 2023/24 US soybean end stocks at 340 million bu, unchanged from April as exports and crush were held steady at 1,700 million bu and 2,300 million bu, respectively. The average farmgate price was projected at $12.55/bu.

• 2024/25 US soybean end stocks were forecast to rise to 445 million bu on a yield of 52.0 bushels/acre. The 2024/25 US soybean crush rate was raised to 2,425 million bu (up 125 million) with exports pegged at 1,825 million bu. The average cash price is forecast at $11.20/bu forecasting a season range for November soybeans of $10.75-12.50. Brazil’s old crop soybean production was dropped by 1 million to 154 million mt while Argentina was left at 50 million mt. It is interesting to note that next year, WASDE forecast that Brazil would harvest 169 million mt of soybeans with China’s soybean imports rising to 109 million mt. The ballooning in 2024/25 world soybean end stocks to 128 million mt is due to Brazil’s massive increase of 15 million. This casts a longer-term bearish profile.

• Wheat data is neutral to slightly bullish. NASS estimates US winter wheat production at 1,278 million bu, up 30 million year on year amid HRW yield recovery and less abandonment, but also 30 million below the trade’s average guess. It is a good but not great HRW crop, while SRW yields correct slightly from 2023’s all-time records. All wheat production is pegged at 1,858 million bu, vs. USDA’s Outlook Forum guess of 1,900 million. US wheat end stocks are projected to rise 78 million bu to 766 million. We see no major issues with USDA’s first 2024/25 US balance sheet, and its exports, and so EU/Black Sea weather, that drive meaningful changes moving forward.

• Major exporter wheat production in 2024/25 is estimated at 386 million mt, vs. 394 in 2023/24. This assumes a Russian crop of 88 and total European output of 132. We expect EU production closer to 126-128 million mt, and a Russian crop of 82-85 is reasonable amid recent frosts and if regular soaking rain fails to develop prior to late May. Already USDA numbers features major exporter wheat stocks/use of 13.3%, the second lowest on record and down sharply from the current year. A new elevated price plateau has been found. EU/Black Sea weather is critical over the next 30 days.

• The soy outlook leans bearish on rallies amid adequate oil stocks, the arrival of Argentine meal exports this summer and as Brazil floods the market with supply in Q1 2025 assuming normal weather. Upside risk remains present in global grain markets. A record US corn yield is needed to prevent a decently sized contraction in US stocks. The world needs winter wheat acreage expansion in autumn 2024.

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