- HEADLINES: Grains, soy weaker at midday amid short-term planting window; GFS weather forecast wetter in s Russia; Soy oil market finding export demand.
- Chicago ag markets are mostly weaker at midday, save for soyoil, as modest weather premium is extracted. The GFS forecast at midday is slightly drier in IA into May 25 and Central US planting should be widespread over the next 2-3 days amid dryness and warming temperatures. The GFS forecast also hints at better rain chances in key areas of southern Russia beyond May 24-25. Scattered showers are offered to Ukraine. This along with unchanged Russian fob prices this morning has triggered another round of profit taking in US and European wheat futures. We would note that an outright pattern change in the Black Sea is not indicated, and it is imperative that the GFS forecast verifies in southern Russia, but wheat is in a full-blown weather market. Volatility is certain.
- Weekly export sales are viewed as mixed, positive for corn, neutral for beans and a bit negative for wheat.
- Corn export sales in the week ending May 9 totalled 30 million bu, vs. 35 million the previous week, but which compares to net cancellations a year ago, as Brazil and Ukraine dominated trade in late spring and summer. Soybean sales were 10 million bu, vs. 16 million the previous week. New crop wheat sales totalled 11 million bu, vs. 15 million the previous week and slightly below the same week a year ago for the first time since early March.
- For their respective market years to date, the US has sold 1,905 million bu, up 27% year on year, 1,565 million bu of soybeans, down 16%, and 120 million bu of new crop wheat, up 66% from last year.
- Soy oil has been the bright spot this week, demand-wise, amid April’s decline in NOPA stocks and as export demand is being found. Soyoil export sales in the week ending May 9 totalled 20 million lbs, have been above 15 million lbs in each of the last 4 weeks, and already US export sales account for 83% of USDA’s annual forecast. Rapeseed oil in northern Europe is quoted at $0.48 per pound, and so US soyoil remains competitive globally. The oil market is expected to add premium into summer amid seasonally rising US fuel consumption and as the US market must keep exports minimal.
- Spot WTI crude at midday is up $0.44/barrel at $79.10. The US dollar is slightly stronger. The Dow is up another 65 points at another record high.
- The midday GFS weather forecast is less intense with projected rainfall in IA but is otherwise unchanged from this morning’s solution. Meaningful precipitation into Sun-Mon will be isolated to the Delta/Southeast, TN and KY. Near daily showers return to the E Plains and Midwest May 21-27. We note the GFS and EU models remain at odds over the placement of heavy rain, with the GFS favouring the N Plains and Upper Midwest and the EU favouring the southern Midwest. Wet weather lies ahead, but confidence is low as to where planting delays resume. A normal/above normal temperature pattern is forecast into late month.
- The overhang of 2 billion bu old crop US corn stocks has kept resistance in place at 200-day moving averages. World wheat demand has not yet shifted from Russia to others, and the market must see/feel balance sheet changes to sustain rallies. Yet, EU/Black Sea weather risk remains massive, and work maintains US corn’s export potential is bright longer term. It is soy demand that remains concerning amid China’s ongoing absence from the US market in a new crop position. We would currently expect both the bulls and bears to find opportunity this summer.