• HEADLINES: Chicago mixed/mostly lower; Macros weigh; Midday GFS adds rain to US Plains, Central Brazil.

• Chicago ag markets are again mixed with corn firm, wheat struggling amid cheap supplies offered to Egypt and the GFS’s ongoing attempts to add rain to KS. The soy complex stays choppy, with soyoil sustaining modest overnight gains despite weakness in crude. Overall macro input leans negative.

• Crude is testing the lower end of the recently established range at $72, while US equity markets are trading sharply lower on rising concern over regional bank liquidity, following the sale of First Republic Bank over the weekend, and waning job openings coupled with ongoing sector-based layoffs imply a loosening of the labour market. Consensus still points to a 0.25% hike in US benchmark rates Wednesday, but this looks likely be the last of hikes for this cycle. Index funds in the last 12 months have liquidated 400,000 contracts of ag market length. Commodity indexes remain historically deflated when compared to equity market, and key is whether a plateauing of interest rates changes investment flows this summer. The Dow at midday is down 480 points.

• The cheapest wheat offer made to Egypt for Jun/Jul delivery overnight was Russian at $260/mt, 695,000 mt of Russian origin supply was offered at exactly $260, followed closely by Romanian at $263.

• It is clear Egypt and other major importers will continue to source near-term supplies from regions facing abundance, namely Russia/eastern Europe. Egypt’s last purchase in early April was executed at $275/mt, and so Egypt’s purchase today reflects a new, lower price floor in the Russian fob market. Europe and Russia lack major climate threats today, with stable soil moisture levels forecast in key areas of Western Europe into May 10 and with soaking rainfall of 1-2” probable in southern Russia early next week.

• The GFS weather forecast is also improving in Brazil, where better rain chances are offered to Mato Grosso do Sul and Parana, where safrinha corn seeding was most behind schedule, May 9-10. This is too far out to be overly confident, but mid-May rainfall in Central Brazil would be highly welcomed. The GFS forecast in the US, similar to midday Monday, extends heavy rainfall upward of 3-6” into Western Kansas and Nebraska May 10-11. If realised, drought indicators in W Kansas would be cut in half by late month. We view ongoing deeply negative soil moisture anomalies across the Southern and Western Plains as critical, and very close attention will be paid to whether last week’s rain event marks the beginning of a more lasting pattern shift there. The EU model’s release this afternoon is important.

• The midday GFS weather forecast projects a nearly cut-off low pressure trough to swirl around the Central US May 10-13, which triggers a stagnant pattern of heavy rainfall across the Central Plains, Delta and far southern Midwest in the 8-12 day period. Heavy cumulative rainfall will impact all but the far Northern Plains and eastern Midwest. The midday GFS forecast leans cooler, but additional freezing temperatures are not indicated into mid-month

Cheap Russian wheat and aggressive Brazilian corn and soy prices along with improved medium-term Central US forecasts are noted. Markets are oversold, corn and wheat deeply so, but the catalyst needed to spark speculative short covering today is absent. We reiterate that volatility will be the theme of 2023 as markets work to transition from historical tightness to adequate supplies. Mother Nature into August determines whether this occurs – or not.