- HEADLINES: Wheat rallies hard with resistance at $7-7.25 July Chicago; Corn to follow planting progress with most looking for 70% finished; GFS weather forecast stays wet for the Midwest/Delta.
- Chicago futures are sharply higher at midday with the grains leading the advance. July Chicago wheat has rallied to a daily gain of 35 cents, the largest one-day rally since July of 2023, when the Russian’s were backing out of the Black Sea Grain deal. Corn/soybeans have followed wheat with concern over excessively wet Central US weather, a deepening Black Sea drought and that WASDE will cut S American corn crops again in June due to corn stunt disease in Argentina and the early withdrawal of the Brazilian monsoon.
- Managed money has been active buyers since the opening as funds cover net short grain positions. Amid worrisome world weather and the broadening Russian war in Ukraine and the attack on the key Russian export port of Novo, Chicago is adding risk premium to price. We look for a sharply higher close with the nearby upside price target in July wheat being $7.00-7.25, July corn at $4.75-4.90, and July soybeans $12.65-12.80.
- Chicago brokers estimate that funds have bought 7,300 contracts of wheat, 10,200 contracts of corn, and 7,800 contracts of soybeans. In the products, funds have bought 3,900 contracts of soymeal and 6,600 contracts of soyoil. Spot Chicago soyoil futures have rallied above the 50-day moving average and it will be interesting to see if the market can close above $0.4647/lb. We would also like to remind readers that the May options expire on Friday, which is causing some delta buying of futures today.
- US export inspections for the week ending May 16 were 47.7 million bu of corn, 6.8 million bu of soybeans, and 7.5 million bu of wheat. For their respective crop years to date, the US has shipped out 1,386 million bu of corn (up 309 million or 29%), 656.6 million bu of wheat (down 48 million or 7%), and 1,460 million bu of US soybeans (down 311 million or 17%). The US soybean export pace argues for a final of 1,675 million bu, 25 million bu below the May WASDE estimate.
- 2024 US corn seedings are being debated with producer surveys suggesting a 1-1.5-million-acre shift from corn into other crops, namely soybeans in the June USDA Final Plantings report. Last Friday, the Nutrien CEO indicated that US farmers would seed 3 million acres less corn; that appears to be too large as of today. However, if wet weather were to continue across the Central US into June, a 3-million-acre corn seeding loss becomes likely. US Prevent Plant acres will be increasing but will not be defined until late summer. The point today is that a seeding shift from corn into soybeans is occurring due to wet weather. The drop in corn seeding tightens US 2024/25 US corn end stocks below 1,600 million bu.
- The midday GFS weather forecast is drier in KS/NE but otherwise consistent with the morning run. Near daily showers exist this week with heavy rain targeting MO, AR, IL, MN. The forecast models have been willing to shift the areas of heavy rain south and east, but there is no hint of a lengthy period of drier weather until the closing days of May, which is too far out for any forecast confidence. One storm system is pushing through the Midwest today, with another due midweek and a third on the holiday weekend. There could be a few dry days after May 28 with another storm system targeting the Midwest on June 1-2. The overall upper flow stays active with migration of the jet stream northward into the Midwest during June.
- There are numerous weather concerns, Russian, Ukraine and Australian dryness and excessive Central US and Western European rain. Wheat is the crop at the biggest production risk with at least 15 million mt lost due to adverse weather. Â However, a decline in US 2024 corn seeding opens the upside in feedgrain prices. And soybeans are supported by short bought end users and the narrowing basis bids between the US Gulf/Brazil/Argentina. July soybeans above $12.70 are overdone nearby but China is said to be asking for offers on new crop US soybeans. Chicago breaks will be well supported.