- July corn falls to support at $4:40-4.50; GFS midday weather forecast drier for NC Midwest, wetter Delta/NW Midwest; EU wheat prices correct
- Weaker Chicago prices are noted at midday with corn/wheat pacing the decline. July corn futures dropped to $4.40-4.50 support amid a correction in world wheat values while soybean futures are trying to hold on soy/grain spread unwinding. Traders have been active in securing corn/wheat on the expanding Black Sea drought and selling soybeans on a spread for over a month. End of month profit taking is featured today. The tone of the market is bearish on favourable Central US weather. A weaker Chicago grain close is forecast.
- Rusagrotrans (Russian rail operator) forecast a 2024 Russian wheat crop in a range of 77.5-84.0 million mt at a grain conference in Sochi with drought/frost impacting 40% of the winter wheat crop. Igor Pavensky, the head analyst at Rusagrotrans, estimated 2023/24 wheat exports at 50.5 million mt. No export estimate was offered for the 2024/25 season. The marketplace has digested 2024 Russian wheat crop estimates of 80-82 million mt with the southwest harvest to start in several weeks. Russian interior wheat prices have rallied above 18,000 Rubles.
- Chicago brokers estimate that managed money has sold 6,200 contracts of corn, 4,600 contracts of wheat, and 3,400 contracts of soybeans. In the products, funds have sold 2,900 contracts of soymeal while being flat in soyoil.
- Reuters is reporting that US ethanol in SAF will be nonexistent in 2024, which is largely expected. That is not news. US farmers will be unable to meet the three Biden Administration qualifications for a 50% reduction of carbon production. However, the EPA has promised new measures for ethanol to qualify for SAF in 2025 as the GREET Model is updated. It is hoped that US farmers will have to meet just one of the carbon reduction farming practices of; 1) The use of cover crops, 2) No till farming practices, or 3) Precision fertiliser applications. If true, this allows for a potential broader use of US ethanol in the production of SAF. Yet, we caution that 2024 is an election year and that the outcome of the November election will have an outsized impact on US biofuel regulations.
- US weekly ethanol production expanded to 314 million gallons, up 6% from last year, the largest production since March. US weekly ethanol stocks fell 42 million gallons to 975 million gallons. These stocks were 4% larger than last year. US gasoline consumption gained 1% to 9.15 million barrels/day. US ethanol margins are back in the black amid the recent decline in corn.
- The midday GSF weather forecast is drier across E Iowa, WI, and MI vs the overnight run. Showers/storms look to occur on near daily basis across the E Plains and the Delta with flooding likely across saturated soils of E OK, E TX, AR, LA. Some areas of the W Delta will see 4-6.00” of additional rain. The E Plains front slowly pushes eastward in a broad ridge/trough pattern across North America by mid next week. The NW upper air flow produces near to below normal Midwest temperatures. The extended range GFS weather model is hinting at the formation of a summer ridge, but its exact location is unknown. The models have a Western US lean for the ridge with expansion eastward during July. Pay close attention to extended range EU weather model updates.
- Seeded crops and 10 days of nonthreatening Central US weather is pressuring Chicago values. The soon to accelerate Northern Hemisphere winter wheat harvest will produce a new supply for end users, the key question is the price they will emerge with forward purchases. China priced 4-5 cargoes of Brazilian soybeans on the Chicago break but shows little interest in US new crop purchases. World crop sizes are in decline, but favourable US weather is keeping US yield ideas elevated. We see Chicago weakness into early June.