- HEADLINES: Chicago values decline with USDA report in focus; GFS weather forecast wetter for the S Midwest, Delta, and Gulf states; No surprises in us weekly ethanol production.
- Chicago futures are lower on early speculative selling and lack of midday fund buying. In the first few minutes of the morning reopening, large sell orders were executed for 8,000 contracts of soybeans, 4,500 contracts of corn, and 3,500 contracts of soymeal. This selling set the tone for the day.
- Soyoil is the only Chicago grain that is higher at midday as managed money covers a large net short position and there is growing awareness that Midwest cash soyoil is priced below tallow/imported used cooking oil. Spot demand for soyoil is rebounding on biodiesel seasonal considerations. Soyoil has priced itself into a larger biofuel feedstock share with meal prices under pressure as Argentine export offers become more numerous/aggressive.
- Chicago brokers report that managed money has sold 4,200 contracts of wheat. 7,400 contracts of corn, and 4,100 contracts of soybeans. In the soy products, funds have sold 3,800 contracts of soymeal while buying 2,100 contracts of soyoil. There is new speculative interest in the oil share spread below 37%.
- Brazil’s CONAB will revise their estimates of 2024 corn and soybean crops on May 14 (Tuesday). Normally CONAB releases their estimates prior to the USDA report, but this month it will be several days later. When CONAB released its crop forecast later in February, it appeared that Chicago had a larger market reaction. We will watch closely to see if that occurs again.
- Egypt’s GASC has yet to announce a decision on its June wheat tender. However, there were 20 offers of wheat to GASC with included origins being Bulgaria, Russia, and France. The cheapest wheat offer was from Russia which including credit for 270 days and elevation costs, works back to around $226-227/mt fob ex the Black Sea. The tender confirms rising Russian wheat prices, and that quoted price offers of $227/mt fob are correct.
- US weekly ethanol production rose to 284 million gallons, down 6 million gallons from last week, but equal to last year.
- The midday GFS weather forecast is wetter for the Gulf states and most of the Delta for the next 10 days. Midwest planting opportunities will be present from today into May 15, before widespread rain develops across the Southern and Central US late next Wednesday. The rain is creeping forwards (and westward) in the forecast with excessive totals to hit the Gulf States. Corn/soy crops in the Gulf States are struggling with too much soil moisture already. Three new systems will exacerbate flooding. This area must be closely followed with near to above normal rain in the 11–15-day period.
- Chicago values are sagging as traders ponder a likely bearish USDA Crop report on Friday. The managed money short covering rally has ended with traders expecting that Plains HWR wheat yields will be larger than private analyst forecasts. WASDE will also likely be conservative in trimming S American crop sizes. Funds are estimated to be long more than 70,000 contracts of soymeal on their early week buying spree while the Chicago wheat short is down to less than 20,000 contracts. We look for sagging Chicago values into Friday’s USDA report.