- HEADLINES: Chicago adds premium amid adverse global climate patterns; GFS weather forecast wet in Midwest.
- Chicago ag markets are higher at midday, again led by wheat as short covering worldwide occurs amid even larger uncertainty over Black Sea production following recent frost/freeze events in Russia. Whether crops can recover from recent chills is uncertain, but what is known is that regular soaking rain is needed. However, meaningful precipitation in the Black Sea into May 25 will be confined to far southern Russia. A majority of winter crop areas of Ukraine and Russia will be left arid.
- Another 2-8” of rain will drop on Rio Grande do Sul in southern Brazil in the next 10 days, and it is damage to infrastructure and the associated challenges to processing capacity that is noteworthy. Roughly a fifth of Brazilian soy crush plants reside in RGDS.
- And yet more soaking rain is forecast in France, where corn seeding last Friday was only 54% complete, vs. 80+% on average. Winter wheat in France is rated at 64% good/excellent, vs. 63% the previous week but against 94% a year ago in early May.
- Weather issues outside the US have forced the covering of sizeable, short positions in late April/early May, but work suggests a net even position in corn, soy and Chicago wheat lies on the horizon. Managed funds last Tuesday were net short a combined 186,000 contracts of corn, soy and wheat combined, and at midday Monday we estimate funds’ combined net short at 160-165,000 contracts. The risk of further covering remains in place, but in the last three weeks managed funds have trimmed their short exposure by 60%.
- US corn export inspections in the week ending May 9 totalled 37 million bu, vs. 51 million the previous week. Soy inspections were 15 million bu vs. 13 million the previous week. Wheat inspections totalled 13.5 million bu, vs. 12.5 million the previous week. For their respective marketing years to date, exporters have shipped 1,336 million bu, up 30% year on year, 1,453 million bu of soy, down 18% and 648 million bu of wheat, down 6%. USDA’s old crop US export forecasts are about right.
- The midday GFS weather forecast is more expansive with 10-day rainfall across the eastern Midwest and mid-South. Moderate totals of 1-2” are indicated into the weekend across OK, MO, IL, IN, KY, and the entirety of the Gulf/Delta region. A second event is forecast next Tues-Thurs, with soaking rainfall of 2-3” offered to NE and across IL, IN, OH and KY. Confidence in details beyond 4-5 days is low, but key is where national corn and soy seeding progress exists as of Sunday. Our bet is that regional challenges persist across the southeast and far eastern Midwest. Water availability certainly won’t be an issue in June.
- Decent physical wheat and soy export shipments along with uncertainty, still more questions than answers, surrounding Black Sea wheat and S American row crop production lean positive. Yet, we note that markets tend to peak seasonally by early/mid-June without adverse Central US weather. The Wheat Quality Council’s tour of Kansas kicks off Tuesday morning.