- HEADLINES: Improving Central US weather pressures Chicago grains; Russian winter wheat weather importance in decline; Central US ridging to be watched.
- Chicago midday values are dull and lower with fund managers coming back to buy oil share as soymeal values decline. The buying of soyoil futures is more related to the drop in soymeal rather than any strong cash market influence. Illinois soyoil basis is trading at $2.50 under Chicago July with the W Midwest soyoil rail basis at $1.50 cents under, the same basis that has prevailed since April. A year ago, rail C IL soyoil was offered at $3.00 cents over July.
- Soymeal/soybeans are weakening on slowing US export demand. China continues to book Brazilian soybeans for August/September which is cutting into US new crop demand. The next level of support rests at $12.00-12.05 basis July beans.
- Corn futures are sagging on improving Central US weather. Mother Nature is in control of Chicago with the key mid-June to late July timeframe to determine US 2024 corn yields. Key support should hold July corn at $4.40-4.50 with high corn crop ratings forecast for next Monday. Yesterday, the IA corn crop was rated 73% good/excellent with IL rated 72% good/excellent on individual state reports on Monday.
- Chicago brokers estimate that managed money has sold 7,700 contracts of corn and 5,200 contracts of soybeans, and 4,600 contracts of soymeal. Managed money has sold a net 900 contracts of wheat and bought 2,900 contracts of soyoil.
- Russian winter wheat crop progress is being discussed with June starting on the weekend. The SW Russian wheat area (North Caucasus and Southern District) accounts for 56% of the Russian winter wheat harvest. The 10-day forecast offers a few light showers, but not enough rain to alter prevailing short soil moisture. Nonetheless, the point is that beyond the middle of June, the importance of SW Russian rainfall is in decline in terms of its ability to help the crop. Wheat will start to change color in mid-June with the drought to date pushing crop maturity. Wheat has been a supply driven rally and the market likely topped either yesterday or will do so in the next week. Thereafter, it is all about demand and at what price do importers/millers step forward and take coverage. Russian spring wheat appears to be receiving enough rain for now for early plant growth.
- Central US crops are largely planted, and the mentality of weather has shifted to “rain makes grain”. The weather forecast in the weeks ahead will drive Chicago prices either up or down, and it is premature to argue that 2024 US summer row crops are made. Climate outlooks from late June into July offer heat, the big question is the mean position of a high-pressure ridge, and will it be located over the Plains or the Western US. The positioning of the ridge will determine rainfall and if a NW upper flow prevails across the Central US.
- The midday GSF weather forecast is drier across the Midwest. Heavy rain looks to drop across the Southern Plains with totals across Eastern Texas and Eastern Oklahoma reaching upwards to 4-6.00”. The southern branch of the jet stream stays strong with flooding to resume across the Gulf Coast States and Western Delta this weekend and early next week. A drier 11-15 day forecast is offered with warming temperatures for the Central US. A high-pressure ridge forms across the Central US on June 7 and progresses eastward into June 13 as a new trough drops south into the NW US. The ridge lacks stability and any Midwest heat will be fleeting. The extended range GFS weather model is hinting at the formation of a summer ridge, but its exact location is still being decided.
- Seeded crops and 10 days of improving Central US weather is pressuring Chicago values. It is Mother Nature who will direct US and world grain values for the next 8 weeks. Late June/July weather is exceptionally important to US corn yield potential. As such, it is premature to be bearish with the US growing season ahead. Tightening global corn exporter stocks of grain makes a record US corn yield a must.