AM Comments May 3 2024

Posted on May 03 at 06:42

Good morning. Happy Friday. Ag markets are following through to the upside to end the week as fund managers to continue to cover shorts and the weather situation around the world remains less than ideal. The US is too wet for planting, the Black Sea/Russia is hot and dry, Southern Brazil is experiencing torrential flooding, and Argentina has frost concerns with a delayed harvest. Corn futures are trading 3-4 cents higher, soybean futures are trading 5-10 cents higher, and the Chicago wheat market is trading 13-14 cents higher. Soybeans back above $12. Products are mixed, soybean meal is up another $4-5/ton, while soybean oil is down 10-15 points. Outside markets are mostly higher, crude oil futures are up 30 cents/bbl, the Dow Jones index is up 300 points, and the US$ index is down 10 points.

 

Today's Reports: Monthly Nonfarm Payrolls; Monthly Unemployment; CFTC Commitment of Traders

 

  • May deliveries for Friday morning included 441 contracts of corn, 196 contracts of soybeans, 18 contracts of wheat, 146 contracts of soybean meal, and 79 contracts of soybean oil.

 

  • In their weekly crop update, the Buenos Aires Grain Exchange reported soybean conditions at 29% g/ex, down 1% from last week; normal was seen unchanged at 46%, while p/vp was up 1% to 25%. Harvest progress was reported at 36.2% complete.

 

  • Corn conditions were seen at 18% g/ex, up 1% on the week; normal was seen down 1% at 42%, and p/vp was unchanged at 40%. Harvest progress was reported at 22.1% complete. The exchange also trimmed their production forecast to 46.5 mmt's, down from 49.5 in their previous estimate.

 

  • Ahead of this afternoon's CFTC Commitment of traders report, European non-commercial traders bought nearly 67k contracts of MATIF wheat in the past week, and are now seen net long for the first time since last August.

 

  • Census export data for March, released yesterday, showed corn exports up 19.8% vs March of last year at 5.894 mmt's; soybean exports were seen down 2.6% vs last year at 3.054 mmt's. Wheat exports were up 54.2% from last year 2.099 mt's. In soy products, meal exports were up 12.2% y/y, and soybean oil exports were up 671.3% y/y (6k mt's to 45k mt's).

 

  • Private ag company StoneX on Thursday raised their estimate of Brazil's corn crop by 1.1% to 125.6 mmt's. The group cited better than expected yields in both the North and the South as the reason for the increase.

 

  • Same group sees corn exports out of Brazil unchanged at 45 mmt's, while domestic consumption is seen at 84 mmt's. Ending stocks are estimated 10.9% higher than their April estimate at 13.4 mmt's.

 

  • They see the soybean crop at 150.83 mmt's, which would be up slightly from their April estimate, but down nearly 5% from last year; the group did cite likely cuts going forward as heavy rains are expected to damage fields. Ending stocks seen at 3.42 mmt's, up 18.3% from last year.

 

  • Barge shipments down the Mississippi River in the week ending April 27th were down 4.5% from last week at 442k tons. Corn shipments at 320k tons were up 32.2% w/w, while soybean shipments at 97k tons, were down 47%.

 

  • This morning's non-farm payrolls report is expected to show an increase of 243,000 in April, slightly less than the 303,000 added in March. Unemployment is seen unchanged at 3.8%, while annual average earnings growth is forecast at 4.0%.

 

  • Radar again shows light showers overnight and into this morning, this time in the Eastern Corn Belt as opposed to the West. Another system makes its way through the Plains into this weekend, with up to an inch seen for parts of KS and NE. Key will be how much rain falls in Western KS.

 

  • Another low pressure trough then moves into the East by mid-week next week, which will drop temps and bring more potential severe weather. It is past this system that the models have been trying to advertise a pattern shift to more ridging in the East, which would be a drier pattern.

 

  • Locations/amounts are not in good agreement between the two models beyond 5 days, but both continue to show the same active pattern into the middle/end of next week with another two storm systems the next 6 days.

 

  • Brazil continues to experience historic flooding in the far South, with no let up seen in the forecast for at least another week. And Argentina did have an episode of frost in its far Southern growing areas this morning, but damage is not known at this point.

 

  • Have a good and safe weekend!