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06/13/2024 Non-Event WASDE Dialed In; Crop Ratings Again the Key Driver Going Forward

By The Commstock Report
On the Grains Grains are mixed in overnight trade thus far. As of 6am corn and wheat were firm with soybeans weak. As it turns out yesterday’s WASDE had few changes from May and proved little more than a “placeholder” for the July report after USDA gets a look at the June Acreage report and more evidence from actual yield results on South American crops.   Ending stocks at the global level were lower for corn, wheat and soybeans but no more than expected. As for South America, they didn’t lower corn estimates for Brazil or Argentina at all. They left Argentina’s soybean estimate unchanged and only cut 1 million tonnes from their Brazilian estimate, far shy of the 2.7 MMT cut expected.   They did cut the wheat crop estimates for Russia and Ukraine by 6.5 MMT total and their combined exports by 5 million, however – in open defiance of Russian claims their crop losses to drought and frost will have no impact on exports. Wheat futures tumbled anyway, even though USDA did cut U.S. ending stocks slightly instead of the slight increase expected and raised the average farm price forecast by 50 cents (to 6.50) from last…
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06/12/2024 Grains Mixed Ahead of Today’s Reports with a Few Wildcards in Trade Expectations

By The Commstock Report
On the Grains Grains are mixed in overnight trade heading into the June Crop Report and WASDE updates due at 11am. As of 6am corn and beans are firm but wheat prices are soft. Corn is getting support from growing expectations that the June 28 Acreage Report may show fewer planted acres than March intentions. Even though there's also expectations bean acreage could be higher, beans are getting support from a second flash sale of beans to China yesterday and ideas that Brazilian plans to tax bean exports more severely has put U.S. beans in competition for their business again. Turning to expectations for today's changes in the new crop corn ending stocks outlook for the U.S. the average estimate is for very little change from last month but a very wide 415 million bu. range among those estimates. The "swing factor" is a combination of expectations for changes in old crop ending stocks and whether or not USDA might pare back its yield estimate for new crop. Worth noting is that there are actually two sets of trade estimates, one for where analysts expect us to end up and the other for what they actually expect from USDA this…
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06/11/2024 Grains Mixed as Trade Absorbs Mixed Results from Crop Progress Report

By The Commstock Report
On the Grains Grains are mixed in early trade. As of 6am all were a few cents either side of unchanged. Yesterday's action was remarkable and encouraging only in the sense that both corn and beans managed to close higher and not be dragged down by the freefall we're seeing in wheat. The latter was blindsided by the sudden withdrawal of Turkey from imports for four months. They not only accounted for 20% of Russia's exports but 22% of Ukraine's wheat exports as well and basically neutralized the market impact of falling crop estimates for both those countries. After the close we got the weekly Crop Progress report with the second set of crop ratings for corn and spring wheat and the initial set for soybeans. Looking at corn first, the portion rated good-to-excellent dropped a point, to 74%, but pretty much matching expectations and 13 points over last year. Just 5% rated poor to very poor, up a point from last week but still less than last year at 8% P/VP. Corn emerged is at 85%, a point better than average but 6 points behind last year. Planting progress came in at 95%, a point lower than expected but…
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06/10/2024 Grain Outlook Subject to Lots of “Moving Parts” in Fundamentals

By The Commstock Report
On the Grains Grains are mixed in overnight trade thus far. As of 6am corn and beans are firmer but wheat is lower, led by KC wheat due to harvest pressure. All three wheats cratered on Friday with the unexpected announcement by Turkey that it would halt wheat imports for four months. They are Russia’s largest customer and that knocked the legs out from under the reports of falling Russian production estimates.   Today will start out with weekly export inspections but trade focus may be more on the weather forecast for rains to end and heat to build up into next week and the balance of June for most of the Corn Belt. That’s most likely the reason we’re seeing firmer prices for corn and beans despite the pressure on wheat and Friday’s Commitments of Traders report showing that funds had resumed aggressive selling in everything except spring wheat where they continued to build a net long position.   This content is for members only.Log In Register
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06/07/2024 Markets Dialing In Further Improvement in Crop Outlook Prematurely

By The Commstock Report
On the Grains Grains are all weak in overnight trade with wheat leading losses in double-digits as of 6am. Yesterday’s nice gains in corn and beans were fueled in part by a big slowdown in sales by Brazilian farmers. The Lula administration has provisionally enacted a new tax plan aimed at raising $29 billion in new revenue that could raise farm taxes in Brazil by roughly 20%. Sources say that has many Brazilian farmers holding onto their grain instead of selling it into the world export market until they see if Lula’s tax proposals are approved by their Congress.   On the export front, yesterday’s weekly sales were near the high end of the expected range for corn and beyond the high end for new crop wheat. At the current pace, USDA’s corn export forecast could be raised. Soybean sales, on the other hand, came in near the low end of the expected range.   This content is for members only.Log In Register
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06/06/2024 Even Market Bears Running Low on Grit after Relentless Selling?

By The Commstock Report
On the Grains Grains are mixed in overnight trade. As of 6am corn and beans are firm but wheat still on the soft side. Bullish news is still hard to come by, but after seven straight lower closes even the bears are running low on grit. The weather outlook is drier for the next seven days and that pretty much is exactly what the crop needs with many regions too wet. To put numbers on it, Monday’s Crop Progress report said topsoil moisture was in “surplus” for 18% of the country vs. 5% last year and 14% of the nation’s subsoil was in “surplus” vs. 3% last year.   Yet another Russian firm, SoveEcon, has cut its estimate of that country’s wheat production to 80.7 million tonnes vs. USDA’s current peg at 88 million and we’ve got other sources saying it may well be as low as 76 MMT. It still looks like India will resume wheat imports to rebuild stocks. Yet U.S. wheat prices remain overpriced internationally and harvest is upon us. Further, there are new reports that China will rebuild its stocks from domestic supplies and remain stingy on imports.   On the Grains Grains are mixed in…
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06/05/2024 Hope that Strong Crop Ratings Now Dialed In, But Long-term Charts Still Look Grim

By The Commstock Report
On the Grains Grains are mixed in overnight trade. As of 6am corn and wheat are soft with beans steady to firm. Given the considerably better-than-expected initial crop condition ratings for corn released Monday afternoon. The market weakness suffered since has been modest, suggesting the plentiful moisture and benign June weather forecast may be mostly "dialed in" after breaking so hard last week before the report even came out. Drought still plagues Mexico, our biggest corn customer and production prospects are uncertain for Russia, Ukraine and China as well. The technical picture for corn, on the other hand, looks pretty grim, particularly on the weekly chart. Recent action has broken the uptrend line demarking the "spring rally" from late-February lows after testing, but failing to breach the upper Bollinger band. The weekly chart shows that after barely entering the "overbought" zone on the Stochastics oscillator, that indicator has decidedly turned lower and reopened downside risk to 420 and even 400 if that can't hold. Trade focusing is on possible changes from March intentions that we might see in the acreage mix between corn and beans when the June Acreage report comes out late this month with most expecting some switch…
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06/04/2024 Initial Crop Condition Ratings Beat Expectations That Were Already High

By The Commstock Report
On the Grains Grains are generally weaker in overnight trade as of 6am. Given yesterday's hard sell-off, you'd never know the day started with weekly export inspections that came in at the upper end of expectations for corn, wheat and soybeans alike. In fact, corn inspections beat the top end of the range by a considerable margin. But traders have concluded big crop potential in the offing for this season and a big break in crude oil prices bled into grain markets as well. Crude oil sold off hard yesterday despite the weekend OPEC+ decision to extend current production cuts through September. That seems counter-intuitive, but apparently many traders thought they might have announced deeper cuts to boost global prices, so when they didn't it was deemed bearish. The potential for increased output from October forward was all that mattered. After the close we got the weekly Crop Progress report with initial crop condition ratings for corn and spring wheat, but not for soybeans. For corn, it came in at 75% good to excellent, 5 points better than expected and 21 points better than last year. It matched 2021 for the best initial ratings in six years. Only 4% was rated…
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06/03/2024 Why This Afternoon’s Crop Progress Report Will Be So Closely Watched

By The Commstock Report
On the Grains Soybeans are lower in overnight trade to start the week and corn is weak as well. Today's Crop Progress report is expected to show both crops in the wrap-up phase of planting and soil moisture conditions vastly improved over last year. Wheat is bucking the trend, however. Friday's Commitments of Traders report showed funds had resumed selling in corn and Chicago wheat but continued to lighten up on their net short position in KC wheat and continued to build a net long position in MGE wheat, perhaps for fundamental as well as technical reasons. The new weather outlook for June could explain. It shows benign weather for most of the corn and soybean regions. As for wheat, however, it shows June to be hotter and drier than normal over most of the spring wheat area of the country and above normal rain for the southern Plains with HRW harvest underway and the potential to do more harm than good at this point. Wheat futures struggled late last week on reports some rain was falling in Russia and that officials claimed it would still make 85 MMT, down only 3 million from USDA's current estimate. Our Ukrainian grain broker contact,…
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05/31/2024 Trade Attention Will Rapidly Focus on First Crop Condition Readings and New Long-term Weather Outlooks Due Next Week.

By The Commstock Report
On the Grains Grain prices are firm in overnight trade, even though the CPC updated the Drought Monitor yesterday showing the drought footprint has dramatically declined in the Midwest with only 5% of corn area still in some degree of drought and just 3% of soybean area. Surprisingly, drought worsened some in central and western KS and the OK panhandle with 25% of HRW winter wheat still considered in some degree of drought but only 3% of spring wheat. The PNW is the only other region with significant drought conditions. Weekly EIA stats were encouraging for ethanol. Production came in higher than expected for an 8-week high and yet ethanol stocks came in lower than expected, the lowest in 23 weeks in fact. Monday's Crop Progress report due after markets close will get heavy scrutiny. Not only will it likely show planting in the final stages for corn and beans, they will resume weekly crop condition ratings and traders will zoom right in on comparisons with last year's initial ratings to get a "feel" for yield potential relative to last year. We should also see the reports commence on wheat harvest progress. Next week we'll also get an update on…
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