July corn -3 ¼ at 6.7675
Aug beans -10 ½ at 15.29
The DOW is UP
USD is Down
Crude oil +.35 at 70.40
Overnight grain markets traded lower on rains reaching into portions of the Northern Plains this week although the forecast returns to a hot/dry pattern after this system moves through suggesting only a temporary benefit for the parched crop areas that receive this near term, yet timely relief. Weather is weighing on flat price as well as the bull spreads for corn and soybeans early on despite the ongoing index fund roll through the end of this week. Other news of market significance is limited.
On the calendar tomorrow we will get export sales in the morning and expectations should be muted. This will be followed by the monthly crop report at 11 am cst. The USDA will revise old crop demand on the balance sheet and take another look at Southern Hemisphere crops. The corn balance sheet appears more susceptible to tightening in both the domestic and world carryouts; more so than the soybean S&D for this report and that is reflected in the trade estimates shown below. They will not address new crop production until the 30th with the updated acres in addition to the quarterly stocks report.
In the product trade, both meal and oil are weaker to start and the oil share spread is steady. Oil is easing back from an all-time high in price while meal is testing key near term support against last month’s lows. The rains in the Canadian Prairies that have stretched down into the N Plains are beneficial to the rapeseed crop prospects and are pressuring the rapeseed futures after establishing a new contract high to begin the week. Malaysian palm oil broke sharply closing -4.4%%.
Overnight, the markets were defensive, particularly in new crop positions; by the morning pause, July finished 3 cents lower, Sept 9 cents lower, and Dec 11 cents lower. The market is likely eyeing the radar, where small systems have popped-up in North Dakota, Southern IN/OH, and the SD/NE border, more or less as advertised by forecast models. The same forecasts continue to suggest a smattering of rain at best for the Heart of the Belt, while the 6-10 & 8-14 day outlook maps stay below-normal on precip, so be careful expecting this to be a cure-all? We will get some hard data this morning in the form of the weekly EIA report, and expectations for this one vary widely given recent swings in the data. For our part, we are looking for ethanol production to hold steady or perhaps increase another 1%. Blender demand may retrace 1-2%, as it often does after a major driving holiday (Memorial Day). Residual disappearance should be strong and more than make up for it? We think ethanol stocks will hold steady, or perhaps draw down very slightly. The front-end of the curve was under pressure today, giving back Monday’s gains in the crush. We think most ethanol plants can still earn modest profits in the spot of about 10 c/gal, though that is well below the 40 c/gal seen on recent highs mid-May! 8 AM sales
flashes remain quiet.
Darren, David, and Elizabeth