CONAB lowers bean production and raises corn.

Grain futures were softer overnight, while soybeans were firm ahead of this morning’s CONAB report out of Brazil. CONAB estimated the Brazilian crop at 122.4 MMTs while raising corn production to 215.6 MMTs. The numbers were in line with early estimates, but the corn crop is still an overall record large winter Brazilian crop and will depend on the weather for the next 6-8 weeks. Acute dryness is starting to become a problem across NC Brazil which is starting to raise yield concerns.

The index roll starts today when funds start rolling out of any remaining May futures contracts into July or even forward to the new crop. This expectation over the past week has pressured the May/July corn and soybean spreads. However, cash-basis levels remain strong and are likely to rise into late April as Midwest farmers focus their efforts on planting. As typical, spring highs occur when farmers are in the field, with early May the typical optimum window for price highs.

Yesterday the Federal Reserve released their minutes from their March policy meeting, which put pressure again on stock index futures, with the US dollar parking at new calendar year highs of just under 100.00. If it were not for the Ukrainian war and the need for old crop supplies from anywhere but the Black Sea region, this would typically be a bearish scenario for US grain values. But as it is, the US will be the last choice of available supplies as South American bean supplies dry up for availability towards the end of May.

Reuters is reporting that the EPA will soon announce a decision on the 69 small refinery waivers that are still pending. In December, the EPA offered a proposal to reject all 65 pending applications. It’s expected the EPA will act similarly to the prevailing 2022 applications.

This morning, US weather shows a potent low-pressure trough pulling to the Great Lakes with widely scattered showers and even snow. Illinois, the remainder of E Midwest, received .25-1.24” of rain yesterday, adding to already surplus soil moisture. The rest of the Central US was dry with high temps ranging from 40s-to 60s. The central and southern Plain’s drought continues to worsen amid the lack of moisture. A strong jet stream and a series of storm systems will continue to press eastward across the N Plains and the Midwest over the next two weeks. Heavy snow will blanket Eastern North Dakota and Minnesota with accumulations up to 18” in spot localities. The central and southern plains hold arid weather trends with little rain for the drought areas of HRW wheat into April 20.

Live cattle futures found support for the spot June contract just under 133.00 and rallied for a higher close yesterday along with feeder cattle which noticed a break in the corn pricing. Cash cattle markets remained active but still mostly at one 3800. Yesterday box beef choice values were down $0.49, and select was off $1.85. Feedlot inventories continue to hold at historic levels, which Packers will likely keep summer values at or below $140. Longer-term feeder cattle inventories will create a supply-driven bull market starting in the fourth quarter.