Grains lower ahead of the WASDE crop report Friday.
Grain futures are lower this morning on follow-through technical selling from yesterday’s poor close and the unwillingness of buyers to maintain recent new long positions ahead of this Friday’s potentially negative WASDE crop report. Also, talks are being pushed again by the UN/Ukraine/Turkey to continue working with Russia on the extension of the grain corridor. The Kremlin has stated their position as well known, and they must see movement on the sanctions before they extend the pact. Also, it’s becoming widespread knowledge that Ukraine is not in the situation it was over a year ago with land travel now organized into Europe via rail/truck and River and supply chains having switched from less dependence on Ukraine if the corridor fails on May 18.
Malaysia’s Palm Oil Board released 2023 April production numbers of 1.196 MMT, below expectations of 1.30 MMT and off from 1.288 MMT in March. April stocks were seen at 1.497 MMT, below expectations of 1.510 MMT and down from 1.674 MMT in March. With their low stock numbers ahead of an El Niño year, it could possibly spark a rally in SE Asian palm oil prices later this year and have the prospects of adverse weather further cutting supplies.
This morning's CPI data shows inflation again modestly slowing but still outpacing American wages for the 25th straight month. Headline CPI was expected to accelerate in April up .4% month over month and it did meet expectations with the drop in the year-over-year CPI slowing dramatically on a print of 4.9% versus estimates of 5%. This softened the dollar and firmed energies, metals and indexes after morning weakness and prompting a slight recovery from the lows in the grains from 7:30 a.m. into the morning close.
Over the next five days, an active weather pattern is forecasted for the Central US, with shower chances occurring near daily with a zonal flowing jet stream. Summer like warmth will speed seed germination/emergence, creating a favorable start to the growing season. Any 90-degree heat will be focused on the S Plains. North Dakota has rain arriving late Thursday that run into the weekend of 1.50-3.00”.
Live and feeder cattle moved sharply higher yesterday, with feeder cattle catching a strong bid on the weak corn prices. Box beef trade had shown gains of a dollar near the noon hour, prompting a sharp rally, but this will be suspect this morning, as box beef later in the day ended down $1.18 on choice and select was $0.23 lower. This could prompt a softer start today for live cattle.