This morning's grain trade shows a firm start.
This morning’s grain trade is firmer across the board as a recovery bounce into the weekend on short covering gets underway. Yesterday’s USDA Report featured a conservative approach to corn, bean, and wheat balance sheets. The USDA also “punted” on making any changes to Brazilian production, maintaining a wide gap in projections with Brazil’s CONAB. There is a large disparity between the USDA’s outlook on South American production and Brazil's and Argentina’s own analyses.
Brazil’s CONAB (their version of the USDA) is 8.5 MMTs lower on bean production and 14 MMTs lower on corn. Much of the Brazilian corn production difference is due to CONAB’s smaller winter corn seeding forecast. For now, the market trusts USDA more than CONAB following last year's crop miss. What stands out is Brazil’s corn and soybean premiums (basis) are firm, with more than 80% of the soybean harvest now completed. And this is with minimal logistical pressure.
Argentine corn stunt disease has caused the recent sharp cuts in forecasted crop sizes by Argentine’s two principal commodity exchanges that the USDA seemed to be missing. Earlier yesterday, BAGE reported that they dropped their Argentine corn estimate to 49.5 MMTs, off 2.5 MMTs and cut their soybean crop estimate by 1 MMT to 51 MMTs. Private Argentine enumerators fear the disease could drop the corn crop to 47-49 MMTs.
In other news, the French winter wheat crop is now rated at 64% good/excellent, down 1% on the week and the lowest rating in four years. Recent heavy rains abated this week, but our forecast returns next week with 3% of the French corn crop now seated, which is well below last year’s pace of 9%. It’s possible the 2024 EU wheat crop will be at 10 MMTs less than last year on curtailed seedings and excessively wet weather. All of this is occurring while Russia continues its daily drone/missile attacks on Ukraine, with Kiev’s largest power plant being destroyed overnight. Russian attacks are finding less resistance as Ukraine the military munitions run low. Russian fob wheat for 12.5% is bid at $212/MT, up $3/MT for the week. The grain markets are building a base price, and heavy bearish news is losing its power to create substantially sharp breaks.
Commitment of Traders Report today after the CBOT close. NOPA Crush Report on Monday. Monthly Cattle on Feed Report next Friday.
Weather models continue to show dryness across the plains, with near to below-normal rain for the Midwest. The Dakotas will receive needed rainfall after weeks of dryness. US spring planting should be able to advance, with delays focused on the far eastern US. The last week of April favors US seeding. The 11-15 day forecast period offers a building of warmth and a new storm system for the central and southern US. Meanwhile, the Plains look to remain dry until the end of April.
Live and feeder cattle were found to have respective support on the charts at 172.00 for June cattle and 235.00 for May feeder cattle, which we had been stating were major lines in the sand that had to hold. Both live, and feeder cattle rebounded into the close, but more news of the H5N1 expanding to further states remains concerning for the movement and commerce of cattle. Yesterday, North Carolina became the seventh state affected by cattle with H5N1. The cash trade Thursday was quoted at $185 in the north, which was $2 lower for the week. Dressed sales range from $2-4 lower at $293-295. Live sales in the South were off $2 for the week at $182.