5.23.24

 

Good afternoon. Another choppy day at the CBOT on Thursday as the grains closed higher and the soy complex sagged. Beans were able to push to new highs briefly this morning, but were unable to sustain buying above the May highs and fell back to close lower on the day. Old crop beans seem to have a barrier between 12.50 and 12.60, while the new crop has been unable to poke through the 200-day moving average.

 

CN closed at 4.64 Thursday, up 2 3/4. CZ was 2 1/2 higher at 4.86 1/2. Outside day higher for CZ. SN closed at 12.39 1/4, down 7 cents. SX was down 2 1/4 at 12.16. WN closed at 6.98, up 5 cents. Market still has not mustered a closed above $7 despite trading their multiple times the last few days. Products were lower, July bean meal closed at 376.70, down $1.50/ton, and July bean oil closed at 45.19, down 69 points. Livestock markets were lower, June live cattle closed at 183.52, down 65 cents, August feeders were down $1.45 at 261.45, and June hogs closed at 94.52, down 87 cents. As has been the case all week, both fats and feeders made new highs for the week, while the hog market made new lows. Outside markets are mostly lower, crude oil futures are down 60-80 cents/bbl, the Dow Jones index is down 600 points (~1.5%), and the US$ index is up 20 points. Of note, both the S&P and the NASDAQ are also both down around 0.75%. Metals markets are sharply lower for the second day in a row; gold is down around $55/oz, and silver is down around $1.10/oz.

 

Spreads were mixed/quiet; corn spreads were up a quarter cent to 3/4 of a cent, and soybean spreads were unchanged to 5 cents lower. CN/CU closed at -9 1/4, down 1/4 of a cent, and SN/SU closed at 20 1/4, down 3 1/2 cents.

 

A general lack of fresh news in the ag markets has led to rather choppy trade this week. Global weather is less than ideal (as has been discussed ad nauseum) and this has provided markets with a base, but this story will not last forever and the bull camp will need something new to chew on to break through the May highs. Confirmation of a record US crop, or lack thereof, will not come until late Summer/Fall, which will likely keep volatility elevated. Managed money has also trimmed their net-short position in recent weeks, which potentially limits their amount of buying in the short-term. It likely takes extreme adverse summer weather in the US or a further escalation of some sort in the Middle East to get funds to go net-long.

 

This morning's weekly export sales report hit the trade expectations for corn, beans and wheat, but did little else to inspire confidence. Corn sales for the week ending May 16th were seen at 911k mt's, compared with expectations for 500k-1.2 mil mt's. Featured buyers for the week were Mexico (350,300 mt's), China (273,800 mt's), and Japan (220,100 mt's). Of note, the majority of China's purchases were switched out of unknown (263,100 mt's). Soybean sales were seen at 279k mt's, compared with trade expectations of 275k-550k mt's. Featured buyers for the week were Japan (73,500 mt's) and Egypt (55,000 mt's). Thailand canceled 44,000 mt's, and unknown bought 70,700 mt's in the week. Wheat sales were seen at 18,000 mt's, compared with expectations of (100k)-100k mt's. Featured buyer for the week was Haiti (12,100 mt's), while unknown booked 11,000 mt's. For the 2024/25 crop year, wheat sales totaled 225k mt's, corn sales totaled 305k mt's, and soybean sales totaled 66k mt's. The soybean sale was to unknown, which means another week of zero new crop soybean purchases by the Chinese as of now.

 

While moisture over the past month has hindered planting operations, it has also alleviated most of the drought stress throughout the Corn Belt. This week's update showed continued improvement in drought conditions across most of central IA, as well as Northern ND and MN. Notable improvements were also seen in Eastern KS and NE. The percent of US corn ground in D0-D4 drought dropped from 24% to 18% in the past week, while the percent of soybean ground in the same category went from 20% to 14%. Other areas outside the Corn Belt that saw improvement over the past week include the Northeast corner of WY, and a fairly large area of VA/NC on the East Coast. In keeping with the updates on IA, only 33.58% of the state has D0-D4 drought conditions, down from 47.46% last week.

 

Weekly jobs data this morning came in slightly better than economists had estimated; initial claims for the week ended May 18th fell 8,000 on the week to 215,000, the second straight week of declines. Economists had seen initial claims coming in just 3,000 lower from the previous week. Continuing claims remain at historically low levels, and were down 8,000 on the week also to 1.794 mil. Major stock indexes were higher in morning trade, with the S&P and the NASDAQ setting new record highs, but fell to sharp losses by the afternoon as broader inflation fears persisted.

 

Again not a lot of change with the mid-day weather forecasts, both in the US and globally. The GFS is slightly further North with Midwest rainfall over the next five days, but models continue to see the same pattern. Low pressure brings storms through the plains into this weekend, before another 3-4 day dry period emerges early next week. Midwest planting is getting accomplished between the rains, albeit at a slower (and possibly muddier) than desired pace for most. Cooler air is still seen moving into the Eastern half of the US starting next week, while the West turns warmer.

 

Also as a reminder, there will be no markets at the CBOT on Sunday night/Monday for the Memorial Day Holiday in the US. Trade will resume at 7pm central time Monday evening.

 

 

 

 

 

 

 

 

 

 


Quotes are delayed, as of May 24, 2024, 12:15:30 PM CDT or prior.

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