Daily Ag Direction 5/13/24
Good Morning!
Funds continue to unravel their short position in wheat and Russia crop concerns continue to mount. IKAR lowered its Russian wheat estimate to 86 mmt and showed exports at 47 mmt. It is generally accepted that if Russian production falls below 85-86 mmt., we will start to see exports follow suit and a possible export cap be put in place. Russian crops look to get some rain here nearby but it is not clear how this will affect the crop and the extent that recent freezes may have had. U.S. balance sheets are not particularly bullish but concerns continue over the southern plains HRW and SRW crop despite beneficial rain as of late. Clarity on the Russian situation could be drug out to October so there should be plenty of unrest in wheat markets as we get rolling on our own harvest.
Corn planting progress continues a little behind schedule but with recent moves higher in wheat, there could be some sympathy trade there. The May WASDE report showed tighter carryout numbers which should be bullish. US carryout was reduced by 100 mbu. Global carryout was down 5 mmt. as reduction from Brazil and Argentina were 2 mmt. Commitment of Traders report showed funds covering a large portion of their short position. To put it in perspective, funds were 300k short and now are at 93k short resulting in a 40 cent price move. If planting continues to be delayed and the weather forecast is bullish, look for that short to be covered completely.
Beans trading higher with corn and wheat. Same story here as funds continue to liquidate shorts but it appears that producers have been selling into this market heavily. Slow corn planting progress may lead to more bean acres which will be a bearish footnote. Watch for administrative interference as the White House is talking tariff increases on clean-energy goods out of China. Cooking oil, palm oil and green diesel are all items that, if affected, would be bullish bean oil prices.
July ’24 KC Wheat +22 @ $6.96
July ’25 KC Wheat +14 @ $7.34
July Corn +3 @ $4.73
Dec Corn +1.5 @ $4.94
July Beans +6 @ $12.25
Nov Beans +8.5 @ $12.15
Aug Feeders +2.650 @ $253.550
June Live -$0.675 @ $174.800
Please reach out to your CEA Risk Management Advisor if you have any questions. Have a great day!
