TFM Midday Update 05-06-2024

CORN

On Friday, December corn closed above the 100-day moving average for the second session in a row; a higher close today would mark the third. The next upside resistance may be around the 200-day moving average – about the 495 level.
Crude oil is trading higher this morning, which is also offering support to grains. This may be due to Saudi Arabia raising their oil prices, as well as talk of an Israeli attack on Rafah.
According to the CFTC, managed funds are still short about 218,000 corn contracts. With more storm systems expected in the US this week, there may be more concern about planting delays, which could trigger more short covering.
The Buenos Aires Grain Exchange lowered their Argentina corn crop estimate by 3 mmt to 46.5 mmt. This is nearly 10 mmt below the first estimates early in the season.

Heavy rains and flooding in southern Brazil are becoming more of a concern. An estimated 2-4 mmt of soybeans may be lost, with 25% of the crop said to still be in the fields of Rio Grande do Sul.
Soybeans are sharply higher at midday, after a weaker start to the session. Soybean oil, soybean meal, and palm oil are all higher as well, offering their support.
On Friday there was a flash sale of US soybeans to unknown destinations in the amount of 122,000 mt. Given the issues faced in southern Brazil, as well as harvest delays in Argentina, it may keep US exports competitive for a bit longer than usual.
Today, July soybeans rallied through the 200-day moving average which is around 1221. If they close above this average today, it would be the first time the July contract has done so since December.

Good rain coverage over the weekend in southwest Kansas may be putting pressure on KC wheat futures. Rain also fell over the Texas and Oklahoma panhandles. There is the potential for some severe storms this week as well.
Paris milling wheat futures are up sharply at midday with gains of about 4-5 Euros, providing support to the US market. This may be due to the French wheat crop being rated 63% good to excellent, versus a rating above 90% at this time last year.
There are concerns about the Russian wheat crop, with IKAR last week lowering their estimate by 2 mmt to 91 mmt. With dryness in the Black Sea region expected to persist into mid-May, there is the potential for further reductions.
According to the CFTC data, managed funds have bought 44,000 contracts of combined Chicago and Kansas City wheat futures. This puts the joint net short position now at 78,000 contracts (as of last Tuesday).

Brandon Doherty