Dan Flynn is the writer of The Corn & Ethanol Report, a daily market letter covering grains, energies, and various global issues that are the driving force and backbone of the commodity markets. Contact Mr. Flynn at (312) 264-4374
We kickoff the day with GDP (Q 1 ’24), Goods Trade Balance Adv, Initial Jobless Claims, Retail Inventories Ex Autos MoM Adv, Wholesale Inventories MoM Adv, Continuing Jobless Claims, Core PCE Prices QoQ 2nd Est, Jobless Claims 4-Week Average, PCE Prices QoQ 2nd Est, and Real Consumer Spending QoQ 2nd Est at 7:30 A.M., Pending Home Sales MoM & YoY at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.M., EIA Energy Stocks at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Fed Williams Speech at 11:05 A.M., Dairy Products Sales at 2:00 P.M., and Fed Logan Speech at 4:00 P.M.
Trading interest in CBOT grain markets declined in 2022 and remained limited in the first half of 2023. However, open interest soared in early 2024 and has remained elevated. Corn open interest on Tuesday stood at 1.542 Mil contracts, up 205,400 contracts (15%) from a year ago. Soybean open interest at 803,000 contracts was 137,600 contracts (21%) than last year, while wheat open interest at 427,600 contracts (7%) greater than a year ago. Funds maintain sizable net short positions in all 3 markets, while commercials are holding very modest net short positions in CBOT grains amid limited farm selling. The large open interest offers elevated grain price volatility. Corn futures ended weak for a second day as US drought is projected to shrink the next 10-days and as weakness in the Brazilian real weighs on Brazilian corn futures. The EU corn market is concerned by elevated wheat prices and Ukrainian dryness-while US and Brazilian prices need a new supply spark to sustain a rally. US corn is priced to export, but there will be competition from South America July onward as Brazil’s safrinha harvest advances. The corn outlook is neutral. The overhang of large US old crop stock lingers. Expanding Mexican drought, larger projected world feed use and the need for Black Sea rainfall lean supportive on breaks, but rallies above $4.85 July, and $5.00 December, will be challenged by US crop health in early June. Continue to trade a range of $4.445-$4.85 basis July corn futures. Ukraine corn crop estimates below 24 MMT’s are emerging which will curtail 2024/25 Ukrainian exports. In July 2023 Senators Tammy Baldwin (D-WI) and Chuck Grassley (R-IA) introduced the Farmland Security Act of 2023, which builds on their bipartisan Farmland Security Act of 2022, by ensuring that all foreign investors, including “shell companies,” who buy American agriculture land report their holding, strengthening penalties for those who evade filing, and investing in research to better understand the impact foreign ownership of American farmland and agricultural production capacity has on our domestic food supply, Family farms, and rural communities. The USDA estimated that the US ag trade deficit continued to grow with yesterday’s forecast projecting it will reach $32 Bil in FY 2024, nearly double the $16.7 Bil deficit of FY 2023. China is expected to fall to 3rd place in terms of US ag importers behind Mexico and Canada. China is forecast to import $27.7 Bil of US ag goods, a reduction of $1 Bil from the USDA’s February forecast with year-to-date soybean imports down 23% and corn imports down 67%. USDA Ag Sec Vilsack commented that the constant criticism of China by US politicians is backfiring on American US ag exports. China has yet to purchase any US new crop soybeans, a sign of China’s faltering demand.
Sino-US Cold War & Ag Prices. The Corn & Ethanol Report 05/30/2024
We kickoff the day with GDP (Q 1 ’24), Goods Trade Balance Adv, Initial Jobless Claims, Retail Inventories Ex Autos MoM Adv, Wholesale Inventories MoM Adv, Continuing Jobless Claims, Core PCE Prices QoQ 2nd Est, Jobless Claims 4-Week Average, PCE Prices QoQ 2nd Est, and Real Consumer Spending QoQ 2nd Est at 7:30 A.M., Pending Home Sales MoM & YoY at 9:00 A.M., EIA Natural Gas Storage at 9:30 A.M., EIA Energy Stocks at 10:00 A.M., 4-Week & 8-Week Bill Auction at 10:30 A.M., 15-Year & 30-Year Mortgage Rate at 11:00 A.M., Fed Williams Speech at 11:05 A.M., Dairy Products Sales at 2:00 P.M., and Fed Logan Speech at 4:00 P.M.
Trading interest in CBOT grain markets declined in 2022 and remained limited in the first half of 2023. However, open interest soared in early 2024 and has remained elevated. Corn open interest on Tuesday stood at 1.542 Mil contracts, up 205,400 contracts (15%) from a year ago. Soybean open interest at 803,000 contracts was 137,600 contracts (21%) than last year, while wheat open interest at 427,600 contracts (7%) greater than a year ago. Funds maintain sizable net short positions in all 3 markets, while commercials are holding very modest net short positions in CBOT grains amid limited farm selling. The large open interest offers elevated grain price volatility. Corn futures ended weak for a second day as US drought is projected to shrink the next 10-days and as weakness in the Brazilian real weighs on Brazilian corn futures. The EU corn market is concerned by elevated wheat prices and Ukrainian dryness-while US and Brazilian prices need a new supply spark to sustain a rally. US corn is priced to export, but there will be competition from South America July onward as Brazil’s safrinha harvest advances. The corn outlook is neutral. The overhang of large US old crop stock lingers. Expanding Mexican drought, larger projected world feed use and the need for Black Sea rainfall lean supportive on breaks, but rallies above $4.85 July, and $5.00 December, will be challenged by US crop health in early June. Continue to trade a range of $4.445-$4.85 basis July corn futures. Ukraine corn crop estimates below 24 MMT’s are emerging which will curtail 2024/25 Ukrainian exports. In July 2023 Senators Tammy Baldwin (D-WI) and Chuck Grassley (R-IA) introduced the Farmland Security Act of 2023, which builds on their bipartisan Farmland Security Act of 2022, by ensuring that all foreign investors, including “shell companies,” who buy American agriculture land report their holding, strengthening penalties for those who evade filing, and investing in research to better understand the impact foreign ownership of American farmland and agricultural production capacity has on our domestic food supply, Family farms, and rural communities. The USDA estimated that the US ag trade deficit continued to grow with yesterday’s forecast projecting it will reach $32 Bil in FY 2024, nearly double the $16.7 Bil deficit of FY 2023. China is expected to fall to 3rd place in terms of US ag importers behind Mexico and Canada. China is forecast to import $27.7 Bil of US ag goods, a reduction of $1 Bil from the USDA’s February forecast with year-to-date soybean imports down 23% and corn imports down 67%. USDA Ag Sec Vilsack commented that the constant criticism of China by US politicians is backfiring on American US ag exports. China has yet to purchase any US new crop soybeans, a sign of China’s faltering demand.
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