TFM Midday Update 6-12-2024

CORN

This morning’s CPI data was better than expected, coming out unchanged from last month and versus expectations for a 0.1% increase. This has led to a decline in the US Dollar Index and rallying equity markets, which could provide some spillover support into commodities.
The American and European weather models are somewhat divergent, with the European showing below normal precipitation and hotter temperatures for the eastern corn belt, while the American model shows more chances for rain in this region.
Dry conditions in Brazil have been allowing the southern region to recover from last month’s historic flooding. Additionally, the warmer temperatures are allowing the safrinha crop to mature but are not favorable for the later planted corn that is still underdeveloped.

The US is becoming more competitive with soybean exports, as the basis in Brazil continues to climb.
Both palm oil and crude oil are higher this morning, offering support. However, soybean oil and soybean futures aren’t responding, with both trading slightly lower at midday.
The USDA reported private export sales of 106,000 mt of soybeans for delivery to China during the 23/24 marketing year.
China may have turned to the US to buy soybeans after the recent tax change in Brazil. Since the change was announced last Tuesday, Chinese importers have purchased 208,000 mt of US soybeans.

Due to frosts in May, some are estimating that Russia may have lost 15-30% of their wheat crop. Now a warmer and drier forecast could have a further impact.
After a strong rally yesterday, Paris milling wheat futures are lower this morning, so far failing to fill the chart gap from last week and offering weakness to the US market.
Harvest pressure may be the limiting factor in the wheat market, as Monday’s crop progress report showed winter wheat harvest at 12% complete, double the average pace.
Egypt tendered for wheat on Tuesday, with that being filled by Ukraine and the EU. Russian export values have been on the rise recently, which may have caused them to lose out on the business.

Brandon Doherty