TFM Midday Update 5-5-2023

CORN

Corn is continuing higher today after yesterday morning’s announcement of a net sales cancellation as technicals became oversold, and non-commercials are likely doing some short covering ahead of the weekend.
Much of the strength in the corn market is owed to gains in wheat as the Black Sea grain deal ends on the May 18 with little hope that Russia will agree to renew.
China’s corn prices fell again today and, notably, China made its first ever purchase of corn from South Africa in an attempt to diversify their suppliers.
Warming temperatures this week should allow for more favorable planting conditions across much of the Midwest.

Soybeans, soybean meal and oil are trading higher today, fueled by gains in crude oil of nearly 3.00 a barrel in an apparent reversal where the bottom may have been put in yesterday.
The Fed signaled that they may be done with rate hikes for the rest of the year barring further inflationary news which is bullish for crude and most commodities.
In Argentina, the Buenos Aries Grain Exchange has hinted at a further cut their estimates of soy production which is already a record low 22.5 mmt due to the extreme drought. Final production could be under 20 mmt.
Old crop soybean supply may be limited this summer, which should lend some support to the market.

Wheat is leading the grain market higher with the main catalyst being the alleged Ukrainian drone strike on the Kremlin which Russia claims was meant as an assassination attempt on Vladimir Putin.
The increase in tensions right as the Black Sea grain deal is set to expire does not bode well for their exports, and the number of vessels coming in and out of the region is falling.
Non-commercials are currently net short wheat, and this may be the trigger for short covering in a big way between technicals and the political climate.
The Wheat Quality Council Tour begins on May 15 which will give a better idea to the damage of the Kansas crop, but the Oklahoma crop is already reportedly the smallest since 1955.

Amanda Brill