Daily Morning Commentary
5/2/24
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Some strength in corn yanked wheat futures up briefly, but as of 8:00 a.m. they've settled back down (not corn, it's still up a bit). Crude oil fell on its face yesterday and is firmly under $80 for the first time since early March. Conversely, the US$ is gyrating quite a bit at high levels we haven't seen since November.
The "Fed" said no interest rate changes, and likely no hikes. Everything else that was said is cryptic Wall St code, and not worth writing about here.
Corn gurus say the morning mini-rally is due to too much rain in the Corn Belt and it'll slow planting down enough to be problematic. With that said, corn is only up $.07, so the problem might not be THAT big. I'm not saying they're wrong, though. The below graphic is the past 7-days of total rainfall:
That's a lot of wet. Looks what the coming 7-day now shows:
That's a lot of wet^2. Also, the big rains for AB/MT/SK are back in the mix, which will be a major boon for them. For what it's worth, the 8-15-day window has much less, or almost no rain for that portion of the Corn Belt that is getting rain, so that may be why this rally hasn't gone too far.
We also heard part of the jump was that RUS rainfall totals for the last few days did not materialize like projections showed they ought to. Here's the last 7-days:
And the coming 7-day snapshot has pulled a little rain out now, too:
Weekly Export Sales were okay, nothing great, but not awful. Old crop wheat sales should be done happening since the Marketing Year ends this month, and with any luck all unsold grain will roll into new crop and not get cancelled. HRS/DNS continues to be an excellent mover (relatively), and that's kept that market from following the other classes lower:
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Here's some white wheat doodles for you. Notice there are bits of new crop sales happening, but very small ones:
Ukrainian officials are downgrading their crops due to everything you'd expect them to. They claim wheat production will be closer to 14MMT vs 18MMT last year. That's a fair bit of wheat, but it's not anything the market didn't already assume.
Rain is slowing down Brazil's last phase of corn and soybean harvest:
Lastly, a couple of graphics for local rainfall. We're of the opinion that a fair amount of NWGG growers are 1" of rain away from an okay crop, 2" away from an average crop, and 3" away from something better than that (obviously with some caveats on location). Weekend rain looks so enticing, but is starting to fade away in some forecast models, so, are we correct in our (gross) assumptions? Here's rainfall totals at the Walla Walla Airport, first from Oct 1 to now, and second from Jan 1 to now:
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Sensible, right? Cool weather helps, but cool AND wet is so. much. better. A few other areas, all Jan-to-today:
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Central WA is by far the toughest-looking wheat in the PNW, even though some areas had average-or-better early fall rainfall.
Do we think current crop outlooks change the white wheat markets at all? Not really. There's still a fair bit of last year's crop that the market will need to chew through and even an "average" crop at harvest would likely be enough to keep prices relatively tamped down. Obviously, that takes a lot of very broad assumptions into place (like, the CCC doesn't start buying SWW for donation again), but that's the state of things as it looks today.
PS - it's MAY. What happened to April?!
-Cory