GRAINS & OILS

The market is backing off of their recent highs, but remains supported as the planting season in the US is underway and the USDA is set to release their first crop estimates for the 24/25 marketing year on Friday. Overall, trade expectations point to larger soybean, corn and wheat ending stocks vs. the 23/24 crop harvested this past fall. However, the wild card continues to be weather, which is why the market has built additional risk premium into prices over the past few weeks. This is fairly common at this time of year, where growing season risk limits downside opportunity until more is known about crop potential for the upcoming harvest this summer (winter wheat) and fall (corn, soybeans, spring wheat). Currently, drier conditions in the Southern Plains and Russia are bolstering wheat prices as condition ratings have weakened and Russian crop estimates have moved lower. There are some better weather forecasts for both regions, but until verified the market will remain supported. Increased rainfall across the bulk of the Midwest has slowed the planting pace, but most markets remain near average for this time of year. Down in S. America, the Brazilian soybean harvest is nearing completion, but recent flooding could lower overall output of those unharvested beans. In Argentina, leafhopper bugs have sparked production cuts, with Rosario Grain Exchange now calling the crop 47.5 million metric tons vs. the USDA at 55 MMT. Ongoing lackluster demand in the US for corn, soybeans and wheat should limit upside as stocks are expected to expand in the 24/25 season, but weather is in the drivers seat nearby, along with some smaller global production estimates.