Ags Higher as China Lockdown Weighs on Grains

MORNING OUTLOOK

Grains are higher. US Midwest and EU 2 week weather forecast is mostly warm and dry. SU is up 23 cents and near 14.37. SMU is near 418.6. BOU is near 62.62. CU is up 20 cents and near 6.53. Overnight high was 6.67. WU is up 20 cents and near 9.11. Overnight high was 9.40. KWU is up 21 cents and near 9.67. Overnight high was 9.98. MWU is near 9.91.

US stocks are lower. Crude is lower. US Dollar is higher. China is in new Covid lockdown. Some could see 5 week lower raw material prices could near end. Same group could see soybeans, corn and wheat futures test mid-May highs on Q3 on tightening World supplies versus demand.

CU gapped open higher and is near 6.67 on US weather worries. Domestic prices are near 7.40-7.70. Farmer selling has slowed due to uncertain weather. Some fear US and EU corn production could drop 12-16 mmt ( 470-625 mil bu). There is also concern about drop in Argentina and Ukraine corn exports could shift demand to US. Trade est US 2022/23 carryout near 1,442 mil bu vs USDA 1,400. Some are as high as 1,600 due to higher crop. Some could see US weekly corn crop ratings up 1-2 pct from last week on scattered rains.

SU is near 14.37. Given lower USDA acres, some fear that US 2022/23 soybean carryout could drop closer to 200 mil bu. Average trade guess for this week’s USDA report is 211 vs USDA 280.  Some feel uncertain weather could send SX closer to 15.00.

On Friday, Wheat futures ended higher on EU weather worries. Importer demand also increased at last week’s lows near 8.32 KWU. KWU is near 9.67. Argentina weather is lowering their crop and inflation and uncertain government policy could lower Argentina exports. Further drop in EU crop could push World wheat prices higher. Some feel there may be enough new news to rally nearby KC futures to 11.00.

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