We kicked off the day with MBA 30-Year Mortgage Rate, MBA Mortgage Applications, MBA Mortgage Market Index, MBA Mortgage Refinance Index, and MBA Purchase Index at 6:00 A.M., ADP Employment Change at 7:15 A.M., S&P Global Composite PMI Final and S&P Global Services PMI Final at 8:45 A.M., ISM Services PMI, ISM Services Business Activity, ISM Services Employment, ISM Services New Orders, and ISM Services Prices at 9:00 A.M.,EIA Energy Stocks at 9:30 A.M., 17-Week Bill Auction at 10:30 A.M., Dairy Products and Dairy Products Sales at 2:00 P.M.

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Purdue University’s monthly Ag Economy Barometer rose 9 points in May to 108. This follows a 15-point decline in April, which was the lowest since June 2022. The Index for current conditions rose 6 points to 89 but remains at one of the lowest levels since the pandemic low in 2020. The index for future expectations remained optimistic and rose 11 points from April to 117. The Farm Financial Performance Index rose 6 points to 82 but was 15 points less than at the end of 2023. Plans for capital investment improved slightly, with that index gaining 4 points to 35, but was still just above the record low set in April. Corn ended steady to lower, US origin competitive in the world market, and energy market recovery is anticipated with the energy complex holding support on a extremely bearish American Petroleum Institute (API) data.

Corn futures worldwide ended lower on Tuesday, while cash market were mixed. FOB basis in Ukraine shed premium while Argentina’s cash market added premium. On a landed basis, US origin is cheapest into Asia for summer delivery, and Ag Resources (ARC) cautions against turning bearish below 440 spot and 460 Dec. A year ago, South American basis was deeply negative. Central US moisture is abundant, but it’s a long growing season and ARC struggles to correlate the absence of drought and high initial crop ratings with any guarantee of trend/above trend yield. Volatility will be the theme. Longer term, an increasingly bright US export outlook keeps analysts upside targets unchanged.  Some 30% of Ukraine’s Corn Belt will endure a deepening drought. Unwavering heat harms potential in Mexico. The overhang of large old crop inventories caps new long positioning nearby, but this is no place to sell. It is not all a threat today but long climate models are beginning to propose lasting dryness across the Plains and West Midwest. And lets not forget funds are at record shorts in the grain complex and a squeeze play is very possible given global weather and geopolitical events.

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