Written Commentary
Ag Market View for Dec 11.24
December 11, 2024
SOYBEANS
Unexpected wire service report that the EPA would suggest to the WH that Biofuel mandates should be below 2020 due to less miles traveled rocked the soyoil futures sharply lower. Soybeans followed. Soybeans futures were already lower on continued talk that US soybean demand could drop as the Delta virus variant could slow US economy and food and fuel demand. After the close, Pro Farmer estimated the US 2021 soybean crop at 4,436 mil bu vs USDA August est of 4,339. This suggest a yield of 51.2 vs USDA 50.0. Pro Farmer suggested east Midwest yields could be record high and offset lower yields in west. Key now is weather into maturation. USDA soybean August report was negative with USDA dropping US demand. There is new concern that US 21/22 soybean export demand could even be lower. SX dropped from a August 17 high near 13.79 to todays low near 12.77 and below 20, 50 and 100 day moving averages. Yesterday soybean open interest increased suggesting new net shorts.
CORN
Corn futures ended lower. CZ ended near 5.37. Range was 5.32 to 5.54. Concern that US 21/22 corn export demand might drop below 20/21 despite lower Brazil supplies weighed on prices. Since June USDA has dropped US and Brazil corn production 32.5 mmt but CZ dropped from a high near 5.94 to todays lows near 5.32 and below the 20,50 and 100 day moving averages. There appears little buying below the market as technical pictures has turned negative. Corn market has been trading lower since USDA dropped demand equal to the lower US crop on the August Supply and Demand report. After the close, Pro Farmer estimated the US 2021 corn crop at 15,116 mil bu vs USDA August est of 14,750. This suggest a yield of 177 vs USDA 174.6. Pro Farmer tour suggested east Midwest yields could be record high and offset lower yields in west. Key now is weather into maturation and harvest yields. Most doubt US farmer will increase cash sales at these prices especially since he is in good cash position and has sold more new crop to date than normal. Unexpected wire service report that the EPA would suggest to the WH that biofuel mandates should be below 2020 due to less miles traveled rocked the soyoil futures sharply lower and may have weighed on corn futures. Seasonal drop in corn futures also limits new buying. Over last 3 years, corn futures Have made lows either in August or early September.
WHEAT
Wheat futures ended lower. WZ ended near 7.28. Range was 7.23 to 7.47. KWZ ended near 7.17. Range was 7.09 to 7.31. Winter wheat futures traded lower after EU wheat futures reveres lower after options expiration. Long futures and option had rallied Matif to new highs. Rains before harvest may have dropped EU wheat quality. Sep Matif wheat futures have inverted over Dec. Sep open interest remains high. Dry weather in Russia New Lands has also been supportive to Russia wheat prices. There was even talk this week Russia may restrict exports. There is also concern over dry Weather in Argentina reducing their wheat crop. Due to Brazil frost there was talk of increase Brazil buying Argentina wheat. US wheat export prices remain a premium to other buyers. US south plains is dry going into 2022 winter seedings. La Nina weather could keep US South plains dry this summer. Canada rains this weekend may be too late to help the crop and could hinder harvest. MWZ ended near 9.02 with a range of 8.89 to 9.12. Higher US Dollar and concern over food/commodity demand due to virus spread also weighed on wheat futures.
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