Written Commentary
Ag Market View for July 26.24
July 26, 2024
CORN
Prices were down another $.06 – $.09 today with spot May-24 erasing all of Thursday’s gains following the supportive USDA data. Dec-24 corn closed below its 50 day MA support at $4.69 ½, however held above LW lows. Spreads weakened with several making new all-time lows. US corn plantings at 2% matched YA pace and above 5-year Ave. of 1%. A drier outlook this week across the Gulf coast and Delta region should promote better planting conditions. Newswire reports suggest Chinese custom officials are encouraging importers to slow corn imports to help firm domestic prices as farmers begin to plant. EU corn imports since July-23 have reached 13.5 mmt, down 38% from YA. Corn used in the production of ethanol in Feb-24 at 442 mil. bu. was in line with expectations and just above Jan-24 usage. It was up nearly 11% from Feb-23. In the first 6 months of the 23/24 MY corn usage has reached 2.714 bil. bu. up 6.5% from YA, vs. the USDA est of up 4. Tomorrow’s EIA report is expected to show ethanol production to range from 1,037 – 1,060 tdb vs. 1,054 tbd the previous week. Adjusting the USDA Outlook corn balance sheet to reflect the lower acreage forecast from last week still leaves a build in US corn inventories to nearly 2.40 bil. bu.
SOYBEANS
Prices were mixed with beans $.05 – $.12 lower as spreads weaken, meal was down $4 – $5, while oil held on to close 35 – 50 however well off session highs. May-24 beans violated support at $11.75. May-23 oil stopped just shy of LW high at 49.80. May-24 meal traded to a 4 week low with next support at $325.40. Midday forecasts suggesting a warmer, drier outlook across the US Midwest towards the end of the 10 day outlook stimulated the selling pressure. In Brazil scattered, lite rains did provide some relief to dry areas in MGDS and Parana in the past 24 hours, however more will be needed by mid-month to prevent further crop stress. Rains are expected to continue to favor the far northern and southern growing regions over the next week. Forecasts for Argentina are mostly favorable with 7 day rainfall expected to favor NE growing regions supporting maturing crops. Spot crush margins improved nearly $.05 to $.83 bu. with bean oil PV jumping to 42.5%. Census crush in Feb-24 at 194 mil. bu. was below expectations and down 1 mil. from Jan-24, however was still up nearly 10% from YA. YTD crush at 1.170 bil. is up 5.5% from YA, vs. the USDA est. of up 4%. Despite crush being below expectations I still lean to a modest 20 – 30 mil. bu. increase from the current USDA projection of 2.30 bil. With the lower than expected crush, bean oil stocks at 2.146 bil. lbs. were below expectations and down 9% from YA. India’s vegetable oil imports continue to shift away from more expensive palm oil. Mch-24 sunflower imports at 448k mt were up 51% from Feb, soyoil imports jumped 27% to 220k mt, while PO import fell another 3% to 481k mt, a 10 month low. EU soybean imports have reached 9.1 mmt, matching the YA level. Adjusting the USDA Outlook soybean balance sheet to reflect the lower acreage forecast from last week (all other factors left unchanged) still leaves soybean inventories building to nearly 400 mil. bu.
WHEAT
Prices were down across all 3 classes today with Chicago and KC $.09 – $.13 lower, while MGEX was $.07 – $.08 lower. Chicago May-24 held above LW low at $5.38 ½. New contract low for May-24 MGEX and lowest spot price in 3 years. Japan is seeking just over 113k mt of US, Canadian and Aussie wheat in a tender expiring on Thursday. Jordan passed on their recent tender for 120k mt of milling wheat. US winter wheat conditions at 56% G/E were slightly below expectations, however well above the 28% from YA and the highest initial ratings since 2020. 4% of the crop is headed, vs. 5% YA and 5-year Ave. of 2%. Spring wheat plantings have reached 1%. EU wheat imports have reached 23 mmt, up less than 1% from YA.
Chart source: QST
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