Written Commentary
Ag Market View for May 3.24
May 3, 2024
CORN
: Late selling pressure forced new lows into the close. Reversal day in May-24, closing below yesterday’s low after making a new high for the month in early trade. Support is at the 50 day MA at $4.33. Dec-24 rests between support at the 50 day MA of $4.67 ¼ and resistance at the 100 day MA at $4.80. Late yesterday Mexico’s Economics Minister said they expect a resolution by Sept from the USMCA trade panel regarding GMO corn imports. Ukraine’s grain exports for 23/24 as of April 24th at 40.0 mmt is down only 1.7% from YA. Corn exports account for 22 mmt, vs. the USDA forecast of 24.5 mmt for the July-23 thru June-24 timeframe. Ethanol production fell to 954 tbd last week, down from 983 tbd the previous week and down 1.3% YOY. Production was below expectations and the 2nd lowest of the MY. There was 95.5 mil. bu. of corn used in the production process, or 13.65 mil. bu. per day, well below the 14.7 mbd needed to reach the USDA forecast of 5.40 bil. bu. Ethanol stocks slipped to 25.7 mil. barrels, in line with expectations however still above the 24.3 mb from YA. Implied gasoline consumption fell 3% LW to 8.423 mbd, and was down 11.4% YOY. Gasoline demand for mid-April was the lowest since Covid lockdowns in 2020. Tomorrow’s export sales report is expected to show corn sales last week between 15 – 35 mil. bu.
SOYBEANS
Late selling pressure resulted in a mixed close for beans with nearby steady lower while new crop was steady to higher. Meal was up $1 – $4 while oil was 55 – 65 lower. May-24 beans broke thru overhead resistance at its 50 day MA before stalling out. May-24 meal traded to its highest level since early Feb-24 with next resistance is the 100 day MA at $355. May-24 oil failed to trade above recent highs while setting up a retest of this week’s low at 44.36. Spot board crush margins slipped $.04 to $.86 ½ bu. while soybean meal product value rebounded to 60.8%, matching a 3 month high. Heavy rains are expected to impact much of the central and western corn belt over the next 5 days, however the eastern third is expected to see considerably less precip. which should enable planting opportunities. The central US has a warmer/wetter bias in the 6-10 day outlook, while the 8-14 day stays warm with a bit of a dryer bias. In Southern Brazil flooding rains threaten the remaining soybean harvest in RGDS and southern Santa Catarina. The central and northern growing regions will experience net drying as monsoonal rains have ended. Better harvest opportunities this week in Central Argentina as rains look to favor eastern growing areas. Brazil’s bean exports in April are expected to reach 13.5 mmt, up 7% from March, however down 6% from April-23. With reduced yields in Parana this year, RGDS was expected to be the 2nd largest producing state in Brazil, behind only Mato Grosso. As of late last week harvest was reportedly near 50% harvested, leaving a significant amount of the crop vulnerable to flood damage. Export sales tomorrow are expected to range between 10 – 20 mil. bu. soybeans, 100 – 400k tons meal, and -5 – 10k tons for oil.
WHEAT
Prices held sharp gains into today’s close with KC up $.15 – $.17, while Chicago and MGEX were $.10 – $.13 higher. May-24 Chicago surged to its highest level since mid-Feb-24 while closing above its 100 day MA resistance for the 1st time since Dec-23. May-24 KC surged to its highest level since early Feb-24. Speculative short covering and the need for additional global war/weather premium continue to fuel the recent price rebound. Flooding threats are greatest this week in eastern KN and OK along with western AK and MO. Rainfall is still expected to be scarce in the SW plains. Eastern Ukraine and southern Russia are expected to see some moisture however net drying is expected, furthering the need for additional weather premium in wheat. Ukraine’s wheat exports since July have reached 15.2 mmt, vs. the USDA forecast of 17.5 mmt for the 23/24 MY. SovEcon forecasts Russian wheat exports in April-24 exports will reach 4.6 mmt, up from 4.4 mmt YOY. Exports sales tomorrow are expected to range from 0 – 20 mil. bu. for both old and new crop combined.
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