Written Commentary
Ag Market View for July 26.24
July 26, 2024
SOYBEANS
The soybean complex closed lower across the board, rejecting higher trade in the overnight session. Beans were down $.14 – $.18, meal was steady to $3 lower, while oil plunged 200 – 275 points. Nov-23 beans held support above the 50 day MA at $13.38. Oct-23 oil closed at the midpoint of the monthly range while it continues to lose ground to meal in crush product value. Spot board crush margins slid $.20 today to $2.59 bu. Bean ratings held steady at 59% G/E with my model holding an estimated yield at 51.8 bpa, and production remaining at 4.286 bil. bu. This compares to the Aug. USDA est. of 4.205 bil., I’d expect a significant drop in ratings and yield forecast next week. Dr. Michael Cordonnier held his yield forecast steady at 51 bpa. 86% of the crop is setting pods, vs. just above the historical average. Pod count data in SD averaged 1,013 per 3×3’ plots, up from 871 YA and 3 year ave. of 1,040. Ohio pod counts averaged 1,254 vs. 1,131 YA and 5 year ave. of 1,161. Since 1990 the USDA has lowered both production and yield in the Aug. report 17 times. In 13 of these years final production was actually above the Aug. est. Years the stand out where production was lowered significantly were 1999 and 2003 which were cut 7.5% and 14% respectively.
CORN
Prices were down $.03 – $.04 closing near the midpoint of today’s range. Dec-23 held support just above last week’s low at $4.73 ½. Next support is at $4.62. Record high temps across the Midwest are expected to give way to cooler temperatures this weekend which may trigger scattered rains to form around the high pressure ridge in the northern Great Lakes region. The EU model also suggests the potential for .50” – .75” rain amounts in NE and MO this weekend. Above normal temps are expected to rebuild across the Midwest by early next week. Still no organized rain event for the central Midwest thru the end of August.The USDA announced the sale of 224k tons (9 mil. bu.) of corn to Mexico, half for the 2024/25 MY, half for 25/26. After improving the past 2 weeks corn ratings slipped 1% to 58% G/E. Current crop ratings suggest an average yield of 174.5 bpa with production at 15.06 bil. compared to the USDA forecast of 15.111 bil. Dr. Michael Cordonnier held his yield forecast steady at 175 bpa. 78% of the crop is in the dough stage, while 35% of the crop is dented both just above their historical averages. Harvest is expanding rapidly across the deep south with LA at 68%, TX 45%, MS 26%, and AR 11%, all above their historical average. Brazil’s grain exporters association Anec raised their export forecast for Aug. to 9.4 mmt, up .4 mmt from previous and well above the 6.9 mmt from Aug-22. Disappointing trade action for market bulls this week with the inability to hold higher trade given the record late summer heat. The market must sense production losses will be minimal, enabling stocks to hold in excess of 2 bil. bu. Since 1990 the USDA has lowered both production and yield in the Aug. report 15 times. History suggests when this occurs there is still a 60% chance the final production figure is above the Aug. est. Years that stand out with significantly lower production were 1993, 2011, and 2022 where final production slipped 1.085 bil., 600 mil., and 629 mil. respectively.
WHEAT
Prices were mixed at today’s close with Chicago up $.01 – $.03, KC steady to down $.01, while MGEX was down $.04 – $.09. Both Dec-23 Chicago and KC appear to be consolidating within it recent ranges of $6.12 – $6.46 and $7.39 – $7.70 respectively. MGEX Dec-23 slipped to a 2 month low, next support at the May low of $7.80 ½. Spring wheat ratings fell 4% to 38% G/E. Its CC index fell to 76.4, a new low for the year. Ratings suggest an average yield of 42.1 bpa and production at 453 mil. bu. vs. the Aug USDA forecast of 450 mil. bu. Harvest advanced to 39%. Egypt’s GASC reportedly bought 60k tons of wheat from Romania for October shipment at $256 mt. FOB. SovEcon raised its 2023 Russian wheat production forecast 5 mmt to 92.1 mmt, well above the Aug-23 USDA est. of 85 mmt. Ukraine’s Ag. Ministry est. wheat exports July 1st thru Aug. 21st at 1.46 mmt, up 64% from YA. 2023/24 EU wheat exports as of Aug. 20th have reached 4.06 mmt, below the 5.12 mmt from YA.
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