Written Commentary
Aug Small Business Optimism Index Falls to Three-Month Low
September 10, 2024
CORN
Today’s USDA data was neutral to slightly supportive for corn prices. Old crop 2023/24 ending stocks fell 10 mil. bu. to 1.867 bil. slightly below expectations as exports were raised another 25 mil. to 2.250 bil. with FSI usage cut by 15 mil. US 2024 production rose 47 mil. bu. to 15.147 bil. roughly 35 mil. bu. above expectations. Yields rose to a new record high at 183.1 bpa while harvested acres were cut 728k to 82.710 mil. Offsetting the higher production was a 60 mil. bu. increase in demand allowing ending stocks to slip to 2.073 bil. 25 mil. below expectations. New crop exports were raised 75 mil. to 2.30 bil. while FSI usage was cut 15 mil. The Ave. US farm price for 2024/25 was cut $.10 to $4.20 bu. Global stocks are forecast to fall 1.5 mmt to 310 mmt, nearly 1 mmt below expectations. The USDA lowered 23/24 Argentine production another 2 mmt to 50 mmt, while also lowering exports by the same amount. They raised Ukraine’s 23/24 production and exports 1.5 mmt. Noted production changes for 2024/25 were EU down 3.5 mmt to 60.5 mmt, Russia down .9 mmt to 14.1 mmt and Ukraine down .5 mmt to 27.2 mmt. Corn was able to divorce itself from lower soybean values while carving out a key reversal day. Despite the rebound most spreads made new lows.
SOYBEANS
Today’s USDA data and weather forecasts are bearish for soybean prices. Old crop 2023/24 ending stocks were unchanged at 345 mil. bu. in line with expectations. There were no changes to the old crop soybean meal balance sheet. In soybean oil usage for biofuel production fell 100 mil. lbs. to 12.9 bil. lbs. which was offset by a 100 mil. lbs. increase in exports leaving stocks unchanged at 1.612 bil. 2024 US production rose 154 mil. bu. to a record 4.589 bil. 120 mil. bu. above expectations. Yields rose to a new record high at 53.2 bpa while planted acres actually increased 1 mil to 87.1 mil. Biggest increases were SD up 350k, MO up 300k, and OH up 200k. Slightly offsetting the higher production was a 25 mil. bu. increase in exports resulting in ending stocks growing to 560 mil. bu. 95 mil. above expectations. The Ave. US farm price for 2024/25 was cut $.30 to $10.80 bu. Global stocks are forecast to surge to a record 134 mmt, 6 mmt above expectations. The USDA lowered 23/24 Argentine production another .5 mmt to 49 mmt. No change to the Brazilian production forecast of 153 mmt, however they did raised their export forecast 2 mmt to 105 mmt, while raising Chinese imports 3.5 mmt to 111.5 mmt. No significant changes to the global 2024/25 balance sheet. Prices are trying to get to a level to encourage increased US demand while also discouraging SA plantings that begin next month. non-threatening US weather forecast continues to weigh on commodity valuations. Rains this week are expected to favor the central Midwest keeping yield expectations at record high levels.
WHEAT
All US wheat production at 1.982 bil. was down 26 mil. from last month and at the low end of expectations however still an 8 year high. Winter wheat production was raised 20 mil. to 1.361 bil. at the high end of the range of guesses. By class changes were HRW up 13 mil. to 776 mil., SRW down 2 mil. to 342 mil. and white up 9 mil. to 243 mil. The biggest surprise vs. expectations was the 34 mil. bu. drop in Spring wheat production to 544 mil. vs. expectations for a 4 mil. bu. increase. As a result of the lower than expected production US stocks are forecast to drop to 828 mil. down 28 mil. from July-24 and 34 mil. below expectations. World stocks at 256.6 mmt were in line with expectations. 2024/25 production was cut 2 mmt in the EU to 128 mmt while Ukraine was raised 2.1 mmt to 21.6 mmt, Australia increased 1 mmt to 30 mmt.
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