Written Commentary
Ag Market View for Apr 18.24
April 18, 2024
SOYBEANS
The soybean complex closed higher in part of a broad based commodity rally. Soybeans were up $.08 – $.21 with Mch-23 jumping out to an $.09 inverse over May-23. Since challenging the 50 day MA yesterday, Mch-23 soybeans have jumped $.48 low to high. Soybean meal was up $7 – $12, while soybean oil was up 20 – 30 points. Crush margins improved a bit today while soybean meal product value rebounded back above 61%. Soybean exports at 47 mil. bu. were at the high end of expectations. Last week China bought 34 mil. bu. of old crop (14 mil. were switched from unknown) and 5 mil. bu. of new crop. In addition the USDA announced the sale of 4 mil. bu. of new crop soybeans to China. Unless China comes back from their New Year’s celebration next week with big purchases of US soybeans I would not expect old crop futures to trade above this month’s high, $15.48 ½ basis Mch-23. YTD commitments at 1.710 bil. bu. are up 5% from YA, vs. the USDA forecast of down 8%. At this point we see no change to the current USDA forecast in the Feb-23 WASDE report. Soybean meal sales at 334k tons were also at the upper end of expectations. Refinitiv lowered their Argentine soybean production 8% to 42.5 mmt. While below the USDA forecast of 45.5 mmt, it is above most other private est. The BAGE reports Argentine soybean plantings essentially completed at 99%. Crop ratings did improve a bit with recent rains. 7% of the crop is rated G/E, up from 3% LW, however well below the 36% YA. 54% of the crop is rated poor/VP down from 60% LW, and up from 22% YA.
CORN
Prices hold firm into the close with old crop up $.05 – $.08, while new crop was up $.02 – $.03. Mch-23 held support at its 100 day MA before surging into new highs for the week. Nest resistance is the January high of $6.88 ¾. An improved rainfall pattern is still expected to aid crop development in Central Argentina however recent runs of the GFS model have been generating lesser amounts and rainfall coverage. The EU model has been consistently wetter across Argentina and RGDS in Southern Brazil. Export sales at 36 mil. bu. were in line with expectations. YTD commitments are down 45% from YA, vs. the USDA forecast of down 22%. We see no change to the current USDA forecast in the Feb-23 WASDE report. Refinitiv lowered their Argentine production est. 6% to 45.3 mmt, below the USDA at 52 mmt, however in line with most other estimates. A Ukraine agricultural group see’s 2023 corn production no higher than 18 mmt, down from 27 mmt in 2022 and less than half of the 42 mmt produced in 2021. Mexico’s Ag Minister indicates they will not be able to replace all their corn imports by 2024, however hope to reduce them by 30 – 40%. Mexico right now is the largest importer of US corn with commitments of just over 11.5 mmt (455 mil. bu.) for the 2022/23 MY. Mexico typically imports roughly 17 mmt annually, nearly all from the US. The BAGE did indicate crop improvement with last week’s rain. 12% of the crop was rated G/E up from only 5% last week, however well below the 31% from YA.
WHEAT
All 3 classes of wheat closed higher continuing to rebound from Monday’s lows. KC wheat was up $.18 – $.22, Chicago up $.12, while MGEX was up $.07 – $.09. Both Mch-23 KC and MGEX traded above its 50 MA for the first time in roughly 10 weeks, before closing just below this technical resistance. Chicago wheat open interest was down another 3,000 contracts yesterday, suggesting speculative short covering. Look for another drop in O.I. tomorrow with today’s price surge. Export sales at just over 20 mil. bu. were above expectations. Old crop sales were the highest in 9 weeks. A Ukraine agricultural group see’s 2023 wheat production no higher than 16 mmt, down from 21 mmt in 2022 and less than half of the 33 mmt produced in 2021. Tensions in the Ukraine war have escalated with new rounds of Russian missile attacks across Ukrainian cities in response to the US and Germany pledging to send tanks to support the Ukrainian defense. USDA officials today defended their Russian wheat production forecast of 91 mmt, vs. most private estimates at over 100 mmt, stating that high production forecast are “not feasible” as they are not supported by weather analysis nor previous crop data.
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