Written Commentary
Ag Market View for July 26.24
July 26, 2024
CORN
Prices were steady to a penny higher in uneventful trade. Support below the market is at yesterday’s contract low of $4.61 ¾ followed by $4.47. No export announcements despite US corn available below SA supplies into the Spring. Ethanol production slipped to 1,049 tbd last week, down from 1,107 tbd the previous week however was well above the pace needed to reach the current USDA corn usage forecast and was up 24% from this week YA. Recall monthly data showed thru Nov-23 corn usage was up 5% over YA, vs. the USDA forecast of up 3%. This gap will surely widen once Dec-23 usage figures are released. Argentine corn plantings advanced to 78% complete. US corn areas in drought increased 1% last week to 45%, well below the 56% from YA. Export sales tomorrow are expected to range from 18 – 40 mil. bu. History has shown a slight downward bias to US corn production in the January report. Since 2000 production from the previous November estimate was lowered 13 times (57%) while increased 10 times. Only 1 large upward revision of over 150 mil. bu., that occurring in Jan-2010 (2009 crop), while there were 5 downward revisions of over 150 mil. My corn estimate is 15.190 bil. down 44 mil. bu. from Nov-23, with the average yield slipping to 174.5 bpa.
SOYBEANS
Prices were lower across the board with beans down $.07 – $.10, meal was steady to $4 lower, while oil was down 20 – 40. Mch-24 beans traded to a fresh 6 month low with next support at $12.53 ½. Resistance is at a gap on the charts from Tuesday’s open between $12.90 ¾ – $12.96 ¾. Inside trading sessions for both Mch-24 meal and oil. No significant change with SA weather as northern growing areas of Brazil are expected to remain in an above normal precipitation pattern into mid-January. Southern Brazil and Argentina remain favorable with a mix of sunshine and rain in an overall drying pattern. In December the USDA lowered Brazilian production by 2 mmt to 161 mmt. Combined production from the 3 major SA producers (Brazil, Argentina, and Paraguay) was forecast at a record 219 mmt, well above the previous record of 195 mmt 3 years ago. US exports are showing signs of tailing off now that Brazil is priced below US supplies. Argentine planting progress advanced to 86% complete, just behind YA pace of 94%. Crop ratings increased 2% to 42% G/E. US soybean areas in drought increased 2% last week to 50%, slightly above the 48% from YA. Export sales tomorrow are expected to range from 15 – 40 mil. bu. for beans, 75 – 250k tons meal, and 0 – 10k tons of oil. History has also shown a slight downward bias to US soybean production in January. Like corn, since 2000 production was lowered 13 times (57%) while increased 10 times. More recently 6 of the last 8 years also witnessed lower production. My soybean estimate is 4.115 bil. down 14 mil. bu. from Nov-23, with the average yield slipping to 49.7 bpa.
WHEAT
A late day surge in Chicago wheat pulled all 3 classes higher. Chicago finished up $.10 – $.13 while both KC and MGEX were $.02 – $.04 higher. Mch-24 Chicago closed just above its 100 day MA resistance at $6.12 ½, while Mch-24 KC closed back above $6.25. Fundamentally today’s rebound likely triggered by the frigid Russian forecast. US winter wheat areas in drought increased 2% last week to 32%, half of the 64% from YA. Durum and spring wheat areas in drought held unchanged at 10% and 25% respectively. Trade sources indicate Jordan bought 120k mt of optional origin hard milling wheat at $2776.75/mt CF for Mch-24 shipment. Same sources suggest they may be tendering for another 120k in a separate tender. Argentine harvest advanced to 84%. Export sales tomorrow are expected to range from 6 – 14 mil. bu.
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