Written Commentary
US Dollar Likely to Recover
October 8, 2024
CORN
After making new price lows for the move, corn surged $.12 – $.14, making new highs near the close. Next resistance for Dec-23 corn is the 50 day MA, currently $4.82 ½. The most significant rains in the US the past week were along the Ohio Valley and ECB. Heavy rains across the Gulf Coast the next few days will help ease drought conditions. The USDA announced the sale of 144k mt (5.7 mil. bu.) of corn to Mexico. Export inspections at 24 mil. bu. were in line with expectations however below the 44 mil. needed per week to reached the revised USDA forecast. YTD inspections at 243 mil. bu. are up 23% from YA, vs. the USDA est. of up 25%. Safras & Mercado estimate Brazil’s 1st corn crop is 83% planted just above the 82% from YA. Brazil’s 2nd corn crop is coming under greater production risk with delays to soybean plantings Mato Grosso. Last week Money managers were net sellers of just over 24k contracts of corn, extending their short position to 168.6k contracts, pretty much matching their largest short position since Aug-2020. Index funds also sold just over 9k contracts, reducing their long position to 228k contracts, their smallest position since Oct-2019. US corn harvest advanced 7% to 88% complete, behind YA pace of 92%, however ahead of the 5-Year Ave. of 86%.
SOYBEANS
The soybean complex was higher across the board with beans up $.30 – $.35, meal was $15 – $20 higher, while oil firmed up to close 15 – 35 higher. Dec-23 meal traded the daily limit of $25 higher before settling back into the close. Next resistance is $500. Jan-24 soybeans traded above last week’s high at $13.84 ½ before settling back below it. Next resistance for Dec-23 oil is the November high at 52.03. Agricultural commodities were higher to sharply higher today as markets pumped in additional South American weather premium. This past weekend was hot/dry for much of Brazil’s northern growing regions as temperatures soared well over 100 degrees in several areas while rains picked up again across southern states. This pattern looks to hold for another week before rains shift further north in the last week of November. Without a significant change in the weather pattern that’s been in place the past few months, Brazil will start seeing much lower production estimates by December. Spot board crush margins improved $.12 today to $2.16 ½ bu. with soybean meal PV jumping to 64.5%, the largest since Feb-2021. The USDA announced another 204k mt (7.5 mil. bu.) of soybeans sold to China. That’s a total of just over 3.0 mmt (112 mil. bu.) to China or unknown in the last week. Export inspections at 61 mil. bu. were actually below expectations however well above the 30 mil. needed per week to reach the revised USDA forecast. YTD inspections at 516 mil. bu. are down 6% from YA, vs. the USDA forecast of down 12%. Safras & Mercado estimate Brazil’s soybean crop is 57% planted, falling behind YA pace of 67% as farmers await better moisture in the north, and for rains to stop falling in the south. AgRural lowered their Brazilian production forecast by 1.1 mmt to 163.5 mmt, still just above the USDA est. of 163 mmt. Last week MM’s were net buyers of 45.4k contracts of soybeans, 5.4k contracts of meal, while being net sellers of nearly 15k contracts of oil. MM’s are now short just over 10k contracts of oil for the first time in 4 months. The MM long position in soybean meal has swelled to nearly 112k contracts, the largest in 7 months. US harvest progress advanced 4% to 95% complete, vs. 96% YA and the 5-year Ave. of 91%.
WHEAT
With the exception of spot MGEX, prices were $.02 – $.04 higher in all 3 classes. Dec-23 MGEX was down $.02. Dec-23 Chicago closed right at its 50 day MA at $5.79. Export inspections at 8 mil. bu. were at the low end of expectations and below the 13 mil. needed per week to reach the USDA export forecast of 700 mil. bu. YTD inspections at 274 mil. bu. are down 26% from YA, vs. the USDA forecast of down 8%. MM’s were net sellers of just over 1,400 contracts of KC, just over 2,100 contracts of MGEX, while being net buyers of 9,300 contracts of Chicago. MM’s are holding a record short position in MGEX wheat and the largest short position in KC since Aug-2020. The MM combined short position in the wheat market is among the largest since Jan-2018. Winter wheat plantings advanced 3% to 93% complete, in line with YA and the 5-year Ave. G/E ratings slipped 3% to 47% G/E, still well above YA at 32%. IKAR reports Russian wheat for export rose another $4 last week to $230/mt FOB. SovEcon reports Russia exported 740k mt of wheat last week, down from 760k mt the previous week. Russia’s Ag. Ministry reports wheat harvest as of Nov. 9th, has totaled 94.3 mmt, vs. 105 mmt YA. Ave. yields are reported at 3.25 tons/HA, down from 3.6 tons/HA YA.
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