Written Commentary
Ag Market View for July 26.24
July 26, 2024
SOYBEANS
The big news yesterday was that China might drop its Covid zero policy. Overnight though China lockdown city of Zhengzhou and Hefei. Soybean futures rallied on talk of the end of China strict Covid lockdown policy. SF tested 14.57 overnight. Soyoil continues to gain on soymeal. World vegoil prices are higher on talk of increase demand. Global Bird Flu outbreak could be reducing demand. Argentina is dry. C Brazil is also dry but rains are forecast for next week. Brazil truckers continue to strike on over 200 locations. This despite their Supreme Court ordering a halt to the blockades. US Sep soybean crush is est near 167.6 vs 164.1 ly. Soyoil stocks near 23 month low at 2,000 mil lbs vs 2,131 ly. Weekly US export sales are estimated near 700-1,600 mt vs 1,026 last week. USDA est World soybean exports near 168.8 mmt vs 154.1 ly. Brazil 89.5 vs US 55.6. China imports at 98.0 vs 91.0 ly.
CORN
CZ dropped from 6.97 to 6.80 and dropped below the 20 DMA at 6.86 and tested the 50 DMA at 6.80. Corn futures followed wheat futures deep dive after Russia announced they will allow resumption of Ukraine exports. USDA est Ukraine will export 15.5 mmt of corn vs 27.0 last year and 11.0 mmt of wheat vs 18.8 ly. USDA est World corn exports at 183.0 mmt vs 202.9 ly. Largest exporter is US at 54.6 mmt and Brazil at 47.0. Argentina is 41.0 mmt. Weekly US export sales are est near 250-600 mr vs 264 last week. Matif corn dropped €8 against €16 for wheat. EU cash buyers disappeared and we heard no trade in the Black Sea despite the U-turn which brought out renewed Fob offers of Ukraine corn. There was also talk that vessel insurers were also back in the game. Last week EU 2022 feed production was down due to increased production costs and smaller herds due to environmental constraints and health issues were the prime reasons. Some were hoping for similar 2023 estimates. US weekly ethanol production and stocks were near unchanged, but production was down 6% on last year with stocks are up 10%. China approved a new list of 136 Brazilian facilities for corn exports, although there is no sign of any imminent Chinese return to the corn market. There are a few estimate for US Nov 9 report. Brazil could see needed rans next week while Argentina is still dry.
WHEAT
Wheat futures took a deep dive after Russia announced they will allow resumption of
Ukraine exports. USDA est World wheat exports at 208.3 mmt vs 201.9 ly. Largest wheat exporter is Russia at 44.0 mmt.. WZ dropped from 9.02 to fill the gap near 8.40 and dropped below the 20, 50 and 100 DMA all near 8.64 to 8.60. The Russian U-turn on the export corridor sent EU wheat futures lower and halted any cash market activity. Traders are expressing extreme fatigue with the situation, specs are increasingly walking away from the wheat market volatility while commercials will avoid adding risk for the rest of 2022 and do a strict minimum which could see market liquidity collapse. Putin said the decision was made as Moscow had received sufficient written guarantees from Ukraine that they would not use either the corridor or Ukraine ports for strikes against Russia. Ukraine has neither confirmed nor denied this. The first surprise came from marine insurers who almost immediately agreed to re-start issuing policies Some speculate that the U-turn was a proxy for extending the deal beyond Nov 19.
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