Written Commentary
Ag Market View for July 26.24
July 26, 2024
CORN
Prices recovered to close $.01 – $.02 higher, largely in sympathy with surging soybean values as additional longer range SA forecasts warrant additional weather premium. Support for Dec-23 is at last week’s low of $4.61 with resistance at the 50 day MA, currently $4.81 ¼. Forecasts for Argentina continue to remain mostly favorable. The USDA announced the sale of 104k tons (4 mil. bu.) of corn to Mexico. Export inspections at 22 mil. bu. were at the low end of expectations, however last week’s inspections were revised up by 4 mil. YTD inspections at 268 mil. are up 24% from YA, vs. the USDA forecast of up 25%. Last week money managers bought just over 5k contracts of corn reducing their short position to 163,486 contracts. AgRural estimates Brazil’s 1st corn crop is 80% planted. Chinese customs data overnight showed their Oct-23 imports reached 2.04 mmt, with the vast majority, 1.8 mmt coming from Brazil. Iran’s state feed importer issued a snap tender for 180k mt of feed corn for shipment between Dec-23 and Feb-24. The tender deadline is tomorrow. Corn harvest advanced 5% to 93% complete, vs. 96% YA and 5-year Ave. of 91%. Only noted delays remain in the ECB with MI at 67% vs. Ave. of 75% and PA with 70% vs. Ave. of 80%.
SOYBEANS
The entire complex closed higher to sharply higher with beans up $.24 – $.27, meal was $5 – $7 higher, while oil was up 110 – 130. It was an outside day higher for Jan-24 beans as they held support at its 50 day MA on overnight weakness. Next resistance is at last week’s high of $13.98 ½. Resistance for Dec-23 oil is at last week’s high of 53.62. Libertarian candidate Javier Milei won the Presidential election in Argentina on a promise of radical financial change including prioritizing trade with capitalistic countries like the US and China. Many of his policies are viewed as longer term bearish, however short term his victory could be supportive as farmer hold off from selling crops hoping he can end export taxes on agricultural goods. Export inspections at 59 mil. bu. were in line with expectations while last week’s inspections were revised up by 10 mil. YTD inspections at 585 mil. are down 8% from YA, vs. the USDA forecast of down 12%. Last week MM’s were net buyers across the entire complex buying just over 19k of beans and meal, and nearly 4k soybean oil. The MM long position in meal has swelled to 131,404 contracts, the largest since Mch-2023. AgRural estimates Brazil’s crop to be 68% planted, up from 61% LW, however behind the YA pace of 80%. There has been increased talk of soybean acres being switched to other crops, notably cotton, in Mato Grosso as hot/dry conditions extended too deep into November. Chinese customs data overnight showed their Oct-23 imports reached 5.16 mmt, with the vast majority, 4.8 mmt coming from Brazil. In the first 10 months of 2023 cumulative imports have reached 59.7 mmt, up 21% from YA. China’s Ag Ministry reports the countries sow herd at the end of Oct-23 at 42.1 mil. head was too large and they would promote steps to lower the herd size to a reasonable capacity.
WHEAT
Prices closed $.05 – $.08 lower across all 3 classes today. Chicago Dec-23 barely held support above the Sept-23 low at $5.40. Spot KC has traded to a new 2 ½ year low. Dec-23 MGEX held support just above $7. Export inspections at 13 mil. bu. were in line with expectations, and at the weekly level needed to reach the current USDA forecast. Last week MM’s bought nearly 3k contracts of Chicago wheat while selling just over 3k KC wheat. The MM’s short position in KC has swelled to nearly 37,500 contracts, the largest since Sept-2019. The combined short position in all 3 classes recently peaked at just over 163k contracts, the largest since Dec-2019. IKAR reports Russian wheat export prices were steady last week at $230/mt FOB. SovEcon notes Russian grain exports last week totaled 810k mt, down 9% from the previous week. Wheat accounted for much of weekly sales at 750k mt. They also project Russia’s harvest thru Nov. 16th has reached 94.5 mmt, vs. 105 mmt YA. US winter wheat plantings are up to 95% completed, slightly below YA and 5-year Ave. Ratings improved 1% to 48% G/E, well above the 32% from YA.
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