Written Commentary
Ag Market View for July 26.24
July 26, 2024
WHEAT
Prices were higher across all 3 classes today with Chicago and MGEX up $.12 – $.14 (Dec-23 MGEX up only $.02) while KC was up another $.17 – $.27. Following yesterday’s key reversal day in Dec-23 KC, prices today surged thru last week’s high at $6.23 ½. Next resistance is $6.50. Open interest from yesterday’s higher trade in wheat was down just over 16k contracts in Chicago and nearly 5k in KC, however nearly all the declines were limited to the Dec-23 contracts. In fact in KC, O.I. was up over 1k contracts outside of the Dec-23 contract. Deliveries against Dec-23 Chicago are expected from 500 – 2,500 contracts. Morocco’s Govt. has announced a plan to subsidize up to 2.5 mmt of wheat imports in the first 4 months of 2024 to offset reduced domestic production. Analysts in Australia suggest recent heavy rains in the SE may have damaged up to 1 mmt of wheat, reducing it quality to feed status. Export sales tomorrow are expected to range from 8 – 18 mil. bu.
CORN
Prices were mixed with spot Dec-23 down $.02 while deferred contracts were up $.02 – $.03. The Dec-23/Mch-24 spread remains in a freefall, widening out to a record $.27 before settling at $.26. Dec-23 open interest fell nearly 74k contracts yesterday, down to just under 82k contracts coming into today’s trade. Wire services estimate deliveries between 0 – 500 contracts. There were no export sales announced today despite US corn being priced a fair amount below SA supplies thru Feb-24. US ethanol production last week slipped to 1,011 tbd, down from 1,018 the previous week and the lowest in 7 weeks. Roughly 101 mil. bu. of corn was used in the production, slightly below the pace needed to reach the current USDA corn usage forecast of 5.325 bil. Gasoline consumption last week at 8.2 mil. barrels per day was down 3% from the previous week and down 1% from same week YA. YTD gasoline consumption is up 1% from YA. Export sales tomorrow are expected to range from 25 – 45 mil. bu. The path of least resistance remains to the downside with the bear spreading supporting that view. If weather doesn’t force cuts to SA production look for Mch-24 to roll down to Dec-23 lows early next year. With US stocks over 2.1 bil. bu. and demand not threatening to cut into these supplies, rallies will be difficult to sustain.
SOYBEANS
The soybean complex was mostly lower in 2 sided trade. Beans finished within $.01 of unchanged, meal was steady to down $6 while oil was down 15 – 65 with bear spreading noted in both products. For now Jan-24 beans rejected trade above $13.50 before settling back to near unchanged. Mch-24 oil traded above its 50 day MA for the first time since mid-Sept-23 before settling below it. Mch-24 meal held support above the November low at $414.60. Forecasts remain mostly dry for northern growing areas of Brazil thru the weekend before more general rains are expected the first half of next week. Rainfall coverage and totals across northern growing areas of Brazil early next week will drive agricultural prices ahead of Friday’s USDA WASDE reports. Southern Brazil and Argentina continue to experience healthy rains every 3-4 days. Good news for Argentina as soil moisture recovers from last year’s historic drought, bad news for southern Brazil where soils remain saturated. Spot board crush margins fell $.21 today to $2.10 bu. Wire services expect deliveries against Dec-23 oil from 200 – 400 contracts and meal from 0 – 100 contracts. Indonesia’s trade ministry raised their crude palm oil reference price for the first half of Dec-23 $45 to $795/mt. This in turn raised the export tax $15 to $33/mt and the export levy $10 to $85/mt. IMEA in Mato Grosso estimate that only 4% of the countries soybean crop needs to be replanted. Export sales tomorrow are expected to range from 30 – 55 mil. bu. for soybeans, 150 – 350k tons for meal, and -5 – 10k tons of soybean oil. US stocks remain tight, however global stocks are near record large. Those large global stocks however are dependent on another round of record production from SA, far from a certainty at this point.
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