Written Commentary
Ag Market View for July 26.24
July 26, 2024
CORN
Prices were up $.06 – $.12 today rebounding from oversold levels driven by a lack of deliveries, strong export data along with comments from USDA Ag. Sec. Vilsack. The Dec/Mch spread rebounded $.05, however remains historically wide at $.21. Next resistance for Mch-24 corn rests at its 50 day MA at $4.94 ½. Export sales at 76 mil. bu. were well above expectations and a new MY high. YTD commitments at 963 mil. bu. are up 33% from YA, vs. the USDA forecast of up 22%. China was a buyer of 5 mil. bu. while sales to unknown were strong at 29 mil. In a Reuters interview USDA Sec. Vilsack said he expects better demand for US corn from China, following months of nearly all their imports coming from Brazil. Thru the end of Sept-23, US agricultural shipments to China in 2023 have reached nearly $20 bil., down 18% from YA and the lowest in 3 years. Vilsack also stated he felt confident the US Treasury Dept. would provide guidance to allow subsidies for corn based Sustainable Aviation Fuel by year end. If realized this would likely not result in much change for the 2023/24 balance sheet, however may give speculative traders holding sizeable short positions reasons to take profits before year end. The BAGE estimate Argentine corn plantings have reached 33%, up from 26% LW.
SOYBEANS
The soybean complex was lower across the board with beans down $.02 – $.04, meal $2 – $3 lower, while oil was down 40 – 50. Jan-24 soybeans have been unable to generate any buying interest above the $13.50 level this week. Jan-24 oil was unable to trade above yesterday’s at 53.40 before pulling back. New 4 week low for Jan-24 meal. Export sales at 70 mil. bu. were above expectations. YTD commitments at 1.137 bil. are down 17% from YA, vs. the USDA forecast of down 12%. Soybean meal sales at 65k tons were below expectations and a new MY low. YTD commitments are up 22% vs. the USDA forecast of up 5%. The USDA also announced the sale of 134k mt (5 mil. bu.) of soybeans to China. Friday’s census crush report for Oct-23 is expected to reach a new all-time high of 201 mil. bu., up from 175 mil. in Sept-23 and 197 mil. from Oct-22. The current all-time high is 198.2 mil. bu. in Dec-21. Soybean oil stocks are expected to slip to 1.540 bil. lbs., down from 1.603 in Sept-23 and well below the 2.094 bil. lbs. from Oct-22. The BAGE estimates the Argentine soybean crop is 44% planted, up from 35% LW. Bean oil used in the production of biodiesel and renewable diesel rebounded to 1.207 bil. lbs. in Sept. Usage for the 2022/23 MY came in at 12.490 bil. lbs. above the USDA forecast of 12.40 bil. Industry capacity fell slightly last month to 5.774 bil. annually following a modest drop in biodiesel. Combined capacity is up 37% from YA. Renewable diesel capacity was unchanged at 3.704 bil. Combined biodiesel and RD production was a new record high at 420 mil. gallons, up 2% from Aug-23 and up 42% YOY. Soybean oil continues to be the leading feedstock source, although it did drop 1% last month to 38.3%, the lowest in 3 years of data I have readily available. The USDA usage forecast for 2023/24 at only 12.80 bil. lbs to me appears at least 1.5 – 2.0 bil. lbs. too low.
WHEAT
Prices were higher across all 3 classes today extending the recovery from Monday’s low. MGEX was up $.04 – $.06, KC was up $.04 – $.09, while Chicago was $.12 – $.14 higher. Chicago Mch-24 closed at session highs just above resistance at its 50 day MA of $5.96 ½, however held just shy of the $6.00 level. Mch-24 KC today traded $.50 above Monday’s low. Next resistance is at $6.50. Export sales at 23 mil. bu. were above expectations and a 6 week high. YTD commitments at 466 mil. are down 6% from YA, vs. the USDA forecast of down 8%. The Taiwan Flour Millers Association bought just over 109k mt of US milling wheat from Jan/Feb shipment. IKAR analysts project 2024 Russian grain production at 145 mmt, which includes 92 mmt of wheat. Winter wheat plantings were the 2nd largest ever. Exports are expected to reach 48 mmt down 2 mmt from the USDA forecast for 2023.
See more market commentary here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
