Written Commentary
Ag Market View for July 26.24
July 26, 2024
CORN
Heavy rains will delay harvest progress across the northern half of the Midwest until at least early next week. The NWS 6-10 day outlook does however show a return to below normal precipitation across much of the nation’s midsection. The USDA announced the sale of 125k tons (5 mil. bu.) of corn to Guatemala. Ethanol production slipped to 1,004 tbd last week, down from 1,009 tbd the previous week. There was 101 mil. bu. of corn used in the production process, or 14.37 mbd, slightly below the pace needed to reach the USDA usage forecast of 5.30 bil. bu. US corn production was cut 70 mil. bu. to 15.064 bil. just below expectations. We were looking for a 14 mil. bu. cut to 15.120 bil. The average yield fell to 173 bpa, just below the 173.4 bpa from YA. There were no changes to the harvested acres. Adjustments to old crop demand were in line with expectations to get 22/23 ending stocks down to the 1.361 bil. as reported at the end of Sept. New crop demand was cut 50 mil. bu. with both exports and feed usage off 25 mil. bu. Ending stocks at 2.111 bil. were roughly 25 mil. below expectations. 2023/24 world ending stocks were cut just over 1.6 mmt to 312.4 mmt, slightly below estimates. The only noted change to global production was Argentina up 1 mmt to 55 mmt. With US corn yields being cut in July, Aug, Sept. and now Oct, history will likely lean toward future production cuts. Export sales tomorrow are expected to range from 25 – 45 mil. bu. South American weather will be taking on a greater role in price discovery.
SOYBEANS
While scattered rains will impact Argentina and WC Brazil with greater frequency by late next week, there is still no soaking rain events looking out into the 10 – 14 day window. Still too wet across southern Brazil. The USDA announced the sale of 295k tons (11 mil. bu.) of soybeans to a an unknown buyer. US soybean production was cut 42 mil. bu. to 4.104 bil. vs. expectations for at 12 mil. bu. cut and at the very low end of estimates. We were looking for a 9 mil. bu. increase to 4.155 bil. The average yield fell to 49.6 bpa with no changes to harvested acres. Old crop usage was adjusted to get 22/23 ending stocks to the previously reported level of 268 mil. New crop usage was cut 23 mil. bu. to 4.183 bil. with exports down 35 mil., crush up only 10 mil., and residual up 2 mil. We were looking for usage to remain unchanged with a 40 mil b. shift away from exports to crush. As we expected the USDA raised soybean oil usage for biofuel production for both 22/23 and 23/24 MY’s 300 mil. lbs. Other domestic uses were cut 200 mil. lbs. for both crop years. World soybean stocks for 23/24 are forecast to rise 14 mmt to 115.6 mmt, however this was down nearly 4 mmt from Sept-23 and below expectations. No major shake ups to world production however the USDA raised Chinese crush estimates by 1 mmt for both old and new crop. Brazil’s exports were raised .5 mmt for both old and new crop. Export sales tomorrow are expected to range from 25 – 45 mil. for soybeans, 200 – 400k tons meal, and – 3k tons soybean oil.
WHEAT
Russian drones strikes overnight further damaged Ukrainian grain infrastructure in the Southern Odesa regions. US wheat ending stocks rose for the first time in 7 years up 55 mil. bu. to 670 mil., nearly 25 mil. bu. above expectations, however within the range of estimates. We were looking for stocks at 655 mil. The higher stocks were largely attributed to the increased production forecast of 1.812 bil bu released at the end of Sept. Total usage increased 30 mil. bu. due to higher feed usage. HRS wheat stocks rose 35 mil. bu. while HRW was up 23 mil. Global stocks held steady at 258 mmt, in line with expectations as lower production was offset by lower demand. Noted changes were Australia down 1.5 mmt, Brazil down .5 mmt, and Kazakhstan down 2 mmt.
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