Written Commentary
Ag Market View for July 26.24
July 26, 2024
SOYBEANS
The soybeans complex closed higher across the board with beans up $.17 – $.19, meal was $6 – $13 higher, while oil was up 45 – 55. Nov-23 beans traded back above the $13 level however held below the weekly high of $13.04. The next resistance is the October high at $13.18 ½. Dec-23 meal prices surged to new contract highs trading above both the 50 and 100 week MA’s at $439. Next resistance is the July-23 high at $472.50. Today’s extended forecast models have pushed back beneficial rains for WC Brazil until the beginning of week 2 in November. All the models seem in agreement of heavy rains and the potential for flooding across southern Brazil. Forecasts for Argentina are mostly favorable while recent rains have improved planting conditions with 76% of the planted area rated normal/excellent, up from 60% previously. Ukraine’s soybean harvest has reached 4.5 mmt, while sunflower seed harvest is at 11.1 mmt, no YOY comparisons were available. Yesterday’s EIA data showed renewable diesel production fell 7% in July-23 to 214 mil. gallons following 4 straight months of record production. Despite the production decline it is still 66% above July-22. Combined biodiesel and renewable diesel production fell 5.6% last month to 386 mil. gallons. We’ll get a monthly capacity and feedstock usage updates from Aug-23 next Tuesday Oct. 31st. The meal market is really starting to feel the effect of Argentina’s drought reduced crop from earlier this year. Their meal exports are forecast to fall to just under 27 mmt, the lowest in decades. Their percentile of global trade is forecast to slip to 31% for 22/23, down from a peak of 49% just 6 years ago. US spot board crush margins surged another $.16 today to $2.51 bu. a 7 week high, while soybean meal PV jumped to 63%, the highest since May-2023.
CORN
Prices finished $.02 – $.03 higher with much of the day seemingly torn between following soybean higher or following wheat lower. It was an inside trading day for Dec-23 corn. Upside resistance continues to rest just above the market at the 50 day MA of $4.85 ½. Despite heavy rains across the US Midwest and a major snow event in the Northern plains, favorable harvest conditions in the far WCB along with southern IL, IN eastward for much of this past week should enable harvest progress to stay well ahead of the historical norm. Global tensions remain elevated. There were no new export announcements this AM. Recent rainfall did stimulate a little planting progress in Argentina with 22% of the crop seeded, up 2% from the previous week. The BAGE maintained their acreage forecast at 7.3 mil. HA. Ukraine has so far harvested 43.3 mmt of grain, up 40% from this point YA. Corn volume has reached 13.3 mmt, vs. only 4.5 mmt YA.
WHEAT
Prices were lower across all 3 classes with MGEX and Chicago $.03 – $.05 lower, while KC was down another $.08 – $.12. New 27 month lows for Dec-23 KC as spreads also hit new lows. Dec-23 KC premium to Chicago fell to $.67 ½, an 8 month low. Reports that the “Humanitarian Corridor” isn’t closed for Ukrainian Ag. exports pressured wheat while the need for additional weather premium supported both corn and soybeans. Ukraine stated that 51 vessels have entered the corridor since it became operational in August with 23 vessels currently stationed at Ukrainian ports awaiting to be loaded. Recent rains across the US southern plains will continue to chip away at drought conditions ahead of next week’s first crop condition report for this year’s winter crop. This afternoon’s COT report will likely show managed funds continue to extend their short position in KC wheat. According to the BAGE the Argentine wheat crop is 7% harvested while they also maintained a production forecast at 16.2 mmt, very near the USDA est. of 16.5 mmt. Demand news was quiet this week.
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