Ag Market View for Oct 5.23
Dec-23 surged thru its 50 day MA and the Sept-23 high, likely triggering buy stops, holding just shy of resistance at $4.99 ½. The next resistance is the 100 day MA at $5.11 ¼. Prices were higher as the markets were quick to inject additional war premium as tensions in the Black Sea region intensified in the past 24 hours. As expected export sales were strong at 96 mil. bu., 72 mil. – 2023/24 MY and 24 mil. for 24/25. Current 23/24 commitments are up 9% vs. the USDA forecast of up 23%. Aug-23 census exports came in at 100 mil. bu., slightly below expectations. Final exports for the 22/23 MY came in at 1.658 bil., 7 mil. below the current USDA forecast. So far Algeria has reportedly purchased between 30 – 60k mt of corn between $250-$259/mt CF from SA origin for late Oct-23 shipment. Our production estimate for next Thursday’s USDA production and WASDE report is 15.120 bil. bu. with an average yield of 173.6 bpa, just below the Sept-23 USDA forecast of 15.134 bil. and yield of 173.8 bpa. Our 2023/24 demand forecast at 14.340 bil. bu. is down 50 mil. from the USDA Sept forecast as a result of lower exports. Our ending stock forecast at 2.165 bil. is down 56 mil. from the Sept-23 USDA est.
The soybean complex was mixed is volatile trade. Beans finished $.04 – $.08 higher, meal was up $4 – $5, while oil was 60 – 100 lower. Spreads narrowed up again today, rebounding from historically wide levels. No significant resistance for Nov-23 soybeans until the 100 day MA at $13.08. Next support for Dec-23 oil is at a late June-23 low at 54.65. Export sales at 30 mil. bu. were in line with expectations. Southern Brazil remains too wet while only scattered showers are expected in WC Brazil. There are chances for light rains in Argentina early next week, however they are unlikely to put much of a dent in their severe drought. YTD commitments at 682 mil. are down 32% from YA, vs. the USDA forecast of down 10%. An Argentine Ag group maintains that their countries crush plants are currently running at only 35% of capacity and expect imports to reach 10 mmt in 2023.
Prices surged $.15 – $.20 across all 3 classes today as markets add back war premium. All 3 Dec-23 contracts have traded to new highs for the week and closed near session highs. Overnight Russia launched new missile/drone attacks on Ukrainian ports in Odesa and Mykolaiv in an attempt to restrict export demand thru the recently established humanitarian corridor. Reports also indicate Russia may be planting sea mines to deter vessels from entering Ukrainian ports. Another missile strike reported killed over 50 people in the Kharkiv region in eastern Ukraine. Today Russia’s Ag Ministry forecasts 2023 grain production will reach 135 mmt, including 90 mmt of wheat. The USDA is currently forecasting Russia’s wheat production at 85 mmt. Ukraine’s Ag. Ministry has suggested that recent dryness may prevent winter wheat acres from reaching their previous forecast of 4.4 mil. HA. US export sales at 10 mil. bu. were at the low end of expectations. YTD commitments at 347 mil. are down 13.5% from YA, vs. the USDA forecast of down 8%.
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