Written Commentary
Flight to Safety Supports the US Dollar
April 26, 2024
MORNING OUTLOOK
Grains are higher. SH is up 7 cents and near 15.37. SMH is near 488.6. BOH is near 60.97. CH is up 1 cent and near 6.82. WH is up 4 cents and near 7.64. KWH is up 3 cents and near 8.87. MWH is unch and near 9.26. US stocks are higher. US Dollar is lower. US Fed Chairman talked about steady increase in rates to fight inflation. Crude is higher but near $77. Crude fighting talk of slower US economy vs higher China economy. Gold, silver and cotton are higher. Copper, coffee, cocoa and sugar are lower.
On again off again soybean and soymeal futures trade is on again on concern about Argentina soybean crop size and eventual crush. US Argentina Ag Attaché lowered his Argentina soybean crop to 36 mmt. One private group estimated total 2023 SA soybean crop down 9 mmt from USDA Jan report but still up 21 mmt from ly and up 4 mmt from 2021 record. Argentina pct of SA crop is down to only 18 pct. Soyoil is down on talk that increase soybean crush capacity for biodiesel production is on hold. Asian vegoil prices continue to trend lower on concern about lower Asian import demand. Jan India palmoil imports were done 31 pct vs ly.
Corn futures are also higher on Argentina crop concerns and talk of declining Ukraine supply. Weekly US corn export sales are est at 600-1,200 mt. Bulls are hoping for a new trend of higher demand for US exports. Weekly US ethanol production was up 1 pct but offset by talk of lower US economy and lower Crude prices. Argentina Jan Ag export revenue was down 75 pct from Dec. Brazil exported 6.3 mmt of corn in Jan vs 2.7 ly. EU July-June corn imports were 16.5 mmt and up 73 pct vs last year. Argentina forecast is drier. Scattered rains are slowing Brazil second crop corn planting. Our weather guy still looks for normal US summer weather. He admits that he has missed 2 forecast, 1988 and 2012 when La Nina weekend which suggested normal summer weather. Instead summer was dry. Key is April temps. Normal suggest normal summer weather. Above normal April temps could suggest a dry summer. Stay tuned.
Wheat futures are up and above both the 20 and 50 DMA. Lower US Dollar is supportive but higher futures reduces wheat export competitiveness. US south plains could see showers this weekend. EU wheat exports are up 14 pct vs ly. Weekly US wheat sales are est at 300-600 mt.
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