Written Commentary
SOYBEANS
The soybean complex was higher across the board, once again led by surging soybean oil prices. Soybeans finished $.22 – $.28 higher, having recovered most of the losses from the last 2 trading sessions. Next resistance for Nov-23 soybeans is the July high at 13.91 ¾. If the USDA holds their yield forecast unchanged at 52 bpa, production would fall nearly 200 mil. bu. due to the lower acreage forecast. Stocks would drop to only 150 mil. bu. with usage left unchanged. Since the June 30th stocks/acreage report the Nov23 Bean/Dec-23 corn ratio has been capped at 2.75. History has shown this spread can trade over 3.0, last time being in 2016. The highest I recall ever seeing was 2003 when it shot out to 3.44. I look for soybeans to be the bullish leader in the agricultural space. Bean oil was up 250 – 275 points with Aug-23 having traded above $.66 price for the first time since Nov-22. Next resistance is the Nov-22 high at 68.52. Soybean meal was $2 – $3 higher. Last week Money managers were net sellers of just over 10k contracts of soybeans and 6k contracts of soybean meal, while buyers of just over 3k contracts of soybean oil. MM’s remain net long the entire soy complex with their net position just under 184k contracts, less than half of the historical high of 411k. China customs has adopted regulations requiring imported soybeans to be warehoused in specific facilities for quarantine before entering the domestic market. Export inspections at 9 mil. bu. were in line with expectations, however well below the 22 mil. bu. needed to reach the USDA export forecast.
CORN
Prices were up $.05 – $.10, largely in sympathy with the higher soy complex. Weekend weather was mostly as expected with the exception of the Southern plains where heavier rains avoided much of Central Kansas. The heaviest totals staying in the very southwest portion of the state and in central OK, generating flooding concerns. The best rains this week are expected to favor eastern NE, SW Iowa, SW IL along with much of MO. Too little rainfall still expected across NC Midwest and ND. Excessive heat is forecast to stay to the south. It was an inside day for Dec-23 as it hovered most of the session near $5. Both MM’s and index funds were healthy sellers in corn last week with MM’s selling just over 71k contracts, while index funds shed nearly 36k contracts. The MM net position flipped back around to net short 18k contracts. Export inspections at only 13 mil. bu. were an 8 month low and below expectations. AgRural estimates Brazil’s 2nd crop harvest has reached 27% complete, behind the 41% pace from YA.
WHEAT
Prices drifted back into the close with KC finishing down $.05 – $.07, Chicago down $.03 – $.04, while MGEX was $.02 – $.03 better. I look for spring wheat conditions to slip 1-2% in today’s crop condition report. Winter wheat harvest is expected to have reached 50%, while ratings are expected to be steady, perhaps slightly higher. My spring wheat forecast is 470 mil. bu., in line with the average trade est. and down from 482 mil. YA. MM’s last week were net sellers of 1.8k Chicago wheat, and buyers of 1.3k in KC. Export inspections were a MY high at just over 15 mil. bu., above expectations. Turkey’s President is expected to meet with Russian President Putin this week to discuss the Black Sea Grain Initiative hoping to extend the deal that expires in a week. The Kremlin has not confirmed such a meeting is scheduled. IKAR reports Russian wheat export prices at $231/mt, down $1 from the previous week.
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