Ag Market View for June 9.23
Today’s close in July23 soybeans was the highest in a month. Next resistance is the 50 day MA, currently $14.05 ¾. July23 bean oil also had its highest close in a month. Next resistance is the May-23 high of 55.12 followed by its 100 day MA at 55.58. The Clean Fuels Alliance of America with the support of nearly 80 agricultural companies and organizations wrote a letter to Pres. Biden urging the EPA to consider raising biomass-based diesel by more than the current 65 mil. average per year over the next 3 years. Deadline for the EPA decision is June 15th. US soybean 2022/23 ending stocks rose 15 mil. bu. to 230 mil. as exports were cut by this amount. This was exactly in line with our forecast, which I had been questioning in recent days with the strong April-23 census data. Also the USDA announced the sale of 197k tons (7 mil. bu.) of old crop soybeans to an unknown buyer. Production and yield was left unchanged at 4.510 bil. and 52 bpa also as we expected. If realized production would be a new record while the average yield would match the previous record from 2016. New crop ending stocks also rose 15 mil. bu. to 350 mil. in line with our forecast and would be the highest in 4 years. Old crop global ending stocks were unchanged at 101 mmt, slightly above expectations. Argentina’s production was cut 2 mmt to 25 mmt, which was partially offset by a 1 mmt increase to Brazil’s production to 156 mmt. New crop 2023/24 world ending stocks rose 1 mmt to 123 mmt, slightly above expectations. There were no changes to China’s imports or usage for either MY.
: Back to trading weather, which as usual is mixed with the GFS model continuing to suggest greater coverage and rainfall totals than the European model. Coverage and totals of precipitation over the weekend along with forecast updates will be closely monitored leading up to Sunday nights reopening. July-23 corn continues to consolidate around its 50 day MA. In corn old crop 2022/23 ending stocks rose 35 mil. bu. to 1.452 bil. in line with expectations. As we expected exports were cut by 50 mil. bu. to 1.725 bil. while imports were cut 15 mil. bu. Exports are the lowest in a decade. Also as we expected no change to this year crop est. as yield was maintained at a record 181.5 bpa, with production also a record high at 15.265 bil. Without rains soon this year’s crop will start losing yield quickly. The 35 mil. bu. increase in old crop ending stocks carried right thru to the new crop balance sheet leaving 2023/24 stocks at 2.257 bil. which if realized would be the highest in 7 years. World 2022/23 ending stocks nearly unchanged at 297.6 mmt in line with expectations. A 2 mmt reduction in Argentina’s crop was offset by a 2 mmt increase to Brazil. Those forecasts stand at 35 mmt and 132 mmt respectively. Production changes had a direct impact on both SA exports with Argentina’s down 2 mmt with Brazil up 2 mmt. Ukraine’s corn exports were increased 1.5 mmt to 27 mmt. World 2023/24 ending stocks increased 1 mmt to 314 mmt, slightly above expectations. Most notable change to the world new crop balance sheet was a 2.5 mmt increase in Ukraine’s production est. with exports also raised by this amount. Seems questionable with the BSGI status iffy beyond mid-July. Corn ultimately went sideways to nowhere this week with weak demand offset by new crop production concerns.
Chicago wheat was the leader today with SRW slightly below expectations. US winter wheat production rose 6 mil. bu. to 1.136 bil. in line with expectations and below our est. of 1.176 bil. The USDA didn’t lower harvested acres in this report, they were already using a historically high level of abandonment at nearly 33%, highest since at least 2000. The average yield rose to 44.9 bpa from 44.7. By class production vs. expectations as follows: HRW – 525 mil. bu. up 11 mil. vs. expectation of up 6 mil., SRW – 402 mil. bu. down 4 vs. expectation of up 8 mil. and white winter 209 mil. bu. down 1 mil, in line with expectations. The old crop 2022/23 balance sheet was left unchanged, leaving ending stocks at 598 vs. expectations for a 10 mil. bu. increase. There was a 5 mil. bu. shift in exports from white to HRW. No change to the new crop demand leaving the higher production raising ending stocks to 562 mil., slightly below expectations. Old crop 2022/23 global stocks rose 2 mmt to 267 mmt, slightly above expectations. New crop 2023/24 global stocks rose just over 6 mmt to 271 mmt, well above expectations. The higher stocks were driven by higher production forecast in Russia up 3.5 mmt to 85 mmt, and a 1 mmt increase in Ukraine to 17.5 mmt, questionable given this week’s dam collapse. Chinese imports were increased 1.5 mmt to 12 mmt while feed usage was increased 2 mmt to 34 mmt following recent reports of higher wheat usage in feed rations.
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