Written Commentary
CORN
Prices were down $.04 – $.06 today, unable to hold overnight strength. July-24 carved out a new low for the week with next support at the 100 day MA at $4.57. Dec-24 traded to a fresh 4 month high before closing below yesterday’s low. Markets shook off a sharply lower dollar and wet extended forecast in the Midwest with weak demand and speculative selling providing the bearish sentiment. Heaviest rains favor the southern Midwest and Gulf coast over the next 5 days. Forecasts for early next week show heavy rains returning to areas of the Midwest centered around IA. Ethanol production rebounded to 1,000 tbd last week, up from 965 tbd and up 1.3% from YA. Production was in line with expectations however below the pace needed to reach the revised USDA corn usage forecast of 5.450 bil. bu. There was 100 mil. bu. of corn used in the production process, or 14.3 mil. bu. per day, below the 15.2 mbd needed to reach the USDA. Ethanol stocks saw a counter seasonal increase to 24.5 mil. barrels at the high end of expectations. Implied gasoline demand rose 1% last week to 8.875 mbd, however was down less than 1% from YA. Look for export sales tomorrow to range from 28 – 45 mil. bu.
SOYBEANS
Prices closed mixed following the release of NOPA crush. Beans were down $.01 – $.04 with spreads narrowing. Meal was $1 – $2 lower, while oil was up 15 – 20. July-24 beans settled just above its 100 day MA at $12.12. Inside trade July-24 oil likely carving out a broad trading range between 42.50 and 46. July-24 meal for now rejected trade back over $380. RGDS in Southern Brazil is seeing a break from heavy rains and flooding. Above normal precipitation is expected to return late next week. The USDA announced the sale of 180k mt (6.6 mil. bu.) of soybeans to an unknown buyer. 120k mt was for 2023/24 MY with 60k for 24/25 MY. NOPA crush for April at only 166 mil bu was well below expectations of 183 mil. and the lowest in 7 months. This was down a mammoth 15.5% from a record 196.4 mil in March while also 4% below April-23. In all likelihood this would eliminate any chance of a higher crush forecast in future USDA WASDE reports. NOPA data would suggest total crush at 174 mil. bu. bringing YTD usage to 1.547 bil bu still up 3.6% from YA, vs. the USDA forecast of up 4%. To reach the current USDA crush est. of 2.30 bil usage would need to reach a record 753 mil. April thru Aug. up 4.9% from YA record of 718 mil. Oil stocks fell to 1.755 bil. lbs., down 5% from the 1.851 bil. last month and well below expectations for a build to just below 1.90 bil. The weakness in crush margins have sure taken their toll on processing rates. Export sales tomorrow are expected to range from 10 – 20 mil. for soybeans, 150 – 500k tons meal, and 0 – 10k tons oil.
WHEAT
Prices were $.06 – $.08 lower across all 3 classes. July-24 Chicago briefly traded to a new 9 month high, however once again failed to trade above $7.00. Support at the old high of $6.66 from Dec-23 was violated intraday while forming an outside day down. July-24 KC again failed to trade above its recent high before pulling back. The recent price rebound stalled very near its 50% retracement level of $7.09. MGEX July-24 made a new high for the year, however stalled below the $7.50 level. Day 1 of a crop tour in northern Kansas brought a yield est. of 49.9 bpa, the highest in 3 years and well above the 29.8 bpa from YA. The 5-year Ave. is 42.7 bpa. Expect lower yield est. today and tomorrow as the tour moves thru more drought stressed areas. SovEcon lowered their Russian wheat production forecast nearly 4 mmt to 85.7 mmt, joining IKAR who earlier in the week lowered their forecast to 86 mmt. The initial USDA forecast for 2024/25 is 88 mmt. The CME and Euronext are launching a joint futures spread contracts between CBOT and Euronext Paris milling wheat contracts. There will be 2 contracts, 1 cleared by the CME is US $$$, the other cleared by Euronext in Euros. Export sales are expected to range from 8 – 18 mil. bu.
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