Written Commentary
The Ghost in the Machine Q3 2024
October 8, 2024
CORN
Prices were down another $.06-$.07 today as Dec-24 trading to fresh lows for the month while violating support at the 50-day MA in the process. Spreads were firmer for much of the session however finished mixed. Outside of some shower activity in the Great Lakes region and isolated areas of the ECB, US weather remains ideal for corn and soybean harvest. Export inspections at only 17 mil. bu. were a MY low and well below the 47 mil. bu. needed per week to reach the revised USDA forecast of 2.325 bil. bu. YTD inspections at 186 mil. are up 19% from YA vs. the revised USDA forecast of up 1.5%. Mexico was the only noted taker with 8 mil. bu. EU corn imports since June have reached 5.7 mmt, up 5.6% from YA. Conab estimates Brazil’s 24/25 total corn crop at 119.7 mmt, well below the USDA forecast of 127 mmt. The biggest changes to the global balance sheet from last Friday’s WASDE data was the lowering of old crop exports for both Brazil and Argentina which was partially offset by higher domestic consumption. In Brazil this is largely due to increased usage for ethanol production. Global stocks/use among major exporters virtually unchanged at 9.6%.
SOYBEANS
Prices were mixed with beans down $.05-$.10 as spreads rebound, meal was $4 lower while oil was up 30-55. Nov-24 beans and Dec-24 meal fell to 7 week lows before bouncing. After holding support above its 50 day MA support at 41.17, Dec-24 oil rebounded closing just below its 100 day MA. Spot board crush margins rebounded $.03 ½ to $1.62 with bean oil PV increasing to 40.5%. In the US, Week 2 of the weather outlook continues to show above normal temperatures however better prospects for rain in the WCB and northern Midwest. All of Brazil will get rain over the next few weeks supporting planting and early crop emergence, albeit a few weeks later than normal. Australia’s weather bureau joined the CPC in stating the odds of La Nina developing has decreased, however if La Nina conditions develop, it will be weak and short in duration. Export inspections at 58 mil. bu. were in line with expectations and well above the 34 mil. needed per week to reach the USDA forecast of 1.850 bil. bu. Last week’s inspections were revised up by 7 mil. bu. bringing YTD inspections to 189 mil. are down 7% from YA vs. the USDA forecast of up 9%. China took 38 mil. bu. In addition the USDA announced the sale of 131k mt (5 mil. bu.) of soybeans to China. NOPA members crush 177.3 mil. bu. in September, up sharply from the 158 mil. in August and the 165.5 in Sept-23. Crush came in above the range of estimates of 164–177 mil. Soybean oil stocks fell for a 6th consecutive month to 1.066 bil. lbs. down 6.3% from Aug-24 and in line with expectations despite the much higher than expected crush. EU soybean imports as of Oct. 13th have reached 3.52 mmt up 8.3% from YA. Meal imports at 4.9 mt are up 7.2% from YA. Conab estimates Brazilian soybean production for 24/25 at 166 mmt, vs. the USDA est. of 169 mmt. Global stocks/use ratio among major exporters is still expected to rise to nearly 23% in 2024/25, which if realized would be a 6-year high. While Brazil’s crop is going a few weeks later than normal, history shows it will not negatively impact yields if weather is normal moving forward.
WHEAT
Prices are down $.14-$.17 across all classes today. Dec-24 Chicago barely held support above LW’s low at $5.84. Both Dec-24 in KC and MGEX have violated support at LW’s low. Markets shrugged off news that another Russian missile attack over the weekend damaged 2 civilian vessels and a grain storage facility in Ukraine’s southern Odessa region. The attack killed 1 person while injuring dozens more. Heavy rains fell in Central Ukraine over the weekend, with much lighter amounts in drought areas in the east along with Southern Russia. Last week MM’s bought 9.4k contracts of KC wheat, 6.1k of MGEX while selling 6.5k in Chicago. Their combined short position across all 3 classes is down to 43k contracts, the smallest in 4 months. SovEcon reports Russia exported 1.1 mmt of grain LW with 1.0 mmt being wheat. These are both above the previous week’s sales of 870k tons of grain and 800k of that being wheat. IKAR reports Russia’s export price for wheat ended last week to $230/mt FOB, while up from $223/mt the previous week, this is well below the $250/mt price floor the Ag. Ministry asked exporter not sell below in international tenders.
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