Written Commentary
The Ghost in the Machine Q3 2024
October 8, 2024
CORN
Prices were $.06-$.07 higher closing at session highs as spreads continue to firm. Dec-24 closed above LW’s high with next resistance at the 100 day MA at $4.18 ½. The Dec-24/Mch-25 spread traded into $.12 ¼, a 4 month high. Ag. commodities were mostly higher today fueled by higher energy prices along with speculative buying as reports suggest VP Harris has gained in the polls 2 weeks ahead of the Presidential election. A Harris Presidency would likely keep lower tariffs on Chinese imports while also maintaining green fuel subsidies beneficial to soybean oil and corn. The USDA announced the sale of 360k mt (14 mil. bu.) to Mexico. US harvest progress advanced 18% to 65% complete, well above the 55% from YA and 5-year Ave. of 52%. This is the fastest harvest pace since 2012 with every reporting state at or above their historical average. EU 24/25 corn imports as of Oct. 20th have reached 6.07 mmt, up 7% from YA. Tomorrow’s EIA report is expected to show ethanol production rebounded to 1.053 mil. barrels per day LW, up slightly from the previous week and if realized would be just above the pace needed to reach the USDA corn usage forecast. After a rough start for the month, Dec-24 corn has bounced back, down less than 2% for the month. Dec-24 corn has closed higher in the month of October for 6 consecutive years
SOYBEANS
Prices were mostly higher with beans up $.11-$.12, meal was steady to slightly lower, while oil surged 115-135. Beans and meal spreads ended flat while bean oil spreads firmed. Upside resistance for Nov-24 beans rests at its 50 day MA at $10.05 ¾. Attempts to rebound in Dec-24 meal have been capped the past 2 sessions at its 50 day MA at $319.50. Support is at LW’s low at $308.80. Dec-24 oil surged thru its 100 day MA resistance, trading above LW’s high in the process. Next resistance is this month’s high at 45.29. Spot board crush margins improved a few cents to $1.87 ½, a fresh 3 month high while bean oil PV improved to 40.7%. A good mix of rain and sunshine is expected across Argentina and Brazil the next few weeks keeping the outlook for planting progress and crop development favorable. US harvest progress advanced 14% to 81% complete, well above the 72% from YA and 5-year Ave. of 67%. This is the fastest harvest pace in 7 years with every reporting state at or above their historical average. EU 24/25 soybean imports as of Oct. 20th have reached 3.73 mmt, up 7% from YA. Soybean meal imports are up 9%. Indonesia’s Ag. Minister states their Govt. is committed to implementing a mandatory 40% biodiesel blend by Jan-25 with a goal of working to 50% in the future. A trade group in Indonesia pegs their end of Aug-24 palm oil stocks at 2.45 mmt, down from 2.51 mmt in July and the tightest since Mch-2019. China continues to load up on SA soybean purchases well into 2025 given the uncertainty with the US election. Despite today’s higher close Nov-24 soybeans are still down 6.6% for the month after closing higher in the month of Oct-24 7 of the last 10 years.
WHEAT
Prices recovered from overnight weakness closing $.02-$.04 higher across all 3 classes. Dec-24 CGO dipped below its 50 day MA reaching a 5 week low before recovering. Next resistance is at its 100 day MA at $5.87 ¼. Same story with KC and MGEX Dec-24 contracts with resistance at $5.95 ½ and $6.31 respectively. Some additional lite rains are expected for E. Ukraine, W. Kazakhstan and S. Russia however are not likely to put much of a dent in current drought readings. IKAR forecasts Russia’s 2025 wheat production between 80-85 mmt, while SovEcon has it pegged at 80.1 mmt, just below the 2024 production of 83 mmt. Tunisia reportedly paid an average just under $263.50/mt CF for 125k mt of soft wheat. Jordan reportedly passed on offers for their 120k mt wheat tender, making no purchase. EU soft wheat exports for 24/25 as of Oct. 20th have reached 7.02 mmt, down 31% from YA.
All charts provided by QST.
>>See more market commentary here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2024 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
