Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
SOYBEANS
The soy complex was higher across the board with beans up $.09 – $.16 (Aug-23 up $.01), meal $2 – $5 better, while oil surged late, closing 80 – 150 higher. An inside trading day for Nov-23 soybeans holding support above yesterday’s low of $13.22 ¾ before rallying late. While there were no new sale announcements from the USDA, China is believed to have secured additional US soybeans on yesterday’s break. EIA data yesterday showed a record 1.141 bil. lbs. of bean oil was used in the production of biofuels in May-23, up 23% from April and up 33% from May-22. In the MY to date oil usage has reached 7.6 bil. lbs. up 13% from YA, vs. the USDA forecast of up 12%. I look for the USDA to raise their current bean oil usage forecast for the 2022/23 MY of 11.6 bil. bu. by 200 – 300 mil. bu. In order to accomplish this the USDA will likely have to raise their crush forecast as well. Census crush in June showed 174.6 mil. bu. were processed, slightly below expectations of 175 – 176 mil. bu. In the MY to date crush has reached 1.858 bil. bu. up .6% from YA, in line with the USDA forecast. To reach the current est. of 2.220 bil. bu. crush in July/Aug will need to reach a record 362 mil. bu., just above the previous record of 360. Soybean oil stocks fell to 2.202 bil. lbs., at the low end of expectations and well below the 2.316 bil. from YA. Crop conditions slipped 2% to 52% G/E, in line with expectations. The soybean CC index remains at its lowest reading since 2012. Current conditions suggest an average yield of 51 bpa, below the USDA forecast of 52 bpa.
CORN
Prices backed up another $.05 – $.07 in choppy 2 sided trade. Much cooler temperatures across a vast majority of the Midwest this week as the extreme heat has been suppressed to the southern plains and deep south. Good prospects for rain this week in the western corn belt, northern plains, southern IA, central MO and western IL. Lighter precipitation is forecast for the Great lakes region and southern plains. Dec-23 violated support at yesterday’s low. Next support for Dec-23 is at $5.02. Crop conditions slipped 2% to 55% G/E, in line with expectations. The corn CC index remains at its lowest reading since 2012. Strangely enough 10 states actually saw conditions improve, while they declined in 8 states. Ratings suggest an average yield of 172.3 bpa, below the USDA forecast of 177.5 bpa. 84% of the crop is silking while 29% is in the dough stage, both at or slightly above the historical average. US export demand is likely to remain weak as SA supplies are cheaper than US thru Nov-23. There was 441.5 mil. bu. of corn used in the production of ethanol in June-23, in line with expectations. In the first 10 months of the 2022/23 MY corn usage has reached 4.280 bil., down 3.8% from YA, vs USDA forecast of down 2%. In order to reach the current USDA usage forecast of 5.225 bil., usage in July/Aug will need to reach 945 mil. bu., vs. only 876 mil. YA. Record usage for the last 2 months of the MY was 965 mil. in 2018. With the recent surge in weekly production rates the current USDA forecast is achievable. Next weekly ethanol production update is tomorrow at 9:30 CST.
WHEAT
Prices were lower across all 3 classes with Chicago and KC down $.08 – $.13, while MGEX was steady to down $.01. Both Dec-23 Chicago and KC wheat violated support at their respective 50 and 100 day MA’s. Next support for Chicago is $6.62 ½. Support for KC is at $7.96. Dec-23 MGEX traded below yesterday’s intraday, next support at its 50 and 100 MA’s, both very near $8.53. At midday Israeli press reported that a Sierra Leone flagged vessel left an Isreali port for a Black Sea port in Ukraine. After today’s close a wire service is reporting that according to a US envoy to the UN, Russia is prepared to resume participation in the Black Sea Grain Initiative. At this point no confirmation from Russia. Winter wheat harvest progress has reached 80%. Spring wheat conditions slumped 7% to 42% G/E, much more than the 2-3% expected. The crop’s CC index has fallen to its lowest reading of the growing season. Yield is expected to have fallen to 43.1 bpa, with production at 456 mil. bu., below the July-23 USDA est. of 479 mil. Harvest has reportedly reached 2%. Algerian purchased between 700 – 800k mt of milling wheat at $276/mt CF, with most likely being sourced from Russia. Bangladesh and Tunisia have also issued tenders. Australia’s Bureau of Meteorology suggests there is a 70% chance of an El Nino weather pattern developing, often associated with drought reduced wheat crop. Late news that Egypt is seeking an unspecified amount of wheat in a tender that closes tomorrow.
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