Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
SOYBEANS
Despite the midday price plunge, Nov-23 Beans held support above the 100 day MA at $12.90 and this week’s low at $12.82 ¼. Support for Oct-23 oil is at this week’s low at 59.40, followed by the 50 day MA at 58.45. Oct-23 meal fell below its 50 day MA support, next support is the July low at $395. Old crop ending stocks rose 5 mil. bu. to 260 mil. bu. as imports were increased by this amount. New crop 2023 production fell 95 mil. bu. to 4.205 bil. roughly 30 mil. bu. below expectations. The average yield slipped to 50.9 bpa, just above the 51.1 bpa suggested by the updated crop ratings. As we expected the USDA did raise soybean oil usage for biofuels 100 mil. lbs. to 11.7 bil. and meal exports .20k to 14.2k tons. Demand for 2023/24 MY was cut 25 mil. bu. thru lower exports leaving ending stocks at 260 mil. bu., 10 mil. above expectations. Global stocks for 2022/23 were steady at 103.1 mmt, in line with expectations. 2023/24 global stocks are expected to rise to 119.4 mmt, down 1.6 mmt from July. Chinese imports for 2022/23 were increased 1 mmt to 100 mmt. Pretty neutral all around for soybeans with another 4 – 6 weeks of weather to monitor.
CORN
US weather is mostly favorable for the next 5 – 7 days with normal to above normal temperatures along with good prospects for rain with 2 systems expected to impact the nation’s midsection. The extended forecast shows a high pressure ridge positioning across the Midwest by late next week bringing above, too much above normal temperatures with limited prospects for rain. This pattern will be closely monitored as it could provide a late threat to the maturing corn and soybean crops if hot/dry conditions held thru early Sept. Good rains of .50” – 2.0” benefited drought stressed areas of MN and eastern IA the past 24 hours. Today’s price action seemed to be a delayed negative reaction to today’s USDA data. While today’s numbers weren’t necessarily bearish, they provide no bullish fodder as well. Old crop ending stocks rose 55 mil. bu. to 1.457 bil. above expectations of unchanged and above the range of estimates. As we expected exports were cut another 25 mil. bu. to 1.625 bil. while FSI usage was trimmed 20 mil. In addition old crop imports rose 10 mil. 2023 production was cut 209 mil. bu. to 15.111 bil. roughly 25 mil. below the average guess, however within the range of estimates. The average yield was reduced to 175.1 bpa, just above the 174 bpa suggested by the most recent crop condition report. New crop usage was cut 95 mil. bu. with exports down 50 mil., feed down 25 mil., while FSI was cut 20 mil. Ending stocks at just over 2.2 bil. were slightly above expectations. World 2022/23 ending stocks rose 1.6 mmt to 297.9 mmt, slightly above expectations. Brazil’s production was increased 2 mmt to 135 mmt. Global 2023/24 ending stocks are forecast to decline 3 mmt to 311.1 mmt, vs. expectations of holding steady. 2023 production in Ukraine was increased 2.5 mmt to 27.5 mmt, which was offset by a 3.7 mmt reduction in the EU and a 3 mmt reduction in China. Today’s initial price reaction was higher on the lower global production.
WHEAT
Winter wheat production was increased 21 mil. bu. to 1.227 bil. roughly 17 mil. above expectations and very near my crop condition models forecast of 1.222 bil. By class production was HRW – 585 mil. up 8 mil., SRW – 440 mil. up 18 mil. and white – 202 mil. down 5 mil. Spring wheat production was cut 29 mil. bu. to 450 mil., just above my models forecast of 456 mil. All wheat production at 1.734 bil. was in line with expectations. Exports were cut 25 mil. bu. to 700 mil. resulting in ending stocks rising 23 mil. bu. to 615 mil., 20 mil. above expectations. Global 2022/23 ending stocks slipped 1 mmt to 268.3 mmt. 2023/24 global stocks slipped 1 mmt to 265.6 mmt, in line with expectations. Noted global production changes were China down 3 mmt to 137 mmt, Canada down 2 mmt to 33 mmt, and Ukraine up 3.5 mmt to 21.5 mmt. Today’s USDA data is viewed as slightly friendly MGEX wheat, while neutral to slightly negative Chicago and KC. So far Ukraine has been able to harvest 17.7 mmt of wheat, while barley harvest is nearly 5 mmt as of Aug. 10th.
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