Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
SOYBEANS
The soybean complex was higher across the board, finishing close to session highs. Beans were $.20 – $.26 higher, meal was up $4 – $8, while oil was 30 – 50 higher. Nov-23 surged to new highs for the month as forecasts suggest the need for additional weather premium. Next resistance not until a chart gap between $13.75 ½ – $13.79 from late July. Oct-23 oil inched closer to resistance at the July-23 high at 66.65. Next resistance for Oct-23 meal is at its 50 and 100 day MA’s very near $399. Outside of weather, fresh news is scarce. No export announcements. Markets perhaps becoming increasingly concerned this year’s soybean crop may follow the pattern of either 1999 or 2003 when late season droughts triggered lower production forecasts right up to the final est. In 2003 bean production fell 408 mil. bu. (14%) from Aug to final. In 1999 production fell 216 mil. bu. (7.5%) from Aug. I feel these particular years represent the worst case scenario with the probability of this type of production decline this year very low. That said however, a 5% reduction this year would drop production 200 mil. bu. creating a significant rationing chore. An important distinction between now and those years is that crop conditions had already begun falling in both 2003 and 1999, where this year we’ve seen good recoveries the past 2 weeks.
CORN
Prices closed $.05 – $.07 today, while also managing to close slightly higher for the week. Next resistance for Dec-23 is $5.07 ½. We now begin a long stretch of hot/dry conditions across the nation’s midsection. High temperatures in the upper 90’s to 105 degrees will extend thru at least late next week with little to no prospects for rain. Next week’s Pro Farmer crop tour will shed some light on this year’s corn and soybean production prospects, however may not capture the level of production losses from the late season flash drought. The USDA announced the sale of 112k tons (4.5 mil. bu.) to Mexico, this on the same day Mexico’s Pres. declared their government will accept the USMCA trade panel’s decision to resolve their proposed ban on GMO corn. Canada’s Trade Ministry has expressed support of the US concern over Mexico’s proposed ban on GMO corn imports while considering their next steps to oppose Mexico’s actions. Mexico typically imports 17 – 18 mmt of corn annually, predominately from the US, which represent 40% of their overall consumption. The BAGE reports Argentine 2nd crop corn harvest has reached 87%, down from 97% YA. Concern seems to be mounting that late arrival of rains often associated with El Nino may prevent Argentine farmers from expanding corn acres in the 2023/24 MY. Plantings that begin in Sept. have been expected to increase 3-4% this year, while forecasts for heavy rains are being pushed back into Oct. Aug. 1st cattle of feed came in right at expectations of 98% of YA, while both placements and marketing’s were 95% of YA
WHEAT
Prices have rebounded across all 3 classes today with MGEX closing $.13 – $.15 higher, KC was up $.18 – $.20, while Chicago was $.20 – $.24 higher. The Hong Kong vessel “Joseph Schulte” that left the Ukrainian port in Odessa on Wednesday arrived in Istanbul without incident overnight. This was the first ship to navigate thru the Black Sea having left a Ukrainian port since the collapse of the BSGI. Romania’s PM states they have an optimistic goal that 60% of Ukraine’s Ag. export products flow thru their country. The Grain Industry Association of Western Australia has lowered their states output forecast by 7.5% to 9.15 mmt due to drought. Reports continue to suggest India and Russia governments are negotiating the sale of roughly 8-9 mmt of wheat. India seeks to curb food inflation ahead of state and national elections next year while Russia needs the cash flow to fund war efforts. Whole sale wheat prices in India have recently hit a 7 month high. It’s been suggested the deal will be done at a $25 – $40 discount to the current FOB price at Novorosslysk of $250/mt. Russia’s Ag. Ministry raised their export tax for the period ending Aug. 29th to 4,269 roubles/mt, up from 3,713 previously.
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