Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
Soybeans, soyoil, soymeal and corn traded higher. Wheat traded lower. US stocks were higher. US Dollar was lower. Crude was higher. Gold was higher. Meats were lower.
SOYBEANS
Soybeans and soyoil traded higher and traded back above the 20 day moving average. Soymeal also traded higher but only tested the 20 day moving average of resistance. Talk of new China buying US old crop and new crop soybeans offered support and offset poor US weekly sales. Soyoil found support from talk of lower Malaysian Nov production and lower than expected Canada canola production estimate. The lower Canada estimate pushed canola prices higher. Celeres estimated the Brazil 2021 soybean crop near 129.5 mmt versus 134.0 previous. Rains are forecasted for C/S Brazil. Long range forecast calls for S Brazil and Argentina to see less than normal rains. Argentina soybean crush is down 12 pct from last year. Weekly US soybean export sales were only 407 mt. China bought 476 mt bu there was 539 mt cancelled from the unknown. China total commit is near 29.7 mmt with 8.8 mmt in unknown. Season to date exports are near 27.1 mmt versus 16.0 last year. Total commit is near 52.3 mmt versus 25.9 last year. USDA goal is 59.8 mmt versus 45.6 last year. Based on the weaker Dollar buyers are paying near 10.50 for nearby US soybeans versus SF near 11.68.
CORN
Corn futures traded higher and back over the 20 day moving averge. Good weekly US corn export sales offset talk of rains across central Brazil. Talk that China may be buying US corn, US wheat and US sorghum offered support. China published a new draft law on management of its grain reserves on Thursday to include oversight of stocks in regions and provinces as it seeks to bolster its food security. Local governments should build up reserves of processed grains and oils of an appropriate scale in central areas of medium-large cities and regions with markets that are prone to volatility. Reserves should only be used in cases of obvious grains shortage, significant price moves, major natural disasters or other emergencies. Weekly US corn export sales were near 1,37 mt. China total commit is near 11.1 mmt with 6.2 mmt in unknown. Some feel China could import 25 mmt all origins versus USDA guess of 13.0. China could import 50 mmt all origins next marketing year. Mexico bought 657. 351 was added to unknown. Season to date exports are near 10.3 mmt versus 6.3 last year. Total commit is near 38.3 mmt versus 14.6 last year. USDA goal is 67.3 mmt versus 45.1 last year. Based on the weaker Dollar, buyers are paying near 3.83 for nearby corn vs 4.26 March futures.
WHEAT
Wheat futures traded lower. Some money Managers may have reestablished short wheat and long corn and soybean spreads. Fact Canada raised they wheat crop offered resistance. Canada all wheat crop is now near 35.2 mmt vs 34.1 previous and 32.6 last year. USDA guess is 35.0. India also sold Bangladesh wheat $10 dollars below Black Sea prices. Some could see India exporting 7 mmt of wheat versus USDA guess of 1 mmt. USDA raised US net farm income to $134 billion, up $19 billion from September and up 23 pct from last year. Of the total, farmers have received $46 billion is direct government payments of which $24 billion was Covid subsidies. 13 pct of Russia winter wheat crop has yet to emerge. Some were estimating Russia to increase winter wheat acres 10 pct. Weekly US wheat export sales were near 446 mt. Season to date exports are near 12.3 mmt versus 12.7 last year. Total commit is near 18.5 mmt vs 16.4 last year. USDA goal is 26.5 mmt versus 26.2 last year.
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