Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
Soybeans, soymeal, soyoil, corn and wheat traded lower. US stocks were lower. Most commodities traded lower.
SOYBEANS
CBOT March soybean futures made new contract highs before selling off. Soybean market bulls will have to deal with the seasonal slowdown in US soybean export sales as South American soybean exports accelerate in upcoming months. US Jan census crush will be released on Monday. Most estimate the crush at a record large 195.2 mil bu vs 188.8 mil bu last year. The report will confirm that there was no slowdown in the US soybean crush through January. Soybean, soybean oil and soybean meal deliveries against March futures on first noticed day tomorrow are all expected to be low. Weekly US soybean exports sales were only 6 mil bu. Total commit is near 2,203 mil bu vs 1,238 last year. USDA goal is 2,250 vs 1,682 last year. There is talk that Brazil April-May export prices are lower than US. There is also talk that China crushers may be slowing crush rate due to delayed Brazil soybean cargoes. This could reduce the chance of buying US. Brazil local analyst survey estimated Brazil 2021 soybean crop near 133 mmt vs USDA 133. Some private estimates are as high as 136. Seasonal suggest a lower futures trend into Brazil harvest and US spring planting season.
CORN
Corn traded lower. Corn market bulls will have to deal with the seasonal slowdown in US corn export sales as South American corn exports accelerate in upcoming months. March corn deliveries on first noticed day tomorrow are all expected to be low. The trade will continue to monitor weather impacting final South American corn production and World buying of US commodities to determine if there is a spark to rally corn futures. Weather forecaster discussion of US weather has increased and will continue to increase next month as US corn planting begins in the southern US. Weekly US corn exports sales were only 17 mil bu. Total commit is near 2,323 mil bu vs 1,018 last year. USDA goal is 2,600 vs 1,778 last year. There is talk that Argentina April-May export prices are lower than US. Brazil local analyst survey estimated Brazil 2021 corn crop near 108 mmt vs USDA 109. Seasonal suggest a lower futures trend into Brazil harvest and US spring planting season. There is concern that in March, USDA may leave US 2020/21 corn balance sheet near their February guess. Approaching South America harvest could limit any reduction in South America crops or exports. USDA may also wait until after end of March acreage and stocks report to make adjustments to demand. Argentina could rob US April- August corn exports. US though could be competitive in September.
WHEAT
Wheat futures traded lower. Lower US stocks and higher bond yields offered resistance. There was talk that Q4 US GDP was lower than expected. Q2 US GDP Could near 6 pct but Q3 and Q4 could drop. Weekly US wheat exports sales were only 6 mil bu. Total commit is near 866 mil bu vs 831 last year. USDA goal is 985 vs 965 last year. Rally id World ocean freight reduced US competitiveness to N Africa and Mideast buyers. Seasonal suggest a lower futures trend into US spring weather and harvest. Seasonal suggest wheat futures are overvalued. Key to wheat prices will continue to be World 2021 wheat crop size and World wheat trade. The International Grains Council (IGC) on Thursday raised its forecast for global wheat production in the 2020/21 season. In its monthly update, IGC increased its global wheat crop forecast by 5 million tonnes to 773 million tonnes. The IGC raised its forecast for Australia’s wheat crop to 33.3 million tonnes from a previous forecast of 31.2 million and more than double the prior season’s 15.2 million. The IGC raised its outlook on Kazakhstan’s crop to 14.3 million tonnes, a three-year high, from 12.4 million. It put Russia’s crop at 85.3 million, up from 84.5 million seen previously.
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