Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
SOYBEANS
The soybean complex was mixed soybeans down $.02 – $.04, meal up $2 – $4, while soybean oil was down 20 – 30. Money managers were net sellers across the board in the soybean complex last week. After selling just over 3,600 soybeans, 14,100 soybean meal and nearly 600 contracts of soybean oil their combined long position has slipped to just under 23k contracts, their smallest position since July-2020. Export inspections at 8 mil. bu. were at the low end of expectations and well below the 17 mil. bu. needed per week to reach the USDA forecast. YTD inspections at 1.788 bil. are down 3% from YA, vs. the USDA forecast of down 7%. Look for planting progress to approach 92 – 94% complete, vs. the historical average of 76%. Today’s first crop condition report is expected to show 65% of the crop in G/E condition.
CORN
Prices turned lower with spot July-23 down $.11 ½ while deferred contracts were $.03 – $.05 lower. July-23 closed back below its 50 day MA at $6.04 ½. Weather remains a key source of uncertainty with near-term forecasts still showing below normal moisture for much of the central and eastern corn belt for the next week to 10 days. The midday GFS model did offer better prospects for rain across much of the central and eastern corn belt early thru the middle part of next week. Confidence remains low however as it has gone back and forth with rainfall totals and coverage in recent weeks. The cooler temperatures for much of the eastern growing regions this week is welcome given the recent moisture shortfall. Old crop corn’s premium to new crop narrowed today likely due to Brazil’s 2nd corn harvest just getting underway. Production is expected to be a record high resulting in storage capacity to be strained again, while demand for US corn will continuing to struggle. Export inspections at 46.5 mil. bu. were in line with expectations and in line with the weekly amount needed to reach the USDA forecast of 1.775 bil. YTD inspections remain 32% below YA, vs. the USDA forecast of down 28. Plantings have likely reached 96 – 98% complete. Look for crop conditions to slip 5-6% in G/E, down from last week’s 69%.
WHEAT
Prices closed higher in all 3 classes with MGEX up $.12 – $.16, KC up $.08 – $.10, while Chicago was $.03 – $.05 higher. The high in July-23 KC at $8.30 ¾ stopped just shy of its 50 and 100 day MA resistance near $8.33. Saudi Arabia bought 624k mt of wheat from several different supplies. The average price was just under $262/mt CF for Sept thru Oct shipment. Egypt announced they are in for a undetermined volume of wheat for late July shipment in a tender that closes tomorrow. With the uncertainty of the BSGI in early May-23, Ukrainian grain shipments thru Danube river ports reached a record 3 mmt for the month of May. IKAR reports Russian Black Sea wheat for export was trading near $225/mt at the end of last week, down from $230/mt the previous week. SovEcon raised their est. for Russian wheat exports in 2023/24 by 2.7 mmt to 45.7 mmt, now in line with the current USDA est. of 45.5 mmt. I look for WW conditions to improve another 1-2% in G/E, up from last week’s 34%. My production forecast for WW is 1.176 bil. bu. with an average yield of 46.5 bpa, up 46 mil. bu. from the USDA forecast is May-23.
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