Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
SOYBEANS
The soybean complex was lower across the board with late day selling driving prices into new lows near the close. Soybeans were down $.14 – $.20, soybean meal steady to $2 lower, while soybean oil was down 125 – 175. Despite the weakness, both beans and soybean oil held above yesterday’s low. May-23 crush margins slipped to $1.65, its lowest level since July-22. Dr. Michael Cordonnier lowered his Argentine soybean forecast 2 mmt to 26 mmt, just above the BAGE est. of 25 mmt. He held his Brazilian forecast steady at 151 mmt, vs. the USDA at 153 mmt. AgRural estimates Brazilian harvest has reached 62% as of late last week, vs. 69% YA. Harvest in Mato Grosso has reached 97%, while Parana jumped 18% in the past week to 48% while RGDS is at only 1%. AgroCousult raised their Brazilian production forecast 2 mmt to 155 mmt. They expect Brazil to export 96 mmt of this year’s harvest, well above the USDA est. of 92.7 mmt. Some have suggested today’s sell-off may be attributed to larger outbreaks of ASF in China which is hurting meal demand and weighing on their crush margins as well. Something to keep an eye on although Brazilian soybean exports to China are expected to be near record high in March.
CORN
Prices closed down $.02 – $.04 despite the announced sale of 136k tons (5 mil. bu.) of old crop corn to China. Total announced sales to China since last Monday have reached 88 mil. Widespread rains are expected over central areas of Argentina in the next 2 – 3 days. While the moisture is welcome, its impact on this year’s corn and soybean crops will be minimal. A warmer drier pattern has developed over Parana and Mato Grosso do Sul enabling corn plantings to catch up. Additional rains are needed to maintain favorable crop prospects. Dr. Michael Cordonnier lowered his Argentine corn forecast 1 mmt to 36 mmt, matching that from the BAGE. USDA is currently at 40 mmt. AgRural reports Brazil’s 2nd corn plantings have reached 91% vs. 97% YA. Mato Grosso plantings are essentially complete at 98%, while Parana advanced 24% LW to 61% complete. MG typically produces nearly 50% of Brazil’s 2nd corn crop, while Parana represents 15%. Safras & Mercado estimate Brazilian corn exports in 2022/23 MY at only 40 mmt, vs. their forecast of 46.6 mmt back when the Black Sea corridor was first opened. This is well below the current USDA forecast of 50 mmt. AgroConsult lowered their total Brazilian corn production 5.4 mmt to 125.5 mmt. Their 2nd crop estimate was cut 4.1 mmt to 97.2 mmt. Their export forecast for Brazil is 51.9 mmt. US states reporting planting progress vs. their 5-year Ave. as follows: TX – 40% vs. 35%, LA – 87% vs. 26%, MS – 7% vs. 5%,AR – 1% in line with Ave.
WHEAT
Wheat prices were back on the defensive today with all 3 classes closing lower. Chicago led the declines down $.10 – $.17, KC was down $.08 – $.10, while MGEX was off $.05 – $.06. KC May-23 peaked at its 50 MA of $8.43 before retracing. Ukraine’s Ag Minister expects 2023 wheat production to reach only 16.6 mmt, down from the 2022 USDA est. of 21 mmt and well below the 33 mmt harvested in 2022. Both Kansas and Texas saw improved winter wheat conditions this week. Kansas was up 2% in G/E to 17%, while TX improved 6% to 23% G/E. OK ratings slipped 1% to 29% G/E, while CO slipped 4% to 36%. Following a 2nd day of talks with Chinese leader Xi Jinping, Russian Pres. Putin stated that China is Russia’s top trade and economic partner, while adding he hopes to stay in constant contact with Xi.
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