Written Commentary
ADM Reports Q1 2024 Results
April 30, 2024
SOYBEANS
The soybean complex closed higher across the board with beans are up $.14 – $.16, soybean oil was up 125 – 135, while meal was up $1 – $3. AgRural estimates Brazil’s harvest at 70% complete, vs. 75% YA. The average est. for Mch 1st soybean stocks at 1.730 bil. down from 1.932 bil. YA. The range of est. is 1.60 bil. – 1.910 bil. Acres are expected to reached 88.3 mil. in 2023, up from 87.5 mil. YA, which is the same est. used in the USDA Feb Outlook. Since 2000 the soybean market reaction to the Mch 31st USDA reports has historically been a toss-up. 48% of the time July soybeans closed higher, 52% lower. Whether the trade was up or down the average move was just over 2%. Export inspections at 33 mil. bu. were above expectations and well above the 16 mil. bu. needed per week to reach the USDA export forecast. Friday’s CFTC report showed MM’s last week were net sellers of 17k soybeans, 4,500 oil, and 18,750 meal. MM’s are net still long 111k soybeans, 115k meal, and short 5,700 oil as of Mch. 21st.
CORN
Price surged to their highest levels in 1 month, closing $.05 – $.09 higher. Next resistance in May-23 is the 50 day MA, currently $6.56 ½. The 100 day MA is just above that at $6.60. Added war premium seems justified following weekend reports that Russia was moving nuclear weapons into Belarus in response to NATO’s increased support for Ukraine. Good rains last week in Argentina likely provided little benefit to this year’s corn and soybean crop prospects. Central Brazil has dried out, enabling corn plantings to near completion. A return of rainfall will be needed by mid-April to maintain strong yield potential. History has shown a slightly bullish bias going into Friday’s USDA reports for corn. Since 2000 July corn has closed higher 61% of the time. AgRural est. 2nd corn plantings in Brazil have reached 96% complete. Mch 1st stocks expected at 7.475 bil., down from 7.758 bil. YA with a range of 7.240 – 7.830 bil. Acres expected at 90.9 mil. up from 88.6 mil. YA, however just below the 91 mil. in the Feb. Outlook. Export inspections at 26 mil. bu. were disappointing and well below the 49 mil. bu. needed per week to reach the current USDA export forecast of 1.850 bil. bu. The USDA did announce a 113k ton sale (4.5 mil. bu) to an unknown buyer. Last week MM’s were net buyers of 12k contracts of corn, reducing their short position to 42K contracts. Barring another large sale to China I look for the recent rally to be capped by the MA resistance.
WHEAT
Prices closed higher in all 3 classes with KC and MGEX both $.12 – $.16 higher, while Chicago is up $.09 – $.11. Over the weekend Russia reiterated their desire to see wheat prices not drop below a $275 – $280/mt in order for farmers to cover production costs. IKAR estimates Russian Black Sea wheat prices ended last week at $272/mt FOB, down $5 from the previous week. SovEcon est. Russian wheat exports last week at 970k tons, up from 750k the previous week. Export inspections at 14 mil. bu. were in line with expectations, and the weekly amount needed to reach the USDA export forecast of 775 mil. bu. Mch 1st wheat stocks are expected at 930 mil. bu. down from 1.029 bil. YA. All wheat acres are expected to rise to 48.9 mil., up from 45.7 mil. YA. Spring wheat acres are expected to increase to 10.9 mil. slightly above YA. Since 2000 July wheat was up 57% on Mch 31st report day. Last week MM’s were net buyers of 8,800 Chicago wheat and 4k KC wheat reducing their short position to 86,500 and 8,800 respectively. Kansas crop ratings held steady at only 19% G/E, however poor/VP increased 2% to 52%.
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