Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
SOYBEANS
The soybean complex was mixed. Nearby soybeans were down $.02 – $.04, while new crop futures were down $.01. Soybean meal was up $1 – $2, while soybean oil was down 60 – 100. May-23 made a new high for the move before backing off. Look for it to consolidate near the midpoint of its recent range at $14.77 ½ until tomorrow’s report. Old crop export sales at 13 mil. bu. were below expectations. YTD commitments are now down 10% from YA vs. the USDA forecast of down 7%. Meal sales were strong at 348k tons. YTD commitments are still down 4% from YA, vs. USDA at up 1%. There were net cancellations of 2 mil. bu. to China/unknown. Shipments to China at 20 mil. bu. reduced outstanding sales to China/unknown to 112 mil. bu. vs. 251 mil. YA. Census crush for Feb-23 will be released after the close next Mon. April 3rd. Crush is expected to come in just shy of 176 mil. bu., while down from 191 mil. in Jan-23, it would represent a record for the month of Feb. Spot board crush margins slipped $.05 today to $1.35. The BAGE kept their soybean production forecast unchanged at 25 mmt. Last week’s heavy rains did bring modest improvements in crop conditions. 4% of the crop is rated G/E, up from 2% LW. 67% of the crop is rated poor/VP, down from 73% LW.
CORN
After a strong start, corn prices slipped closing down $.01 – $.04. The 50 day MA has capped the rally in May-23 the past 2 sessions. Export sales at 41 mil. bu. were at the low end of expectations as there were very little business outside of the announced sales to China. YTD commitments are still down 33% from YA, vs. the USDA forecast of down 25%. The USDA also announced the sale of 178k tons (7 mil. bu.) of old crop corn to China. Announced sales to China/unknown this week have reached 631k tons, 25 mil. bu. Right now I expect no change to corn exports or usage for ethanol production in the April 11th WASDE report. We’ll see if we get any surprises in Mch 1st stocks report tomorrow that would impact feed and residual usage. The EU Commissioner expects their corn production to rebound to 65 mmt in 2023, up from 52.1 mmt in 2022. The BAGE kept their Argentine production forecast unchanged at 36 mmt. Corn conditions also improved with 9% of the crop rated G/E, up from 5% LW. Poor/VP slipped to 53%, down from 58%.
WHEAT
Prices for both MGEX and KC were up a few cents, while Chicago wheat was down $.08 – $.12. May-23 KC spread over Chicago surged back out to its high of $1.79. Turkey’s state grain buyer TMO cancelled 300k tons of its recent tender, reducing the total volume to 395k tons. Only 60k was now purchased for the May 18th thru June 16th shipping period. Jordan has issued another tender for 120k for fall shipment. The deadline tender is next Tues. April 4th. The EU Commission forecasts 2023/24 soft wheat production at 131 mt, up from 126 mt YA. They also raised their 2022/23 export forecast 4 mt to 36 mt, while lowering their ending stocks forecast 2.6 mt to 14.5 mt. Export sales at 7 mil. bu. was at the low end of expectations. Old crop commitments are down 5% from YA, vs. the USDA forecast of down 3%. While both spring and winter wheat areas in drought continue to shrink, drought areas in SW Kansas, western Oklahoma and Texas continue to intensify. As Spring planting approaches areas in Northwest Iowa and much of Nebraska will be need soil moisture levels recharged or risk falling into deeper drought condition. The attached 7 day precip map isn’t particularly encouraging.
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