Written Commentary
The Ghost in the Machine Q4 2024
November 15, 2024
CORN
Prices were $.01-$.03 lower today as early pressure in wheat spilled over in the corn market. Despite the lower prices spreads continued to firm. So far Dec-24 has rejected trade over its October high of $4.34 ¼. Money managers were net buyers of nearly 40k contracts last week, flipping their position to net long for the first time since August 2023. APK-Inform kept their Ukraine grain harvest production forecast unchanged at 52.5 mmt and exports at 37.3 mmt, well below the 51 mmt shipped in 23/24. Since July their grain exports have reached 15.3 mmt, up 52% from YA, so expect to see a significant slowdown to the pace of exports over the last 8 months of the MY. Their corn exports at 5.3 mmt are running 24% over YA. The USDA pattern of raising production in Aug, Sept and Oct only to lower production in Nov has only happened 3 times since 1990. In 2 of those 3 years final production was below the November est. Production and stocks from major exporting nations slipped a bit in Friday’s report with stocks/use dropping to 9.4%, slightly below the 9.5% from YA.
SOYBEANS
The soybean complex finished lower across the board with beans down $.05-$.08, meal was $1 lower while oil was rebounded to close only 60-70 lower. Spreads were steady to weaker all around. An inside day for Jan-25 beans as it once again failed to extend gains above its 100 day MA. Jan-25 also closed below its 50 day MA support at $10.23 ¼. Late weakness in Dec-24 meal established a fresh contract closing low. Dec-24 oil recovered to close back over the $.48 level. Spot board crush margins slipped $.04 ½ to $1.67 bu. with bean oil PV slipping just below 45%. Dryer weather is expected across southern Brazil and Argentina this week with better prospects for rain in week 2. Central and northern growing regions of Brazil to see off and on rains this week. The Malaysian Palm Oil Board reported Oct. production at 1.797 mmt, down from 1.821 mmt in Sept., however slightly above expectations. Despite the higher than expected production, stocks fell 6% to 1.885 mmt, below expectations of 1.92 mmt. Their Oct. exports at 1.732 mmt were up 17% from Oct-23 and above expectations of 1.629 mmt. AgRural reports Brazilian plantings have reached 67%, above the YA pace of 61%. Last week MM’s were net buyers of 2k soybeans, 26k soybean oil while being net sellers of 21k soybean meal. The MM long position in bean oil has swelled to nearly 64k the largest since Jan-23. MM’s have flipped their soybean meal position to net short for the first time in 7 months. Stocks/use among global exporters is still expected to rise to a 6 year high at 22%, a touch below the Oct-24 USDA forecasts.
WHEAT
While wheat was down $.04-$.07 across all 3 classes today, prices did manage to settle well off session lows. Chicago Dec-24 premium over Dec-24 corn narrowed to $1.22 intraday, an 8 month low before recovering. SovEcon is reporting Russian grain exports LW totaled only 770k mt, down from 1.2 mmt the previous week. Of this total wheat shipments total 720k mt, well below the 1.12 mmt the previous week. IKAR is reporting the export price for Russian wheat at the end of last week was $228/mt FOB, down from $232/mt the previous week and well below the suggested price floor of $245 for Nov which was supposed to increase to $250/mt in December. The head of Russia’s grain lobby group maintains that their Ag. Ministries official grain production forecast for 2024 at 130 mmt includes land annexed from Ukraine. This compares to last year’s grain harvest of 150 mmt. Last week MM’s were net seller of nearly 5k KC, 1.1k in MGEX while being net buyers of nearly 400 contracts in Chicago. While global stocks among major exporters is still expected to fall to the lowest level in decades, it still hasn’t translated into higher demand for US wheat as it remains mostly uncompetitive in the global markets.
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