Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
CORN
Prices closed $.04 – $.06 higher making new session highs at the close. Dec-23 held support overnight above the recent low of $4.73 ½ closing the day with an inside trading session. First major resistance not until the 50 day MA, currently $5.01 ½. Ethanol production jumped to 1,039 tbd last week, above expectations and up 8% from YA. Roughly 104 mil. bu. of corn was consumed in the production process, above the pace needed to reach the USDA 2023/24 usage estimate of 5.30 bil. bu. As expected yesterday the USDA lowered old crop usage for ethanol by 30 mil. to 5.195 bil. Late yesterday USDA Sec. Vilsack suggested the US ethanol industry was at a “make or break” moment as the fossil fuel industry remains under assault from environmentalists. He went on to state that his agency would spend up to $400k to adjust the greenhouse gas model to ensure corn based aviation fuel will be eligible for Fed. Govt. sustainable aviation fuel (SAF) subsidies. This market segment is projected to reach 36 bil. gallons annually, compared to the current ethanol capacity of 17.7 bil. gallons. Ukrainian corn exports July 1st thru Sept. 13th at 2.3 mmt are down 32.5% from YA. Yesterday’s report didn’t feature much change in global production from Aug. Stocks among the top 4 exporters in 2023/24 MY are still expected to jump 20 mmt to 70 mmt. Stocks/use ratio among the top 4 exporters is forecast to jump to 12%, the highest in 6 years. The Ave. US Farm price pegged at $4.90 bu. seems high to me with US stocks well over 15% of usage. Export sales tomorrow are expected to range from 15 – 45 mil. bu.
SOYBEANS
The soybean complex was mixed with soybeans closing $.03 – $.06 higher, soybean meal $2 – $4 lower, while oil was up 160 – 180. Nov-23 held support above a key low in Aug. at $13.32 ½. Resistance is at the 50 day MA, currently $13.58 ½. Oct-23 oil held support yesterday on a challenge of the $.60 level, surging higher today closing above it’s 50 day MA at $.6277. Oct-23 meal violated support at its 100 day MA at $396.70. ABIOVE raised their 2023/24 Brazilian production forecast to 157.3 mmt, up .3 mmt, however remains well below the USDA est. of 163 mmt. They also raised their export forecast by .5 mmt to 99 mmt, just above the USDA est. of 97 mmt. Yesterday’s report didn’t feature much change in global production from Aug. Production among the top 4 exporters in 2023/24 MY is still expected to jump 27 mmt following the modest downward revision to the US crop. Stocks/use ratio among the top 4 exporters is expected to jump to nearly 22%, a 5 year high. The Ave. US Farm price pegged at $12.90 bu. seems to me to be a better fit with US stocks/use barely over 5%. I still look for Nov-23 soybeans to trade 3x the price of Dec-23 corn this fall. This would be a first since 2016. Export sales tomorrow are expected to range from 25 – 55 mil. for beans, 200 – 500k tons meal, and 0 – 10k tons oil.
WHEAT
Prices were higher across all 3 classes today with Chicago and MGEX up $.08 – $.10, while KC was $.12 – $.14 higher. Wheat continues to draw support from yesterday’s lower than expected global production forecast and the need for more war premium. Both Russia and Ukraine launched drone and missile attacks overnight on enemy port infrastructures. Ukraine struck a Russian landing vessel and submarine that was in for repairs at the Sevastopol port in Crimea while Russia continued their aerial assault on Ukrainian grain facilities along the Danube river. World stocks are forecast to drop for a 4th consecutive year falling to an 8 year low, while global stocks/use are expected to drop to a 9 year low. Dec-23 Chicago was able to trade back above $6 before slipping a touch. Dec-23 KC is nearing resistance at $7.50 and the Sept high at $7.54 ¼. Dec-23 MGEX traded to a new monthly high with the next resistance at $8. Iran’s state run grain buyer GTC has reportedly bought 240k mt of milling wheat in recent week’s likely from Russia at $314/mt CF for half the volume, and 347.50/mt CF for the remainder. Ukraine’s Deputy Prime Minister claims the Russian attacks on Ukraine ports since July 18th have damaged more than 100 infrastructure facilities and lowered their grain exports by nearly 3 mmt to Asian, African, and European destinations. Production among the top exporters is forecast to drop 17 mmt from YA, with stocks/use slipping to 13.4% the lowest level in at least 10 year.
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