Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
SOYBEANS
Soybean futures ended lower. Increase supply of Argentina soymeal and talk that once US new crop soybeans will be used for crush, soybean and soymeal prices should drop. Malaysian palmoil prices are lower as stocks rise. This limits the upside in soyoil futures. Weekly US soybean export sales were 16 mil bu. Total commit is 945 vs 852 ly. USDA goal is 2,085 vs 2,145 ly with some looking at exports closer to 1,900. USDA will estimate US Sep 1 stocks on Sep 30. Trade should be close to 240 mil bu. July-Sep crush is est near 531mil bu vs 496 ly and exports 278 vs 117. Negative residual is guessed at 74 vs 91 ly. Tropical storm Hermine will be closely watched with one forecast estimating landfall near Louisiana and the other north Florida around Oct 1.
CORN
Corn futures managed a small gain in a relatively tight range. Corn futures, like many markets, are trying to find value with the war in Ukraine and possible Russian escalation and strong US domestic basis offering support. Approaching US harvest and slow US export sales may be offering equal resistance. Continued uptrend in USD offers resistance while bottoming action in Crude may also be offering equal support. There was some concern that drop in weekly US ethanol production could signal lower domestic travel as summer ends and school begins. Weekly US corn export sales were 7 mil bu. Total commit is 491 vs 981 ly. USDA goal is 2,275 vs 2,475 ly with some looking at exports closer to 2,000. USDA did announce 105 mt of US corn was sold to Mexico and 101.6 mmt to unknow. IGC lowered World corn crop to 1,168 mmt with US down to 354.2 vs 364.7 previous. Some feel US crop could drop further in October. USDA will estimate US Sep 1 stocks on Sep 30. Trade should be close to 1,500 mil bu vs 1,235 ly. July-Sep FSI is est near 1,696 mil bu vs 1,671 ly, feed and residual 637 vs 617 ly and exports 518 vs 594. Total July-Sep demand near 2,851 versus 2,883 last year.
WHEAT
Wheat is wheat. Futures ended higher on concern over Black Sea exports. Volatility continues after US Fed raised rate 75 basis points. Fed Chairman pledged to increase rates until Inflation is down to 2 pct. This could drop domestic, global demand and push USD higher. ICG increased World wheat crop from 778 mmt to 792. They increased Russia to 100 mmt. Weekly US wheat export sales were 6 mil bu. Total commit is 382 vs 396 ly. Trade look for US Sep 1 wheat stocks near 1,375 mil bu vs 1,774 ly. Exports near 187 vs 237. Matif wheat closed near a 12-week high with the chart is turning increasingly positive. Some fundamentalist question tech pattern with majority of day trade moved by algorithm machines trading the latest headline. Still. WZ is near resistance and the 200 DMA near 9.28. Head and shoulders bottom suggest a test of 9.50 but futures are becoming overbought. KWZ has a similar pattern with 10.05 200 DMA next resistance. MWZ has initial resistance near 200 DMA at 10.10 then 100 DMA near 10.42.
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