Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
SOYBEANS
The soybean complex was lower across the board with beans down $.13 – $.17, meal was $3 – $5 lower, while oil was down 150 – 170. Renewed trade tensions with China, higher than expected production estimates, along with speculative selling all weighed on soybean valuations. Overnight the Chinese government announced restrictions on IPhone usage in government offices and state backed entities. Apple stock, AAPL, is down 3.5% on the news.Nov-23 beans held above support at the 50 day MA at $13.54 ½. Oct-23 meal close below support at the 100 day MA of $397.40. Oct-23 oil closed below support at its 50 day MA at 62.47. Overnight Chinese customs data showed Aug-23 imports at 9.4 mmt, down 4% from July, however up 30% from Aug-22. Calendar YTD imports have reached 71.7 mmt up 17% from YA. If Sept-23 imports match YA at 7.72 mmt (last month of the 2022/23 MY) total imports would reach 101 mmt, up 1 mmt from the current USDA forecast. Brazil’s Ag. Ministry reports soybean exports for Aug-23 reached 8.4 mmt, up 41% from Aug-22. YTD sales at 80.85 mmt are up 21.6% from YA. Our est. for next Tues. USDA report are 2022/23 ending stocks down 15 mil. bu. to 245 mil. Our 2023 prod. est. based on Sept 1 conditions is 4.176 bil. bu. down 29 mil. from the Aug-23 USDA report with an average yield of 50.5 bpa. We’ve got 2023/24 ending stocks at 200 mil., down 45 mil. from the Aug-23 USDA. Export sales tomorrow are expected to range from 45 – 75 mil. bu. for soybeans, 200 – 600k tons meal, and 0 – 15k tons oil. Soybean area in drought increased 3% last week to 43%, still well below the June-23 peak at 63%.
CORN
Prices closed within $.01 of unchanged near the midpoint of the day’s trading range. Dec-23 remains stuck in a $4.75 – $5.05 trading range. Ethanol production rebounded to 1,012 tbd in the week ended Fri. Sept 1st, up from 1,007 tbd the previous week and slightly above expectations. A spokesperson from the Mexican Ag. Ministry stated they may be willing to modify their proposed ban on GMO corn imports to appease the US/Canada and avoid potential tariffs from a dispute settlement panel. Our est. for next Tues. USDA report are 2022/23 ending stocks up 10 mil. bu. to 1.467 bil. 2023 production based on Sept 1 conditions is 14.934 bil. bu. down 177 mil. from the Aug-23 USDA report with an average yield of 173 bpa. We’ve got 2023/24 ending stocks at 2.161 bil., down 41 mil. from the Aug-23 USDA. According to Brazil’s Ag. Ministry their exports in Aug-23 reached a record 9.33 mmt, up 25% from the previous record in Aug-22. Jan thru Aug sales have reached 25.2 mmt, up 41% over YA. The Biden administration is delaying until Dec. whether corn-based aviation fuel will qualify for subsidies under Pres. Biden’s climate law. Export sales tomorrow are expected to range from 10 – 40 mil. bu. US corn area in drought increased another 4% in last week to 49%, the 3rd consecutive weekly increase. Drought area remains well below the June-23 peak of 70%. The BA Grain Exchange forecasts Argentine corn production will rebound sharply in 23/24 to 55 mmt, up from 34 mmt this past season, and just above the USDA est. of 54 mmt.
WHEAT
Prices closed lower across all 3 classes with Chicago and MGEX down $.07 – $.10, while KC was $.11 – $.13 lower. Chicago Dec-23 continues to consolidate in a tight range around $6. KC Dec-23 briefly pierced the $7.50 level earlier before pulling back. Additional Russian missile strikes damaged a grain silo and port infrastructure in the Izmail district. Lloyd’s of London CEO stated they have had discussions with the UN on issuing coverage for Ukraine Ag. shipments if a new UN Black Sea Grain deal can be reached. A Ukrainian grain export group, UGA, believes that with upgrades grain shipments thru the Constanta Romania port can reach 35 mmt annually, well above the 8 mmt shipped thru the port Jan-23 thru July-23. Stats Canada will be releasing end of July-23 stocks tomorrow at 7:30 CST. All wheat stocks are expected at 4.0 mmt, up from 3.663 mmt YA. US sold just over 88k mt of milling wheat to a South Korean flour mills from Nov/Dec shipment. Export sales tomorrow are expected to range from 10 – 22 mil. bu. Winter wheat area in drought held steady at 46%. The BA Grain Exchange forecasts Argentine wheat production will increase to 16.5 mmt in 2023/24, up from 12.2 last year, however just below the USDA forecast of 17.5 mmt.
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