Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
MORNING OUTLOOK
Grains are lower. SK is down 8 cents and near 13.91. SMK is near 433.4. BOK is near 45.71. CK is down 7 cents and near 5.47. WK is down 9 cents and near 6.45. KWK is down 7 cents and near 6.31. US stocks are higher. US Dollar mixed. Crude is higher.
Chinese Ag futures (May) settled down 6 yuan in soybeans, up 8 in Corn, down 12 in Soymeal, up 72 in Soyoil, and up 66 in Palm Oil. Malaysian palm oil prices were up 54 ringgit at 3,626 (basis April) lifted by a jump in Feb 1-10 exports versus comparable month ago.
The impressive rally in grains that started last August and trended higher after the USDA December crop report could be over. USDA failed to give the bulls the numbers needed to push higher. Some feel SK could drop back closer to 13.25, CK to 5.20 and 6.20 WK on fund long liquidation. This could widen spreads as nearby drops versus deferreds. US domestic basis will have to do the work now to move supplies into the demand pipeline. Some even feel the highs may be in for 2021 if 2021 north hemisphere weather is normal. Argentina truckers ended their strike. China will be on holiday next week.
Demand for US corn and soybean exports will increase from USDA last guess and US corn and soybean carryout could drop from USDA estimates especially corn. Still without increase concern about South America weather the supply bullish influence could have peaked.
Analyst estimate US 2020/21 corn carryout closer to 1,100 mil bu versus USDA 120. Trade is looking for US 2021 soybean acres near 90.0 versus USDA baseline guess of 89.0. That could produce a crop near 15,250 with a yield near 180.0.
Analyst estimate US 2020/21 soybean carryout closer to 100 mil bu versus USDA 1,502. Trade is looking for US 2021 corn acres near 92.0-93.0 versus USDA baseline guess of 90.0. That could produce a crop near 4,525 with a yield near 50.5.
Wheat futures will follow corn lower. Key now is World wheat demand, Russia export pace and World 2021 north hemisphere weather. Some look for a US 2021 wheat crop near 1,900 and carryout near 735.
USDA dropped HRW export 25 mil bu and increased HRW 15 and white 10.
On Monday, Managed funds were net sellers of 5,000 SRW Wheat; sold 22,000 Corn; net bought 11,000 Soybeans; bought 2,000 lots of Soymeal, and; net bought 7,000 Soyoil. We estimate Managed Money net long 21,000 contracts of SRW Wheat; long 372,000 Corn; net long 196,000 Soybeans; net long 77,000 lots of Soymeal, and; long 126,000 Soyoil.
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