Written Commentary
The Ghost in the Machine Q1 2024
March 19, 2024
Morning Grains Outlook
Grains are mixed. SX is up 1 cent and near 10.01. SMZ is near 335.1. BOZ is near 32.60. CZ is up 3 cents and near 3.67. WZ is unchanged and near 5.49. KWZ is up 1 cent and near 4.84. US stocks are moderately lower. Crude is mixed. US Dollar is higher. Gold is lower.
Soybean futures are dealing with seasonal US harvest pressure, news on US yields, China buying or not, South America weather, big fund long and money flow. Corn is up to US harvest pressure and it is still dry in Russia.
For the week, SRW Wheat prices are down roughly 27 cents; HRW down 20; HRS down 15; Corn is down 13 cents; Soybeans down 42; Soymeal down $7.00, and; Soyoil down 255 points. Crushing margins are up 8 cents at $0.94; Oil share is down 2% at 32%.
Chinese Ag futures (January) settled up 1 yuan in soybeans, down 15 in Corn, down 6 in Soymeal, down 174 in Soyoil, and down 172 in Palm Oil. Malaysian palm oil prices were up 29 ringgit at 2,786 (basis December) at midsession with flooding in Indonesia prompting supply concerns.
The 6 to 10 day forecast for the US Midwest has rain moving through the region early next week with mostly light amounts and around 80% coverage. Things quiet down the rest of next week and following weekend. Below average temps begin to move in over the 6 to 10 day period for most of the region. The Southern Plains over the 6 to 10 day period sees little to no rains for most of the region. Temps will become more average in the west and below average in the east.
The weather outlook in most Brazil production regions continues with a pattern of showers and a few thunderstorms expected in center west and center south Brazil over the near term. Argentina has increased rain chances through Sunday with enough rain to improve soil moisture and conditions for winter wheat.
Western portions of Ukraine will receive timely rain through the end of next week that will significantly increase soil moisture needed for winter crops. Eastern Ukraine will receive some rain Sunday into Wednesday, but much more will be needed to significantly change soil moisture. Russia’s ‘Southern Region’ and lower Volga River Basin into western Kazakhstan will remain too dry for successful planting, germination and establishment in many unirrigated areas. The remaining portions of western Russia have plenty of moisture.
USDA will revise the US 2019 corn and soybean crop on Sep 30. Average guess for US corn is 13,607 mil bu with range of 13,427-13,750 versus USDA 13,617. Average guess for US soybean is 3,575 mil bu with range of 3,542-3,614 versus USDA 3,552.
Average guess for US Sep 1 corn stocks is 2,250 mil bu with range of 2,120-2,574 versus 2,221 last year and USDA 2,253 . Average guess for US soybean Sep 1 stocks is 576 mil bu with range of 490-608 versus 909 last year and USDA 575. Average guess for US wheat Sep 1 stocks is 2,242 mil bu with range of 2,150-2,380 versus 2,346 last year.
For the week ended September 17th, U.S. All Wheat sales are running 7% ahead of a year ago, shipments up 4% with the USDA forecasting a 1% increase on the year, U.S. Corn sales are running 147% ahead of a year ago, shipments 74% ahead with the USDA forecasting a 32% increase and U.S. Soybean sales are running 193% ahead of a year ago, shipments up 77% with the USDA forecasting a 27% increase on the year.
The International Grains Council (IGC) on Thursday trimmed its forecast for global corn (maize) production in the 2020/21 season, partly reflecting a reduced outlook for the U.S. crop. In its monthly update, the inter-governmental body reduced its global corn crop forecast by 6 million tons to a still record high of 1.16 billion tons; U.S. corn production was seen at 376.5 million tons, down from a previous projection of 384.2 million.
Global corn consumption in 2020/21 was seen at 1.176 billion tons, up from the prior season’s 1.145 billion with global demand continuing to rise despite the COVID-19 pandemic. The IGC maintained its forecast for 2020/21 world wheat production at a record 763 million tonnes with consumption seen at 749 million. Grains stocks were seen rising to a three-year high of 629 million tons by the end of the 2020/21 season, up from 622 million a year earlier, with a cut in corn inventories for the fourth consecutive season more than offset by expansions for wheat, barley and other grains. Global soybean production in 2020/21 was kept at 373 million tons with consumption seen at 369 million.
On Thursday Managed funds were net buyers of 1,000 contracts of SRW Wheat; net sold 17,000 Corn; sold 13,000 Soybeans; sold 7,000 Soymeal, and; net sold 3,000 Soyoil. We estimate Managed Money net long 21,000 contracts of SRW Wheat; long 48,000 Corn; net long 206,000 Soybeans; net long 60,000 lots of Soymeal, and; long 83,000 Soyoil
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