Written Commentary
ADM Appoints Monish Patolawala as EVP and CFO
July 10, 2024
SOYBEANS
Bean prices started off steady overnight but quickly ran into selling and the edge stays with the bear camp. Soybean planting this afternoon should be above 80% complete. Weekend rains were heaviest in Minnesota, eastern Nebraska and Western Kansas and the 1 to 5 day forecast features scattered showers for the Eastern bean belt but only very light rains for the Western belt which should allow planting to move forward toward the finish line this week. Temperatures will be trending below normal for the next 2 weeks for the majority of the Midwest. The Climate Prediction Center says La Niña may be delayed until late July – August, which would be less threatening for the US summer growing season. NASS crush will be released after the close today and is expected at 175.3 million bushels, with oil stocks at 2.225 billion pounds. Export Sales Report released last Friday showed that for the week ending May 23, net soybean sales came in at 329,427 tonnes for the current marketing year and 6,921 for the next marketing year for a total of 336,348.
Moving average support at 1204 gave way overnight and prices continue the pullback. The lack of threatening US weather is making sellers comfortable pressing the market lower and bullish news is hard to find.
SOYBEAN MEAL
The soy complex struggled last week amidst non-threatening US crop weather and a planting pace near normal. Cash meal tightness has been ongoing following the usually low NOPA crush number 2 weeks ago. However, early last week, meal prices confirmed a technical reversal lower, which sent prices down the rest of the week.
Commitments of Traders data Friday indicated Managed Money increased their long position in soymeal by 17,000 contracts to 118,000 net longs. Since the data is as of Tuesday of last week, the current net position is expected to be less than 118,000 since fund selling was a feature the 2nd half of last week. The weekly export Sales Report released last Friday showed net meal sales at 265,544 tonnes for the current marketing year and 20,239 for the next marketing year for a total of 285,783. This was at the upper end of pre-report estimates.
NASS crush will be released late Monday and is expected to be near 175.3 million bushels. This report holds extra significance this month due to the very low NOPA number a couple weeks ago. We expect crush to come in a bit below estimates and soyoil stocks slightly above expectations.
CORN
Corn prices are slightly higher this morning after falling for the previous 4 days in a row and tested the low for the month of May overnight. Today’s US planting report is expected to be around 90% complete. Also, the 1st corn condition report will be released this afternoon and is expected to show the crop is off to a very strong start, which was part of the pressure on prices late last week. Some scattered showers over the next couple days in the central corn belt are forecast but Western belt areas will see limited precipitation. Temperatures will be trending below normal across the Midwest for the next 2 weeks. Some of the pressure on corn may be coming from the climate prediction Center forecast that La Niña may be delayed until late July – August, which means potentially less threatening US summer weather. Weekly export sales Friday was in the middle of the range of guesses and are expected to stay strong as Ukraine prices have come up to nearly the same price as the US. US weather threats are lacking for the next couple weeks and that will likely keep overhead selling in place on rallies. Look for uncertain global production due to the Argentine leafhopper issues, Brazil’s safrinha dryness and Black Sea crop stress to keep support under the market once the expected bearish crop conditions are seen this afternoon. Next key support for July futures is the April low at 435 ¾.
WHEAT
Wheat is bucking the weaker trend in corn and beans and is starting the week stronger on Black Sea weather stress. While some rains have been seen in northern Ukraine, at least half of Black Sea wheat areas remain too dry. In addition, Interfax is reporting the Russian Ag Minister says a nationwide emergency may be announced due to the frost damage. Over the weekend, some rains fell in Western Kansas and the Oklahoma Panhandle but the benefit to the current crop is debatable as harvest is close at hand.
CATTLE
Cattle prices last week seemed to react to a weak attitude regarding the US economy and August live cattle fell to 100-day moving average support at 177.85. Choice cutout seasonally peaks at this time of year, which may keep the packer from bidding up for cattle this week as profit margins suffer. The CME announced new price limits of $7.50 on live cattle and $9.25 on feeder cattle, which will go in effect today. Friday’s weekly export sales report showed US beef sales for the week ending May 23 at 15,736 tonnes, down from 21,522 the previous week and below the four-week average of 16,182. The estimated average dressed cattle weight last week was 852 pounds, up from 851 the previous week and up from 817 a year ago. The 5-year average weight for that week is 812 pounds. Estimated beef production last week was 459.3 million pounds, down from 463.8 million a year ago.
HOGS
Friday, July hogs traded inside Thursday’s range ending a mostly sideways trading week. However, recent downtrend momentum since late April appears to be waning and last week’s sideways action may be a sign prices are ready to bounce. A move above last week’s high of 97.80 on July would be the signal a rally is starting. The USDA pork cutout, released after the close Friday, came in at $102.33, up $1.38 from Thursday and up from $99.17 the previous week. The previous low was $100.95 on May 30. The previous high was $102.86 on May 28. Estimated US pork production last week was 464.1 million pounds, down from 508.4 the previous week and up from 432.2 a year ago. Friday’s weekly export sales report showed US pork exports for the week ending May 23 at 44,573 tonnes, up from 26,273 the previous week and the highest since April 4. Cumulative sales for 2024 have reached 915,600 tonnes, down from 933,700 year ago and below the 5-year average of 984,400. The largest buyer this week was Mexico at 23,165 tonnes, followed by Australia at 6281 tonnes. Mexico has the most commitments for 2024 at 331,600 tonnes, followed by South Korea at 127,200.
MILK – CLASS III
July Class III Milk rallied to a 1-week high on Friday to finish the week with a moderate gain.
The USDA reported that milk production trends are steady to weaker as handlers in the Midwest report production has eased. While storm-related power outages kept milk and cream handlers busy over the weekend, milk receivers indicate they were still able to handle deliveries effectively. Class I demand is lighter as many educational institutions have begun or will soon begin session breaks.
Cream continues to be generally available throughout the nation, and expectations vary as to when supply will begin to significantly tighten. Retail butter demand varies from strong to steady across the country, while food
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