Written Commentary
SOYBEANS
The soybean complex was higher across the board with late day strength pushing several contracts to new session highs. Bean were up $.06 – $.11, meal was $4 – $7 higher, while oil was up 50 – 65. Bull spreading is noted as Argentina has now announced plans to raise taxes on soybean production to 33% from the current 31%. Today’s rebound in Jan-24 soybeans was capped by its 50 day MA at $13.28 ½. Next resistance is the 100 day MA at $13.36 ¾. Resistance for Jan-24 oil is at its 50 day MA, currently 51.40. Jan-23 meal continues to rebound after dropping below $400 last week. Next resistance is at $418. While beneficial rains are expected to spread over the drier areas of northern and central Brazil over the next few days it may be too late to achieve average soybean yields in parts of Mato Grosso and the NE. Precise coverage and totals over the next few weeks will likely drive agricultural prices thru year end and into the Jan 12th USDA production, stocks and acreage report. Conditions across Southern Brazil and most of Argentina remain favorable for crop development. No export announcements today. Export inspections at 52 mil. bu. were at the high end of expectations. YTD inspections at 778 mil. are down 17% from YA, vs. the USDA forecast of down 12%. Spot board crush margins rebounded $.12 today to $1.38 ¼. AgRural estimates Brazilian soybean planting to have reached 94%. Last week MM’s were net sellers across the board in the soybean complex having sold nearly 6k contracts of soybeans, nearly 5k soybean oil and roughly 25.5k in soybean meal. Their net long position in the soybean complex has slipped to 101k contracts, a 2 month low.
CORN
Prices were down $.05 – $.06 today with Mch-24 trading to a new low for the month. Next support is at $4.70 with resistance at the 50 day MA of $4.91, followed by the 100 day MA at $4.96 ½. There were no export announcements today. Export inspections at 37 mil. bu. were at the high end of estimates however below the 45 mil. bu. needed per week to reach the USDA forecast. YTD inspections at 399 mil. bu. are up 27% from YA, vs. the USDA forecast of up 26%. Chinese corn imports in Nov-23 totaled 3.6 mmt bringing YTD imports to 22.2 mmt, up 12.3% from YA. The vast majority of these imports being sourced from Brazil. Last week money managers bought nearly 9k contracts of corn reducing their short position to 151,570 contracts, down about 55k from the recent peak. The index funds current long holdings in corn is down to just over 221k contracts, down from 56% from its peak at nearly 504k contracts. Late on Friday Safras & Mercado lowered their Brazilian corn production est. over 6 mmt to 129.2 mmt. Consistent with the USDA est. of 129 mmt, however still well above the Conab est. of 118.5 mmt. The final ruling on whether corn based ethanol will qualify for tax subsidies in the production of sustainable aviation fuel (SAF) appears to have put off until Mch-24. There was nearly 80 mil. gallons of SAF produced/used in 2022. That figure is expected to double to nearly 160 mil. gallons in 2023, then tripling to nearly 490 mil. gallons in 2024. This still only represent .50% of the pre-Covid global usage of aviation fuel of approximately 95 bil. gallons. The devil remains in the details as to how much corn based ethanol could potentially be used to fill this demand source. US ethanol production has ranged from 15 – 16 bil. gallons annually since 2016.
WHEAT
Prices were lower across all 3 classes today with MGEX down $.07 – $.09 while both Chicago and KC were $.10 – $.15 lower. Mch-24 Chicago remains stuck in a $6.00 – $6.50 trading range, possibly thru year end. KC Mch-24 fell to a new low for the month as its premium to Chicago fell to $.11 at today’s close, a 16 month low. Good rains across the US southern plains continue to chip away at drought conditions while adding moisture reserves for the US HRW wheat crop. Export inspections at 10.5 mil. bu. were in line with expectations however below the 14.5 mil. needed per week to reach the USDA export forecast. YTD inspections at 328 mil. are down 27% form YA, vs. the USDA forecast of down 4.5%. Still no shipments to China. Saudi Arabia reportedly purchased 1.35 mmt of wheat for Feb thru May shipment. Much is expected to be sourced to have been sourced from Russia. Purchase prices expected to range from $277 – $296/mt on CF basis depending on the port of delivery. IKAR reports Russia’s wheat export price closed last week at $242/mt FOB, up $1 from the previous week. SovEcon reports Russian grain exports last week at 690k mt, up from 610k mt the previous week. Wheat accounted for the vast majority of last week’s exports at 680k mt. MM’s were net buyers of wheat last week apparently evenly up some positions into year end. They bought 26.7k in Chicago and 8.15k in KC. Late today Egypt’s GASC announced a snap tender for wheat shipment in Feb-24 that closes tomorrow.
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