Written Commentary
WHEAT
Prices were higher across all 3 classes with several contracts making new highs on the close. Chicago and MGEX finished up $.04 – $.07, while KC was $.11 – $.14 higher. Mch-24 Chicago closed above its 100 day MA at $6.20 ¼, next resistance is $6.50. KC Mch-24 rejected trade below $6.25 before recovering all of yesterday’s losses. Forecasts of heavy rains for the SE US plains and delta states will continue to replenish moisture reserves while lowering drought readings in the US winter wheat areas. Jordan passed on offers from their recent tender for 120k mt. Several offers were submitted for Bangladesh’s recent tender for 50k mt ranging from $315 – $320/mt CF. Egypt reportedly bought 480k mt of Russian wheat for $265/mt FOB for shipment in Feb-24. Freight costs were reported to be $22.40/mt. Recent Risk Management Agency (RMA) data suggests US 2024 winter wheat acres likely fell closer to 2 – 3 mil. acres below YA, a bit more of a drop than previously expected. The USDA will provide winter wheat acreage data in the Jan. 12th report. EU soft wheat exports as of Dec. 17th have reached 13.98 mmt, down 15.5% from YA.
SOYBEANS
The soybean complex was mixed as a late day recovery in soybean oil enabled it to scratch out a slightly higher close. Soybeans finished $.15 – $.18 lower while meal was down $6 – $10. Despite bull spreading in the beans, Jan-24 gave back all of yesterday’s gains however held above yesterday’s low at $13.07. Today’s late day rally in Jan-24 oil stopped just below its 50 day MA resistance at 51.35. While it was an inside trading day for Jan-24 meal it was not able to close above its 100 day MA support at $404.30. Spot board crush margins slipped $.06 to $1.32 ½ bu. while bean oil PV recovered improved .5% to 38.6%, matching a 2 month high. Bean oil prices were supported by news that the Brazilian Energy Council raised the country’s mandatory biodiesel blending requirement 2% to 14% starting in Mch-24. The blend rate will then jump to 15% in 2025. As a result of the higher blend rates ABIOVE forecast biodiesel demand will jump 22% in 2024 to 8.9 bil. gallons and another 13.5% in 2025 to 10.1 bil. gallons. Dry areas in central and northern growing regions of Brazil are expecting frequent bouts of scattered precipitation over the next few weeks. While rainfall totals aren’t expected to reach normal levels for a typical monsoonal season, they’ll likely be enough to relieve recent crop stress and enabled farmers to finish planting their crops. The USDA announced the sale of 132k tons (4.8 mil. bu.) of soybeans to an unknown buyer. Dr. Michael Cordonnier reduced his Brazilian soybean production forecast by 2 mmt to 155 mmt, further below the USDA est. of 161 mmt. He kept his Argentine est. unchanged at 50 mmt, vs. the USDA forecast of 48 mmt. Brazilian farmers in Mato Grosso were granted an extra 20 days to plant (or replant) this year’s soybean crop given adverse weather to date. They had asked for a 40 day extension however the Brazilian Ag. Ministry granted only 20. As it stands, farmers now have until Jan. 13th to finish soybean sowing. Best estimate it effect 5% of intended acres or 1.5 mil. Late yesterday Argentina purposed raising export taxes on meal and oil 2% to 33%, equaling the export tax on soybeans.
CORN
Prices were down $.04 – $.05 today. While Mch-24 traded to a new low for the month it held support above its contract low of $4.70 ½. The next major support is $4.47, the low from early Dec-23 on the weekly bar chart. Resistance at the 50 day MA at $4.90 ½ , followed by the 100 day MA at $4.95 ½. There were no export announcements today. US corn appears to be seeing added competition in the global marketplace from Argentina as well as Ukraine with the recent success of the “Humanitarian Corridor” along the northern and western Black Sea coastline. Dr. Michael Cordonnier lowered his Brazilian corn production forecast 1 mmt to 117 mmt, well below the USDA est. of 129 mmt, and also below Conab’s est of 118.5 mmt. He offset the lower Brazilian forecast by raising Argentina’s by 1 mmt to 53 mmt, still below the USDA forecast of 55 mmt. EU corn imports as of Dec. 17th have reached 7.9 mmt, down 43% from YA. Ethanol production tomorrow is expected to slip a bit from last week’s 1,074 tbd pace as profit margins have slid to their lowest levels since Feb-2023.
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