Written Commentary
SOYBEANS
The soybean complex was lower across the board extracting weather premium in the process. Soybeans were down $.04 – $.08 with bull spreading evident. Jan-24 has gained $.02 ½ against Mch-24 as there were 66 deliverable receipts cancelled with the exchange. Meal was down $3 – $4 with Jan-24 having fallen to a 2 month low intraday. Next support is at $390. Choppy day in Jan-24 oil however prices recovered late to close with only modest losses. Spot board crush margins slipped $.05 today closing at $1.27 ½ bu. There were no announced export sales as eyes shift toward South American radar which shows rains beginning to fill in over dry areas of Brazil. Precipitation totals and how they are distributed over these dry areas of central and northern Brazil in the next week to 10 days will drive agricultural valuations thru year end. Midday forecasts suggest better coverage in areas that need it the most. Follow up rains into Jan/Feb will still be needed to restore soil moisture after weeks of much below normal precipitation. Time will tell if rains came early enough to prevent further crop deterioration. Weather across southern Brazil and Argentina to remain mostly favorable. Of China’s 7.9 mmt of soybean imports in Nov-23, 5.3 mmt (67%) came from Brazil with only 2.3 mmt (29%) coming from the US. Late yesterday a farm group in Mato Grosso suggested soybean production from the largest producing state will be down 20% from YA to 36.2 mmt, due to lower yields cause by hot/dry conditions. The Korean Feed Association bought 60k mt of SA origin meal for $484/mt CF for Mch/April shipment. Celeres forecasts Brazilian production at 156.5 mmt, vs. the USDA est. of 161 mmt. Export sales tomorrow are expected to range from 45 – 90 mil. bu. for soybeans, (5) – 10k tons for oil, and 175 – 325k tons for meal.
WHEAT
Prices were lower across all three classes today giving back all of yesterday’s gains. Chicago and MGEX were down $.08 – $.12 while KC was $.14 – $.16 lower. It was an outside day down for Mch-24 Chicago with next support at the 50 day MA, currently $6.02 ½. Mch-24 KC is threatening another break below the $6.25 level. After passing earlier this week Jordan issued another tender for 120k mt of optional origin milling wheat with the offer deadline of Dec. 26th. The head of research at SovEcon raised his Russian wheat production forecast for 2024 1.5 mmt to 91.3 mmt citing better than average winter crop conditions. The USDA forecast is 90 mmt. Export sales tomorrow are expected to range from 10 – 18 mil. bu.
CORN
Prices were down $.02 – $.03 today as Mch-24 fell to a new contract low. The next major support is $4.47, the low from early Dec-23 on the weekly bar chart. Resistance is at the 50 day MA at $4.90, followed by the 100 day at $4.95. Algeria bought 80k mt of Argentine corn, prices not available. South Korea’s Feed committee bought 65k mt of optional origin corn for $256.50/mt CF for April-24 shipment. Of the 22.2 mmt of corn imported this year by China 8.8 mmt (40%) has come from Brazil, while 6.5 mmt (29%) has come from the US. APK Inform raised their Ukrainian production forecast 1.6 mmt to 27.6 mmt, still well below the USDA est. of 30.5 mmt. Their export forecast however at 22 mmt is above the USDA est. of 21 mmt. US ethanol production slipped to 1,071 tbd, down from 1,074 tbd the previous week, however up 4% from YA. Production was above expectations and the 3rd highest of the MY. There was 107 mil. bu. of corn used in the production process, well above the pace needed to reach the current USDA forecast of 5.325 bil. bu. Despite the modest production cut, ethanol stocks surged to a 4 month high at 22.9 mil. barrels. Gasoline demand slipped to 8.754 mbd last week, down 1.2% from the previous week however up .5% YOY. Export sales tomorrow are expected to range from 32 – 48 mil. bu. Although export demand and ethanol production have been strong in recent weeks, it hasn’t been enough to cut very deep into the 2.1+ bil. ending stocks forecast. Prices likely to continue drifting lower as SA weather improves crop prospects.
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