Written Commentary
CORN
Prices recovered late to close mixed and within $.01 of unchanged. It was an inside trading session for all contracts. While history would certainly argue for final corn acres to be below Friday’s USDA est., for now the market continues to search for a level that stimulates export demand. Since 2000 final planted acres were below the June forecast 68% of the time and up only 29% of the time. In one year acres were unchanged. Planted acres fell between 1.35 and 2 mil. in 3 of the last 5 years. Right now my lean is for 500k fewer planted acres. Corn inspections at 32 mil. bu. were a 5 month low and below the 35 mil. needed per week to reach the USDA export forecast of 2.150 bil. bu. YTD inspections at 1.672 bil. are up 28% from YA vs, the USDA forecast of up 29%. Money managers last week sold just over 86k contracts, extending their short position to 278k. Thru todays close I suspect their short position has swelled to over 315k, closing in on the record short of 340k this past February. AgRural estimates Brazil’s 2nd crop harvest had reached 49% by June 27th. Corn used in the production of ethanol jumped to 454 mil. bu. in May-24, up 3.3% from May-23 and a 5 year high for the month. Total usage Q1 thru Q3 of the 23/24 MY has reached 4.066 bil. up 6% from YA, vs. the USDA forecast of up 5.3%. Usage will need to reach 1.384 bil. in Q4 of the 23/24 MY, up 3.3% YOY, to reach the USDA est. of 5.450 bil. bu.
SOYBEANS
The soybean complex was mostly higher with beans up $.07-$.12. Bull spreading dominated meal trade with nearby contracts up $3-$5 with differed contracts $1-$3 lower. Bean oil surged $.02 lb. Aug-24 beans made fresh contract lows before recovering. Nov-24 briefly dipped below $11. Aug-24 meal held support at last month’s low of $344.10. Aug-24 oil closed just above its 100 day MA at 45.96. Next resistance at the May high at 47.00. Oil continues to draw support from Friday’s strong usage figures for RD production while higher energy prices help trigger speculative short covering. Spot crush margins (July-24) surged $.25 to $1.49 bu., the highest since Nov-23. Bean oil PV improved to 38.5% a 2 ½ month high. Heaviest rains this week to favor the central and northern growing regions potentially once again raising flooding concern. For now no threat of extended hot/dry pattern for the nation’s midsection. Bean inspections at 11 mil. bu. were in line with expectations however below the 14 mil. needed per week to reach the USDA forecast of 1.70 bil. bu. YTD inspections at 1.526 bil. are down 16% from YA vs. USDA forecast of down 15%. MM’s last week sold nearly 24k contracts of each beans and oil, and nearly 12k meal. The speculative short position in oil has swelled to just over 108k contracts, within 1,500 of the record short of 109,950 in Sept-2018. Census crush in May-24 at 192 mil. bu. was slightly below expectations however within the range of estimates. In the first 9 months of the 23/24 MY cumulative crush has reached 1.743 bil. bu. up 3.5% from YA, in line with the revised USDA forecast of 2.290 bil. bu. In order to reach this estimate crush over the last 3 months of the MY will still need to reach a record 547 mil. bu. up from 528 mil. YA. Oil stocks fell 5.4% to 2.187 bil. lbs. and are down 8.4% from YA. Oil stocks were below expectations of 2.214 bil. barely within the range of estimates.
WHEAT
Prices were $.12-$.19 higher across all 3 classes today. Not much resistance for Sept-24 Chicago until its 100 day MA at $6.15. Resistance for Sept-24 MGEX is at $6.50. Inside trade for Sept-24 KC. Inspections at 11 mil. bu. were at the low end of expectations and below the 16 mil. needed to reach the USDA export forecast of 800 mil. bu. YTD inspections at 50 mil. are up 24% from YA vs, the USDA forecast of up 11%. Money managers last week sold nearly 18k contracts in Chicago, 8k KC and 10,653 contracts of MGEX, a record large amount for 1 week. The combined MM short position in wheat has grown to over 121k contracts, the largest in 2 months. IKAR reports Russian wheat export price ended last week at $226/mt, down from $231/mt the previous week. SovEcon reports Russia exported 790k mt of grain last week down from 830k the previous week. Last week’s total included 680k mt of wheat.
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