Written Commentary
CORN
After an initial plunge following the USDA data, prices quickly recovered chopping around both sides of unchanged before finishing steady to $.01 higher. Spreads rebounded a bit however still remain near historical lows. US production was increased 39 mil. bu. to 15.186 bil., 30 mil. above expectations. Record yields at 183.6 bpa, were up from 183.1 in August. Old crop ending stocks were cut 55 mil. bu. to 1.812 bil. roughly 40 mil. below expectations. Exports were raised 40 mil. (we were looking for 25 mil.) while usage for ethanol was increased 15 mil. exactly in line with our estimate. No changes to the new crop usage figures leaving ending stocks at 2.057 bil. nearly 50 mil. above the average trade guess. The USDA also lowered to 2024/25 Ave. US farm price $.10 to $4.10 bu. 2024/25 global stocks were cut 1.8 mmt to 308.4 mmt, slightly below expectations. Production was trimmed 1.5 mmt in the EU to 59 mmt and down .6 mmt in Russia to 13.5 mmt. Ahead of the USDA reports exports at 26 mil. bu. were below expectations and brought 2024/25 commitments to 526 mil. bu. up 20% from YA, vs. the USDA forecast of up 2%. Early shipments are down 23%. The only noted buyers last week were Mexico – 7 mil. and unknown with 6.5. To me corn looks range bound between $3.90 – $4.25 basis Dec-24. If I had to guess on a directional breakout it would be higher driven by strong demand.
SOYBEANS
The soybean complex was higher with beans up $.09-$.11, meal was $3 higher while oil was up 40-55. An initial rally in Nov-24 soybeans stopped just shy of this week’s high at $10.20 before backing off. Inside day for Oct-24 oil closing back above $.40 lb. Oct-24 meal held support above its 50 day MA at $313.60. Next resistance is the September high at $328.50. US production was cut 3 mil. bu. to 4.586 bil. nearly 25 mil. below expectations. Record yields were left unchanged at 53.2 bpa. Old crop stocks were cut 5 mil. to 340 mil. in line with expectations as a result of higher crush. New crop stocks were cut 10 mil. bu. to 550 mil., roughly 35 mil. below expectations. The USDA raised the amount of bean oil used in biofuel production by 100 mil. lbs. to 13.0 bil., right back where it was in July. Global stocks were little changed at 134.6 mmt, in line with expectations. Chinese imports were left at 111.5 mmt for 2023/24 and 109 mmt for 2024/25. Weekly exports at 54 mil. bu. were in line with expectations and bring 2024/25 commitments to 523 mil. down 14% from YA vs. the USDA forecast of up 2%. Commitments are the lowest in 5 years. Shipments are down 23%. China/unknown combined to buy 40 mil. bu. I look for the USDA to raise 23/24 exports 10 mil. bu. to 1.710 bil. Conab left their 23/24 Brazilian production forecast unchanged at 147.4 mmt. They will provide their 1st 24/25 production forecasts in Oct-24. Abiove lowered their 23/24 soybean forecast .2 mmt to 153 mmt, in line with the USDA. Hurricane Francine made landfall last night in LA. The center of the storm has moved north into MS and the Delta region today. Only minor production damage to soybeans is expected. Cumulative rains of 2-8” were felt in LA with 1-4” totals more common in the rest of the Delta, SE and southern Midwest. Little moisture is expected west of the Mississippi river. Above normal temperatures and little rain this week across much of the WCB and NC Midwest will continue to push corn and soybean crop toward maturity. Outside of some scattered rains for southern Brazil much of SA crop areas will remain dry over the next 7-10 days.
WHEAT
Prices were mixed with MGEX up $.05 while both Chicago and KC were steady to $.02 lower unable to hold early strength. No changes to the 24/25 balance sheet with ending stocks left at 828 mil. bu. We were expecting a 20 mil. bu. drop on higher exports. No production changes until the end of Sept. in the Small Grains Annual Summary. 2024/25 global stocks at 257.2 mmt were slightly above expectations. Production was cut 4 mmt in the EU to 124 mmt largely offset by at 2 mmt increase in Australia and a .7 mmt increase in Ukraine. Exports at 17 mil. bu. were in line with expectations. YTD commitments at 396 mil. are up 30% from YA, vs. the USDA forecast of up 17%. Commitments represent 48% of the USDA forecast, slightly below the historical average of 49%. Egypt’s GASC has acknowledged buying 430k mt of Russian wheat in a privately negotiated deal at $235/mt. A Russian missile reportedly struck a Ukrainian vessel carrying grain to Egypt overnight. While no casualties have been reported, no indication on how much damage was incurred
Charts provided by USDA Charts.
>>See more market commentary here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
