Written Commentary
MORNING AG OUTLOOK
Grain calls are mixed. SH is near 12.98. SMH is near 386.0. BOH is near 48.18. CH is near 4.71. WH is near 6.28. KWH is near 6.43. MWH is near 7.23. US Dollar, Crude and Gold are higher after Iran moved a warship into the Red Sea. US stocks are lower. China also announced higher 2024 crude oil import quotas.
CH ended 2023 near 4.71. Dry Brazil has seen needed rains. Ukraine vessel exports are on the increase. 2024 US corn stocks will increase. China US imports or lack of will be key. As 2023 ended, funds are large short corn futures. Index funds have reduced their net long. Cattle 2023 range 162-187 and near lows. Hogs range 68-104.95 and near lows. One crop scout continues to est Brazil corn crop at 117 mmt vs USDA 129 and 137 ly. He also est Argentina at 53 mmt vs USDA 55 and 34 ly. Total is down 1 mmt vs last year and down 14 mmt vs USDA.
SH dropped below 13.00. Global crush is forecasted to increase which could be negative soymeal. US Biodiesel demand should increase but what will be feed stock? US Nov crush is est near 199.7 mil bu vs Oct record of 201.4 and 189.6 ly. Trade is worried that China may be done buying US soybeans for now. There is also talk China may be diversifying away from soymeal use. As 2023 ends, funds are only a small soybean long and on the decline, long less soymeal than expected and short more soyoil than expected. Needed rains in Brazil and continued favorable Argentina weather has weighed on soybean complex futures prices. One crop scout lowered his est Brazil soybean crop to 151 mmt vs USDA 161 and 160 ly. He also est Argentina at 50 mmt vs USDA 48 and 25 ly. Total is up 16 mmt vs last year but down 8 mmt vs USDA.
WH has been in a 6.00-6.50 range since September. US is mostly warm and dry while Black Sea supply could grow.US LH Jan and Feb weather could remain dry but turn colder. Europe weather could also see same pattern. Ukraine is seeing increase in vessel movement. Most doubt Ukraine war will end in 2024. As 2023 ends, Funds remain short wheat futures. Australia and Argentina supplies are down but will be offering exports Q1. Destination markets hope lower rates will increase buying power. China wheat import demand will also be watched.
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