Written Commentary
CORN
Prices were $.06 – $.08 lower today with Mch-24 having fallen to a new contract low. The next major support is $4.47, the spot low in early Dec-23 on the weekly chart. Dec-24 dropped to a 5 ½ month low falling below $5 in the process. The New Year brought renewed selling into the ag. space as weather conditions in South American continue to improve crop prospects. Weekend rainfall totals of 1”–3.5” were common in the drier areas of central and northern Brazil, with additional heavy rains expected over the next week to 10 days. Export inspections at 22 mil. bu. were at the low end of expectations and well below the 46 mil. bu. needed to reach the USDA export forecast. While last week’s figures were revised nearly 6 mil. bu. higher, YTD inspections at 470 mil. bu. are up 25% from YA, vs. the USDA forecast of up 26%. Last week Money managers were net buyers of just over 3,000 contracts reducing their short position to 177,626 contracts. Corn grind for the production of ethanol reached 455 mil. bu. in Nov-23, slightly above the Ave. trade estimate of 451 mil., however within the range of estimates. In the first 3 months of the 2023/24 MY corn usage has reached 1.345 bil. bu. up 5% from YA vs. the current USDA forecast of up 3%.
SOYBEANS
A late day rebound in soybean oil prices enabled them to finish with modest gains for the day while beans were down $.20 – $.26 while meal was $6 – $7 lower. Mch-23 soybeans traded to a 6 month low with next support being at the late June-23 low at $12.62. After also trading to a 6 month low Mch-24 bean oil staged an outside day higher close to begin the New Year. Mch-24 meal reached a 2 ½ month low. Export inspections at 35 mil. bu. were in line with expectations. YTD inspections at 855 mil. bu. are down 19% vs. the USDA forecast of down 12%. MM’s were net sellers across the entire soybean complex last week selling 5.5k soybeans, 17.7k oil, and 15.6k meal. Their combined long position is down to just over 14k contracts, their smallest position since they were last net short in June-2020. Data from the EIA on Friday showed biodiesel and renewable diesel capacity grew nearly 3% in Oct-23 to a record 5.936 bil. gallons, up 20% from the end of 2022. Despite the increased capacity, combined production at only 388 mil. gallons was down 8% from Sept-23, a 6 month low. Bean oil usage fell 12% to 1.062 bil. lbs. also a 6 month low. As a feedstock source, bean oil was still the largest at 36% in Oct-23, however this was a 3 year low. Yellow grease (used cooking oil) usage jumped to nearly 23%, the 2nd largest feedstock source. Census crush for Nov-23 at just over 200 mil. bu. was in line with expectations. In the 1st 3 months of the 2023/24 MY cumulative crush has reached 576 mil. bu. up 4% form YA, in line with the current USDA forecast of 2.30 bil. bu. Soybean oil stocks rose for the 1st time in 7 months to 1.592 bil. lbs. however fell short of the average trade est. of 1.657 bil. Today’s supportive bean oil stocks data suggests higher bean oil usage in Nov-23.
WHEAT
Prices were lower across all 3 classes today with Chicago $.16 – $.21 lower, KC was down $.11 – $.13, while MGEX was $.06 – $.08 lower. Mch-24 Chicago has fallen back below support at its 100 day MA while also challenging support at the 50 day MA at $6.05. Next support for Mch-24 KC is at $6.19. Export inspections at 10 mil. bu. were in line with expectations. YTD inspections at 354 mil. are down 19% from YA, vs. the USDA forecast of down 4.5%. Last week MM’s were net buyers of Chicago wheat for the 4th consecutive week to end 2023. Their short position slipped under 60k contracts for the 1st time since Aug-23. The MM short position across all 3 classes of wheat has fallen to 118k contracts, their smallest short position in just over 3 months. Jordan issued a tender to purchase 120k mt of milling wheat from an optional origin supplier with a deadline being Jan. 4th.
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