Written Commentary
CORN
Prices were up $.10 – $.12 with Dec-23 making new highs near the close. Despite the surge higher, it was an inside day on the charts for Dec. contract. Next resistance is the 50 day MA at $4.92 ¾. This AM the USDA announced the sale of 210k tons (8 mil. bu.) of corn to Mexico. Export inspections at 25 mil. bu. were in line with expectations however below the 41 mil. needed per week to reach the USDA export forecast. YTD inspections at 104 mil. are up 11% from YA, vs. the USDA forecast of up 23%. AgRural estimates 1st crop corn plantings in Brazil’s center-south region has reached 32%, vs. 34% YA. Last week Money managers were net sellers of nearly 24k contracts extending their short position to 168,606 contracts, their largest short position in just over 3 years. Brazil’s government reports final corn exports for Sept. reached 8.756 mmt, down from last month’s record high of 9.33 mmt, however was still the 2nd highest on record.
SOYBEANS
The soybean complex was mixed with meal lower, oil sharply higher, while soybeans were up $.02 – $.06. Nov-23 soybeans traded to a new 3 month low before turning higher. Next support is the June-23 low at $12.56 ¾. Dec-23 meal closed just below support at $374.60. Dec-23 oil closed very near its 100 day MA resistance at 57.45. Soybean oil usage for biodiesel production jumped another 5.5% in July to 1.273 bil. lbs. This marks the 3rd consecutive month of record demand. Bean oil usage for biofuel production in the first 10 months of the 2022/23 MY has reached 10.086 bil. lbs. up 19% from YA, vs. the USDA forecast of up 14%. In order to reach the current USDA usage projection of 11.8 bil. lbs. for the 22/23 MY, monthly usage would have to fall to 857 mil. lbs. in the final 2 months of the MY, a figure not seen since June-22. Look for significant increases to both the 2022/23 and 2023/24 usage forecasts from the USDA in Oct. Soybean oil continues to be the feedstock of choice as it rebounded to 45.6% in July, the highest since April-22. This AM the USDA announced the sale of 132k tons (5 mil. bu.) of soybeans to China. Export inspections at 24 mil. bu. were in line with expectations. AgRural estimates soybean plantings in Brazil have reached 5.2%, vs. 3.8% YA. Last week MM’s were net sellers of nearly 16k contracts of soybeans, just over 12k contracts of soybean oil, while being net buyers of just over 3,300 contracts of soybean meal. The MM net long position in the soybean complex at 124k contracts is a 3 month low. US Census crush in Aug-23 only reached 169 mil. bu. below the Ave. est. of 171.6 and just below the range of estimates. Total crush for the 2022/23 MY came in at 2.212 bil. bu., 8 mil. below the Sept-23 WASDE forecast. Oil stocks at 1.772 bil. lbs. were just below the Ave. est. of 1.840 bil. however within the range of estimates. Aug-23 month end oil stocks are the tightest since Dec-17.
WHEAT
All 3 classes were higher today with Chicago leading the rebound up $.20-$.23, while KC was up $.12-$.13, and MGEX added $.06 – $.09. Given the sizable production increases on Friday, while Sept. 1st stocks at 1.780 bil were only slightly above expectations suggests to me the market was overdoing it to the downside. Export inspections at 15 mil bu were in line with expectations and slightly above the 12.5 mil needed weekly to reach the USDA export forecast. Last week MM’s were net sellers of just over 4k contracts of KC wheat, extending their short position to just over 16k contracts, their largest short position in 3 years. With Friday’s close we estimate the Chicago wheat short position back over 103k contracts, the largest in 3 months. Russian wheat production continues to be 1 of the few global bright spots. Today the EU Crop Monitoring Committee increased their Russian production forecast 3 mmt to 89.7 mmt, vs. the USDA est. of 85 mmt.
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