July USDA supply and demand report levees surprises | Weekly Commodity Market Update
This week Will and Ben digest the impact of USDA's July supply and demand reports and forecast what's next for trade.
Market recap (changes on week as of Monday's close):
» September 2024 corn down $.03 at $3.90
» December 2024 corn down $.03 at $4.04
» September 2024 soybeans down $.63 at $10.33
» November 2024 soybeans down $.59 at $10.40
» September soybean oil down 2.8 cents at 46.07 cents/lb
» September soybean meal down $13.90 at $314.00/short ton
» September 2024 wheat down $.38 at $5.32
» July 2025 wheat down $.31 at $5.98
» October cotton up 1.37 cents at 70.86 cents/lb
» December cotton up 1.85 cents at 72.44 cents/lb
» September WTI Crude Oil down $.96 at $81.43/barrel
Weekly highlights:
The Consumer Price Index for June showed prices declining month over month for the first time since May 2020. Price dropped 0.1% month over month compared to expectations of a 0.1% gain. Year over year CPI fell to 3.0% down from 3.3% last month.
The Producer Price Index showed slight month over month gains of 0.2% with year over year at 2.6% compared to 2.4% in June.
US energy stocks were mixed on the week. US crude oil and gasoline stocks were down and distillate stocks were down 145 and 84 million gallons respectively. The crude oil drop followed a 511 million gallon drop the week prior. Distillate stocks were higher by 205 million gallons ending a three-week skid. Implied gasoline demand was flat on the week.
US ethanol production pulled back to 310 million gallons on the week down from 313 million gallons the week prior. Ethanol production margins have increased the last couple weeks on decreasing corn cost and increasing ethanol prices. There were no changes to ethanol stocks on the week.
The National Association of Oilseed Processors reported their members crushed 175.6 million bushels of soybeans in June. The volume was a new June record but below pre-report trade expectations of 177.9 and the May volume of 183.6 million bushels.
The July WASDE was full of surprises this month. Notable surprises included 133 million bushel increase in US wheat production, US corn stocks for 2024/25 fell 5 million bushels month over month but 215 million below trade estimates on unexpectedly higher old crop use, and US cotton stocks were 1.2 million bales higher.
Open Interest of futures and options for commodities was largely up across the board. Chicago wheats (+1.9%), Corn (3.3%), Soybeans (6.2%), Soybean meal (+5.4%), ICE Cotton (2.4%), and Rough Rice (+11%). Soybean oil was the lone commodity down in open interest (-2.5%).
Managed money accounts continue to sell off futures and options positions. Managers were net sellers of 17,445 contracts of Chicago corn taking the corn contract to an all-time net short record of 353,983 positions. Traders were sellers of 31,679 positions of soybeans, 9,577 positions of cotton, and 459 positions of rough rice. They were buyers of 7,129 positions of Chicago wheat reducing the net short in that commodity.
Weekly US grain and oilseed export sales were bearish for wheats at 8.8 million bushels and the lowest weekly sales volume for soybeans since the end of May at 7 million bushels. There were minimum new crop sales across the board.
Weekly grain and oilseed export inspections were mixed on the week with corn shipments of 42.5 million bushels near the top of expectations, soybeans of 6.2 million bushels below all expectations and wheats of 19.6 million bushels above all expectations.
US corn and soybean conditions remained unchanged on the week despite expectations of a 1% increase in good to excellent ratings. Corn at 68% compares to 63% on average. Soybeans at 68% compares to 50% on average. The full index was unchanged for corn at 372 while falling just one point for soybeans- both are well above last year and the average.
US cotton condition score of 45% good to excellent was also unchanged on the week. The full composite index fell just 1 point to 319 and compares to 312 last year and 328 on average.
The fast winter wheat harvest is now 71% harvested down from expectations of 74% complete. The spring wheat crop is rated at 77% good to excellent compared to 51% last year and 55% on average.
Topics:
» Market recap
» Absorbing USDA report surprises
» Derecho in Western Cornbelt
» Export outlook
» Updates on soybean crush
» Reports to watch
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