South America runs into production problems | Weekly Commodity Market Update
This week Will and Ben dive into the impacts of wet weather and upcoming USDA reports.
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Market recap (changes on week as of Monday's close):
➡︎ July 2024 corn up $.20 at $4.69
➡︎ December 2024 corn up $.16 at $4.88
➡︎ July 2024 soybeans up $.66 at $12.48
➡︎ November 2024 soybeans up $.41 at $12.19
➡︎ July soybean oil down 0.53 cents at 43.84 cents/lb
➡︎ July soybean meal up $30.30 at $387.60/short ton
➡︎ July 2024 wheat up $.40 at $6.48
➡︎ July WTI Crude Oil down $4.33 at $77.76/barrel
Weekly highlights:
March soybean crush came in at 203.7 million bushels below the 206-million-bushel trade estimate- but was the second largest monthly volume on record behind only December 2023 at 204.3 million bushels.
Corn used for ethanol in March came in at 469 million bushels up from 445 million last month and 436 million last year.
US stocks of crude oil and gasoline were higher on the week while stocks of distillate fuels and ethanol decreased.
US ethanol production increased 10 million gallons to 290 million gallons on the week. This compares to 287 million gallons the same week last year. Ethanol stocks decreased 10.3 million gallons.
The US Treasury and IRS issued updated guidance on Sustainable Aviation Fuel 40 B tax credits providing a pathway for US corn and soybean bushels but with farming practice instructions. No information was provided about the 45 Z tax credits that start next calendar year.
Lates season rains and disease continue to impact South American production. Rains in southern Brazil threated remaining unharvested soybeans while disease and poor weather hamper Argentina corn and soybean production.
The Federal Open Market Committee kept the short-term interest rate at 5.25-5.50 during their April meeting while cooling thoughts of interest rate hikes this year.
After five months of monthly jobs reports surprising to the high side, the April Jobs report showed the US economy added 175,000 jobs- below analyst expectations of 243,000. The unemployment rate ticked higher to 3.9% compared to expectations of 3.8%.
Open interest positions of Chicago futures and options positions was -4% for combined Chicago wheat contracts, -8.3% for Chicago corn contracts, -13.8% for Chicago soybeans. Soybean oil was -5%, and soybean meal -9.2%, while cotton and rice were up 1.1% and 1.9% respectively.
Managed money traders were net buyers of Chicago corn (20,506) and Chicago wheats (96,074) while net buyers of Chicago soybeans (222 contracts). All remain historically short.
US export sales were bearish across the board. Corn, grain sorghum, wheats, soybean meal and soybean oil were all down week over week. Soybeans were up week over week but still low. There were net cancelations of wheats as cancelations of Hard Red Winter wheat by unknown destinations and Soft Red Winter by Ecuador and unknown destinations off set all other positive sales. There were no corn sales to China and net cancelations of soybean sale to China.
Weekly grain and oilseed export inspections were mixed for the week ending May 2, 2024. Corn and grain sorghum exports were on the high end of expectations while soybeans and wheats were on the lower end.
Crop planting progress still increased on the week. Corn planting increased to 36% compared to 39% on average, soybean planting at 25% was up 7% and compares to 21% on average, cotton planting was up 9% to 24% and compared to 20% on average. For corn planting Indiana (20 vs 24) and Illinois (32 vs 41) are behind but joining them are the plain states of Colorado (12 vs 26) and Nebraska (31 vs 48) that are behind the average pace.
The winter wheat conditions rating increased just slightly to 335 (perfect score= 500) compared to 331 last week and 269 last year.
Topics:
➡︎ Market recap
➡︎ Commodity gains, lower crude oil
➡︎ Wet planting conditions
➡︎ South American production concerns
➡︎ GREET model attributes
➡︎ USDA supply and demand report preview
➡︎ Reports to watch
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