On The Money Commentary 5-16-24

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Corn Outlook:

Corn planting was off to a fast start last month but has slowed because of wet conditions and lags at 49 percent complete compared to 60 percent a year ago and 54 percent for the average.  This has led to the unwinding of short positions held by the funds that continued early this week.  At their peak, they were short 1.710 BB, but that has since been whittled down to 690 MB.  Right now, the fundamental outlook for corn is mostly neutral.  Ending stocks are abundant at 2.0 BB, domestic stocks-to-usage have been rising since 2020, while global stocks-to-usage have been flat during the same period.  Meanwhile, exports have been improving the past few weeks, but possibly peaked last week as inspections fell to 36.9, the lowest since mid-February.  The bottom line in corn is that if the fund short covering is finished, a continued delay in planting will be needed to prop up prices.


Bean Outlook

Soybean planting has been creeping along because of wet conditions, and is 35 percent done compared to 45 percent a year ago but is ahead of the average of 34 percent.  The factor that supported the market until recently is fund short covering.  At their peak, they were short 970 MB, but that has since been slashed to 400 MB.  Currently, the fundamental outlook for soybeans is negative.  Ending stocks for 2024-25 are hefty at 445 MB, world stocks are forecast at a record 128.5 million tons, Brazil’s crop is projected at a record 169.0 million tons, and global stocks-to-usage is currently at the second highest on record.  Meanwhile, the export pace has fallen off the wagon.  Last week, inspections were 14.9 MB with China taking 2.6 MB.  Since November, deliveries to them have fallen 94 percent while our overall shipments have declined 83 percent.  While the USDA projects exports to rise to 1.825 BB for 2024-25, Brazil’s exports are forecast to double those of the U.S.  The bottom line is that unless weather becomes an issue this season, the market faces some dark clouds.


Wheat Outlook:

Wheat has been on a roll even though 50 percent of the crop is rated in good-to-excellent condition compared to 29 percent a year ago.  Prices have been supported from dry conditions in Russia, and the USDA lowering their exports 1.5 million tons to 52.0 million and raising the U.S. forecast 55 MB to 775 MB for the 2024-25 season.  A few weeks ago, the funds were short 585 MB, but have since trimmed their position to 395 MB.  Right now, wheat has the most positive fundamentals of the grains.  Although U.S. stocks to usage have risen since 2022, global stocks-to-usage have been on the downswing since 2019.  Last week, export inspections were 14.9 MB, but reaching USDA’s projection of 720 MB is a big question.  The bottom line in wheat is the U.S. ranks fifth in global exports, which means we are not the player that we were a few years ago.


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