Daily Market Commentary

12-11-2024

Morning Comments

The USDA came through with some supportive numbers yesterday. ASDE report didn’t acreages or yields, but the big news was the lowering of the ending stocks on corn by 200 million bushels by increasing exports expectations Corn-for-ethanol usage was increased by 50 million bushels and exports were raised by 150 million bushels, which was over double expectations.

Soybeans were left unchanged but soybean oil ending stocks are very low which is putting the stocks to use in soybean oil at about 5%. The current export sales and shipment pace are running ahead of what's needed to reach that number but the possibility of a huge increase in South American production is putting a lid on that potential. A sharply higher Brazilian production number will force a bigger hit to next year's export tally but the bears won't be waiting around for that to be confirmed. There's some serious downside potential staring us in the face and that's only going to be mitigated by a shift to the dry side in either Brazil or Argentina. The current projected stocks-to-usage ratio of 10.8% was last seen in the 2017/18 marketing year and the average farm cash price that year was estimated at $9.33.

There were 40000 corn contracts bought by the funds. There must have been a large amount of farmer selling to only see 7 cents higher.

Summary of Report:

Corn: 2024/25 U.S. corn use for ethanol is up 50 million bushels this month with exports up a sharp 150 mbu, which takes carryout down 200 mbu from November -way more than anyone in the trade estimate range expected. World 2024/25 carryin is up two million tonnes this month with production down 1.5 MMT (small reductions in the E.U., Mexico, and SE Asia). Overall corn ending stocks down a sharp 8 MMT due to that US usage increase and a 2 MMT drop in Chinese imports.

Beans: no changes in the domestic balance tables this month. World 2024/25 soybean production up 1.7 MMT with Argentina +1 MMT, but ending stocks wind up little changed.

Corn: Supply – Neutral, Demand – Bullish, Technicals – Bullish

Beans: Supply – Neutral, Demand - Bullish, Technicals – Bearish

There were no new production updates, the demand increase went directly to the ending carryout number, which fell by 200 million bushels to 1.738 billion. That puts it below where we ended the previous marketing year, which is certainly a good look for us fundamentalists. The not-so-good part of that is the current March futures price of $4.49 appears to be in line with that level of carryout and the net long fund position of 710 million backs up that thought. We can certainly move higher but that could depend in large part on what happens with the weather in South America. Currently, that weather is pointing to a strong crop, need to consider getting some additional sales locked in at this level

John R. Anderson

Vice President of Grain

Farmers Union Cooperative

563-380-2311

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