Commodity Report

05/09/2024

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: MAY 9th 2024.

 

OVERVIEW

 

Prices for corn and soybeans diverged this week. Corn was down 1.1 percent but soybeans and soybean meal were up 0.8 and 4.2 percent respectively compared to last week. Prices were influenced by technical selling arising from geopolitical concerns and revised projections for crop sizes in Brazil and Argentine. Secondary factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and the predicted ending stocks of corn and soybeans for the 2024 crop. The May WASDE Report will update production forecasts and prices based on planting approaching the midway mark, and the transition to a La Nina by mid-year.

 

At noon EDT on May 9th the CME price for corn was down 1.1 percent compared to the previous week to 442 cents per bushel for May delivery. Corn price was influenced by ethanol demand and the proportionally high ending stock from the 2023 crop. Export orders for the current market year have increased in response to lower prices. Volumes and prices are indirectly influenced by higher wheat prices, events in the Black and Red Seas. Orders by China resumed at the end of the 2022-2023 market-year and have extended through March despite a higher Dollar Index offset by a low FOB prices although with increased ocean freight. Total exports for the current market year are 29.9 percent higher than for the corresponding week during the 2022-2023 year.

 

Soybeans traded at 1,197 cents per bushel for May 2024 delivery, up 0.8 percent over the week. Slightly higher prices were attributed to trading, less farm selling and projections of availability from the 2024 Brazil and Argentine harvests. Total exports for the current market year are 18.4 percent lower than for the corresponding week in the 2022-2023 year.

 

Soybean meal traded at $368 per ton for May delivery, up 4.2 percent compared to $353 per ton for last week. Price was influenced by demand coupled with high crush volumes for consecutive months from December 2023 onwards resulting from increased capacity. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 unchanged from March in the April WASDE Report to be revised in the May release.

 

 WTI was $4.55 (-5.5 percent) lower from last week to $77.75 on May 8th with moderate to lower world demand in relation to supply. Price is down partly due to a lull in the attacks on shipping in the Red Sea, and cessation of hostilities between Israel and Iran. It is accepted that U.S. production is a moderating influence, attaining 12.9 million barrels per day in March with ample reserves. An upward trajectory in price may occur if production cuts by OPEC amounting to 2 million barrels per day and extended through June actually materialize. There was a downward move in price during the week ($81.06 to $77.75 range). Crude oil inventory in the U.S., other than the Strategic Reserve, was up 6.5 percent to 35.3 million barrels last week. High U.S. production is constraining domestic and international prices but the rise in energy cost during past weeks is reflected in inflation restraining the FOMC from lowering the benchmark interest rate.

 

Economic data released during the past week (Q1 GDP; PCE, Confidence, Productivity, Employment) confirmed slower growth and persistent inflation.

The data-driven Federal Reserve FOMC passed on a lowering of rates on May 1st and will be disinclined to reduce the benchmark interest rate until September at the earliest.

 

Factors influencing commodity prices in either direction over the past four weeks included:-

 

  • Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine with favorable rain recently under the influence of a strong El Nino The 2023 U.S. harvest was completed ahead of the corresponding weeks in 2022 with higher carryover and lower exports of soybeans. (Downward pressure on prices). Planting is almost complete for the “new” crop of 2024 but has been disrupted by flooding in the southern production states.
  • Geopolitical considerations continue to move markets, especially in the Mideast. Ongoing attacks on Ukraine port facilities have impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deployment of airborne missiles. Exports from Ukraine are approaching 1.5 million metric tons per week with a total of 26 million metric tons market year through February, down 11 percent from the equivalent period for 2022-2023 year. Grain production in Ukraine during the current year will be lower than 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)
  • Macroeconomic U.S. factors:-
  • Most economists in academia and the private sector are still confident of a “soft landing” for the economy despite the release of the Q1 2024 GDP and recent economic parameters including the ECI, CPI and PPI and with fluctuation in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.5 percent in March 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. A rise in energy prices is contributing to persistence of inflation.
  • The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on May 1st 2024, the sixth sequential pause. The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly less than two reductions of 25 basis points each in 2024, after the September meeting at the earliest. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on demonstrated progress in reducing inflation as confirmed by a basket of key economic data, towards an annual 2.0 percent target by mid-2025. Market optimism with projections of five reductions during 2024 was evidently premature.
  • The March 28th Bureau of Economic Affairs released the advanced estimate of Q1 2024 GDP at 1.6 percent, below the consensus estimate of 2.4 percent. The Q1 GDP value was influenced by spending by both consumer and government-sectors and with higher investment in housing. By comparison Q4 2023 GDP growth was 3.4 percent. Growth in GDP attained 2.5 percent in 2023 up from 1.9 percent in 2022. The Q1 Personal Consumption and Expenditure Index For Q1 (excluding food and energy) was up 3.7 percent annualized, higher than 2.0 percent in Q4 2023.
  • The April 26th Bureau of Economic Analysis released the March Personal Consumption and Expenditure Price Index. The core index (excluding food and energy) was up 0.8 percent from the previous month and 2.8 percent year-over-year. This was in line with estimates. The Headline PCE Index was up 2.7 percent year-over-year, above an estimate of 2.6 percent. On an annual basis the price of goods was unchanged, services were up by 4.0 percent, food by 1.5 percent and energy by 2.6 percent. The headline PCE is closely followed by the Federal Reserve and confirms persistent inflation holding above an annual target of 2.0 percent.
  • The April 10th Bureau of Labor Statistics release of the March 2024 CPI confirmed a 0.4 percent increase from February, and 0.1 percent above forecast. The annual increase of 3.5 percent was up from 3.2 percent in February and higher than the anticipated value. The increase in the core value (excluding food and energy) was 0.4 percent from February and 3.8 percent for the 12-month period, and estimates. Food at home was unchanged from the previous month. The category of ‘meat, fish and poultry’ was up collectively by 0.9 percent with eggs up 4.6 percent from the previous month. Food away from home was up 0.3 percent from February. On an annual basis all food was up 2.2 percent with food at home up 1.2 percent and food away from home up 4.2 percent. Energy was up 1.1 percent together with natural gas (-3.2 percent) in March. The shelter category was up 0.4 percent for the month and 5.7 percent over the past year. The macro trend is inclining towards reduced inflation due to a fall in energy prices but this category has recently moved up, detracting from deflation. The CPI heavily influences FOMC rate decisions.
  • The March Producer Price Index for Final Demand (PPI) released on April 11th was up by 0.2 percent from February compared to an expectation of 0.3 percent. The PPI was up 2.1 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was up 0.2 percent for March and up 2.8 percent for the 12-month period. Food was up 0.8 percent compared to a 1.1 percent increase in February.
  • A Federal Reserve release on April 16th confirmed that industrial production rose 0.4 percent in March. Capacity utilization was fractionally higher at 78.4 percent, 1.2 percent below the 1972-2020 average.
  • The April 24th report on Durable Goods Ordered during March 2024 was higher by 2.6 percent to $283 Billion compared to a revised value of 0.7 percent or $376 Billion in February. Transportation and specifically aircraft orders were up 7.7 percent. Excluding the Transportation component, new orders increased by 0.2 percent in March compared to February. Shipments of durable goods were essentially unchanged from February that in turn was up 1.2 percent from January 2024 impacted by severe weather.
  • The April 15th release of retail sales data showed a monthly rise of 0.7 percent in March. This value is compared to the revised 0.9 percent rise in February 2024, reflecting a rebound from depressed sales in January affected by harsh winter storms and a change in the basis of calculation. Retail sales in March 2024 were up 4.0 percent from the corresponding month in 2023. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
  • The May 1st release by the Institute for Supply Management (ISM®) documented the Manufacturing Index for April at 49.2 down from 50.3 in March and below the consensus of 50.0. New orders fell to 49.1 (54.6, March) and Production attained 51.3 (54.6 March).
  • On April 30th the U.S. Bureau of Labor Statistics reported a 1.2 percent increase in the Employment Cost Index (ECI) over the 1st quarter of 2024 against a consensus estimate of 0.9 percent. The year-over-year increase was 4.4 percent compared to an estimate of 4.0 percent and with benefit costs up by 3.7 percent. The March ECI of 1.2 percent compares with a value of 0.9 percent for the 4th quarter of 2023. The ECI is closely followed by the Federal Reserve FOMC and further reduces the possibility of a rate cut before September at the earliest.
  • The April 23rd release of the S&P Global Composite U.S. Manufacturing PMI for April fell to 50.9 compared to revised 52.1 in March. The Global Services PMI fell from 51.7 in March to 51.7 in April.
  • The Conference Board Consumer Confidence Index released on April 30th for April, fell to 97.0 points from a revised 103.1 for the preceding four-week period. The index was lower than a consensus estimate of 104.0. The Present Situation Index was down to 142.9 in April compared to 157 in March. The Expectations Index fell to 66.4 in April from a revised 74.0 in March. Values below 80.0 suggest a future recession
  • The April 26th University of Michigan Final Index of Consumer Sentiment fell 2.2 points to 77.2 for April down from a revised final value of 79.4 in March. The Index was up 22.2 percent from April 2023. Both the Current Economic Index (76.0 down from 82.5 in March) and the Index of Consumer Expectations (76.0 down from 77.4 in March) denote a decline in consumer sentiment influenced by stable but high interest rates and inflation despite geopolitical concerns. Inflation expectations 12-months hence moved higher from 3.1 to 3.2 percent among those surveyed.
  • Non-farm payrolls added 175,000 in April, as documented by the Bureau of Labor Statistics in a May 3rd This was less than the anticipated 240,000, and should be compared to the revised March value of 315,000. The moderate increase was attributed to workers hired in the health care and government sectors. The unemployment rate rose to 3.9 percent with 6.5 million unemployed and with 1.3 million in the long-term category. Real average hourly earnings during April showed a 0.2 percent increase over March to $34.75 . Average hours worked fell 0.1 percent to 34.7 per week in April. Labor participation was unchanged at 62.7 percent in April. Wage rates increased 3.9 percent over 12-months, the lowest gain since June 2021. Wage rates are closely followed by the Federal Reserve FOMC.
  • The Bureau of Labor Statistics Job Openings and Labor Survey report released on April 2nd estimated 8.8 million job openings at the end of February, down 100,000 (-0.1 percent) from January 2024 and consistent with estimates. The February job openings number was the lowest value in 34 months and compares with the March 2022 value of 12.2 million during COVID.
  • The seasonally adjusted initial jobless claims figure of 231,000 released on May 9th was the highest in eight months and was up 22,000 from the revised seasonally adjusted value for the week ending May 2nd. The Weekly value was unexpectedly higher than the Reuter’s estimate of 215,000. The four-week moving average declined to 215,000 The Bureau of Labor Statistics estimated 1.785 million continuing claims for the week ending April 27th There is evidence from data over the past three months that the labor market is cooling but still tight despite sporadic weekly fluctuation in new claims.
  • The May 2nd Bureau of Labor Statistics report recorded a 0.3 percent increase in non-Farm Productivity for Q1 2024 down from 0.7 percent in Q4 2023. Labor cost increased 4.7 percent over the past 12 months.
  • The ADP® reported on May 1st that private payrolls increased by 192,000 in April, down 16,000 from the revised 208,000 in March and compared to the Dow Jones estimate of 183,000 jobs. The increase in employment was mostly in the construction, services and hospitality sectors. Annual pay was up 5.0 percent year-over-year, down from 5.1 percent in March and the lowest value since August 2021. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded by the FOMC as an unreliable statistic

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FACTORS INFLUENCING COMMODITY PRICES

  • The 2023 harvests of corn and soybeans were completed by late November 2023. The April 11th WASDE projected acreage to be planted, yields, crop size and ending stocks for the 2024 crop.
  • It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and within both sides of the aisle in the House delayed adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8th partial shutdown of the Federal Government. Agreement was concluded on the remaining appropriations bills on March 23rd maintaining Federal funding through October 2024. Currently the position of the Speaker of the House is more secure suggesting progress in passing legislation in the declining weeks of the 118th
  • The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation funding even if the Farm Bill is delayed through to the 119th Congress
  • The April 11th WASDE #647 Projected both corn and soybean production parameters with a potential record corn harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 38.2 percent of the 2024 U.S. crop with a 7.7 percent increase in ending stock to 340 million bushels as compared to the March WASDE Report.
  • Rabobank projected the soybean crop in Brazil at 153 million metric tons on April 4th. This value is higher than the projection by CONAB (the Soy production association in Brazil) at the midpoint of the soybean harvest, of 147 million metric tons (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels). It is anticipated that Brazil will crush 56 million metric tons (2,057 million bushels). If CONAB is correct the harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop. Brazil exported 7.0 million metric tons (257 million bushels) of soybeans to China over the first two months of 2024, double the quantity shipped to this nation over the corresponding two months in 2023.
  • Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 50 million metric tons of corn (1,968 million bushels), double compared to the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
  • The Dollar Index (DXY) was 105.4 at close on May 8th, down 1.1 points from last week despite CPI and other data suggesting retention of current benchmark interest rates through summer. The DXY has ranged from 99.0 to 107.0 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.

 

EXPORTS

 

The FAS Export Report for corn, released on May 9th for the week ending May 2nd confirmed that outstanding export orders for corn amounted to 13.18 million metric tons (518.76 million bushels). Net orders for the past week for the 2023-2024 market year amounted to 0.89 million metric tons (35.00 million bushels). Shipments recorded during the past working week amounted to 1.23 million metric tons (48.45 million bushels). For the current market year to date cumulative export of 34.44 million metric tons (1,356 million bushels) is 29.9 percent higher compared to the equivalent week of the previous market year. For market year 2024-2025 outstanding orders attained 2.18 million metric tons (85.69 million bushels) with 49,100 metric tons (1.93 million bushels) ordered this past week

(Conversion 39.36 bushels per metric ton. Quantities in metric tons rounded to 0.1 million)

 

The FAS Export Report for soybeans covering the week ending May 2nd reflecting market year 2023-2024, recorded outstanding export orders amounting to 3.66 million metric tons (134.40 million bushels). Net orders this past week attained 0.43 million metric tons (15.76 million bushels). Shipments for the past working week attained 0.31 million metric tons (11.18 million bushels). For the current market year to date cumulative exports of 38.68 million metric tons (1,421 million bushels) are 18.4 percent lower compared to the equivalent week of the previous market year. Outstanding orders for the 2024-2025 market year amount to 0.87 million metric tons metric tons (31.78 million bushels) with 4,600 tons ( 0.17 million bushels) ordered this past week.

 (Conversion 36.74 bushels per metric ton)

 

For the week ending May 2nd 2023 outstanding orders for soybean meal and cake attained 2.78 million metric tons. Net orders this week for soybean meal and cake amounted to 209,300 metric tons. During the past week 235,000 metric tons of meal and cake combined was shipped. The quantity exported to date is 15.4 percent higher than the volume for the corresponding weeks of the previous market year. For the next market year outstanding sales have attained 366,900 metric tons with 19,200 tons ordered this past week.

 

The April 11th 2024 WASDE #647 projected:-

  • Corn area planted for all purposes in 2024 (‘new crop’) will attain 94.6 million acres, down 0.3 from last year. According to the April WASDE, yield was projected at 177.3 bushels per acre with a resulting production of 15,342 million bushels with 2,122 million bushels as ending stock. The USDA retained the average ex-farm price to 470 cents per bushel for the 2024 crop.
  • Soybean area to be planted for 2024 will attain 83.6 million acres, unchanged from 2023. According to the April WASDE, yield was predicted at 50.6 bushels per acre with production of 4,165 million bushels with 340 million bushels as ending stock. The USDA reduced the average season price to 1,255 cents per bushel.
  • Crushers are expected to produce 54.25 million tons of soybean meal. Ending stocks will attain 400,000 tons. The USDA held the average projected price at $380 per ton.

 

The Prospective Plantings Report released on March 28th represents the first official, estimate of 2024 planting intentions by U.S. farmers. Acreage estimates are based on surveys conducted during the first half of March from a sample of nearly 72,000 farmers across the nation.

  • Corn
  • Farmers intend to plant 90.0 million acres of corn in 2024, down five percent from last year. Planted acreage intentions for corn are down or unchanged in 38 of the 48 estimating states. Acreage decreases of 300,000 acres or more from last year are expected in seven Midwest states and Texas.
  • Soybeans
  • Farmers intend to plant 86.5 million acres in 2024, up three percent from last year. Acreage increases from last year of 100,000 or more are expected in 12 states. 

 

The preference for planting corn over soybeans in 2024 was based on a favorable projection of the corn to soy benefit ratio.

 

COMMODITY PRICES

 

The following quotations for the months of delivery as indicated were posted by the CME at 12H00 EDT May 9th 2024, compared with values at 12H00 on May 2nd 2024 (in parentheses): -

 

COMMODITY

 

Corn (cents per bushel)

May 442 (447)

July 455 ( 455)

Soybeans (cents per bushel)

May 1,197 (1,188)

July 1,210 (1,189)

Soybean meal ($ per ton)

May 368 (353)

July 374 (360)

 

Changes in the price of corn, soybeans and soybean meal over five trading days this past week were:-

Corn: May quotation down 5 cents per bushel. (-1.1 percent)

Soybeans: May quotation up 9 cents per bushel (+0.8 percent)

Soybean Meal: May quotation up $15 per ton (+4.2 percent)

 

The CME spot prices for feedstuffs per short ton at close of trading on May 1st 2024 with prices for the previous week were:-

  • Corn (ZC): $164 per ton, was $161, up $3 per ton (+1.9 percent) from the previous week. 52-week range $149 to $233
  • Soybean Meal (ZM): $381 per ton, was $351. Up $30* per ton (+8.5 percent) from the previous week. 52-week range $323 to $495

(*down to $374 per ton noon May 9th)

 

Values for other common ingredients per short ton:-

  • Meat and Bone Meal, (According to the USDA National AnimalBy-product Feedstuffs Report on May 3rd: Range $330 to $430 with an average of $383 per ton for porcine (ex MN), unchanged from last week; $305 to $335 per ton (Av. $320 per ton) for ruminant (ex MN) unchanged from last week. Price varies according to plant and location
  • According to the USDA National Mill-Feeds andMiscellaneous Feedstuffs Report on May 3rd wheat middlings from St. Louis, MO. and other locations: $95 to $125 per ton (Av. $107 per ton) unchanged from the previous week
  • According to the National Grain and Oilseed Processor Feedstuffs Report on May 3rd DDGS, (IA.) the range was unchanged at $140 to $195 (Av. $158 per ton, down $3 per ton (-0.2 percent) from the previous week reflecting stable to slightly lower corn prices. The average Pacific Northwest price was $255 per ton. Price varies according to plant and location and is expected to fluctuate with the price of corn
  • University of Missouri Extension Service By-Product Feed Price Listing for April
  • Bakery Meal, (MO & TX): $150 per ton.
  • Rice Bran, (AR & CA): $120 to $200 per ton. (Av. $160).

 

For each $1 per ton (2.8 cents/bushel) change in corn the cost of egg production would change by 0.11 cent per dozen

 

For each $10 per ton change in the price of soybean meal the cost of egg production would change by 0.35 cent per dozen

 

There was a 1.4 cent per dozen increase in the nest-run production cost for eggs this past week, compared to May 2nd due to rises in the spot prices of corn and soybean meal

 

ENERGY

 

A recent U.S. Energy Information Administration (U.S. EIA) report estimated that fuel ethanol blending would average 1,000,000 barrels per day in 2024, up 2.0 percent from 2023. For the week ending May 3rd, 83.7 percent (85.7 percent for the previous week) of the U.S. ethanol fermentation volume was operational, based on January 2023 U.S. EIA capacity of 1,152 million barrels per day. The outlook for increased production will depend on higher domestic demand, from summer driving and the emergency waiver to dispense E15 blend during summer in addition to increasing the limited quantity exported comprising approximately nine percent or the production equivalent to 2.8 days.

 

During February 2024 (the last month for which US Energy Information Administration data is available) ethanol exports were down 7.4 percent from the previous month to 141.3 million gallons (3.317 million barrels). Importing nations and regions of significance and their proportions of total volume (rounded) for the month included:- 34.3 percent to Canada; percent to India; 22.3 percent to Europe; 17.8 percent to Central, South America and the Caribbean; 11.3 percent to Asia and the Middle East, predominantly South Korea;; 4.2 percent to Mexico.

 

According to the U.S. EIA, for the week ending May 3rd 2024 the industry produced on average 965,000 barrels of ethanol per day, down 2.2 percent from the week ending April 26th and below the one million gallon per day benchmark for the fourth consecutive week.

 

On May 3rd ethanol stock was down 5.1 percent from the previous week to 24.2 million barrels, an approximately 24-day reserve. This past week demonstrated higher demand for ethanol, given relative changes in the weekly production level (output down 2.2 percent and inventory down 5.1 percent over the most recent week)

 

Current Energy Prices:-

  • The price of WTI was down $4.55 per barrel, (-5.5 percent) to $77.78 per barrel on May 8th compared to the previous week. This represents a technically oversold position due to a disparity between supply and demand with a build in inventory. WTI is up 5.9 percent year to date. Issues affecting price last week included an easing in the conflict premium for Middle East crude. Disruption of shipping in the Red Sea continues resulting in an escalation in bulk and liquid sea-freight. An OPEC+ production cut that commenced in July 2023 in addition to a voluntary one-million barrel per day reduction by Saudi Arabia announced on June 4th was extended through June 2024 although it is questioned whether all members of OPEC will comply. At the April 3rd OPEC+ Meeting Ministers decided to retain current supply policy and encouraged compliance by members with respect to supply cuts.

 

The ending stock of crude held at Cushing OK. on May 3rd was up 6.5 percent from last week to 35.3 million barrels and 17.5 percent down from the annual high on June 23rd 2023. Hydrocarbon sources of energy contributed materially to inflation in the third quarter compared to the previous quarter of 2023 but was an important contributor to deflation in the fourth quarter of 2023. On May 3rd Baker Hughes reported 605 rigs were in operation in the U.S. down from 613 on April 26th 2024 and compared to 748 during the corresponding week in 2023. U.S. crude production will average 13.2 million barrels per day in 2024. Consensus estimates for WTI price through 2024 average $83.78.

  • Ethanol quoted on the CME (EH) on May 8th was priced at $2.16 per gallon, unchanged for months due to lack of trading activity. The 52-week range is $2.14 to $2.19 per gallon.
  • On May 8th RBOB gasoline traded on NASDAQ (RB) at $2.53 per gallon, down 5 cents per gallon (-1.9 percent) from the previous week. Despite the change this week prices rises are becoming more evident in CME trading and ultimately at the pump. The 52-week range for RBOB gasoline is $1.98 to $2.96.
  • The AAA national average regular grade gasoline price was $3.64 per gallon on May 8th, down 2 cents (-0.5 percent) from last week. Gasoline is now $1.48 per gallon more expensive than ethanol but has a 63 percent higher BTU rating. Future rises in fuel cost are inevitable given the prospects for a rise in benchmark WTI
  • The AAA national average diesel price was $3.97 per gallon on May 8th, down 4 cents (-1.0 percent) from the previous week but with prospects for future increases due to an extremely low national stock and the rising price of WTI. Increases are currently restrained by a decline in the trucking industry.
  • CME Henry Hub natural gas was priced at $2.18 per MM BTU on May 8th up 22 cents (+11.2 percent) from the previous week on higher demand despite milder weather. Gas prices are depressed following an Administration embargo on new LNG export terminals.

 

INGREDIENTS

 

DDGS is freely available with most plants among the 192 operational on January 1st 2023 (the last available estimate) with a combined capacity of 1,152 million barrels per day functioning at a sharply reduced national average 83.7 percent compared to 85.7 percent last week. The May 3rd USDA National Grain and Oilseed processor Feedstuffs Report priced DDGS from Iowa plants at $140 to $195 per ton, with an average of $158 per ton. Wide variation in price exists depending on supplier, quantity and location. It is axiomatic that the cost of DDGS will reflect changes in the price of corn with an appropriate lag period. Generally DDGS is currently incorporated at moderate inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS fluctuate in price

 

The CME soybean price for May 2024 delivery at noon on May 9th was up 0.8 percent to 1,197 cents per bushel. The current price of soybeans is a reflection of availability for domestic crushing to produce oil, consumption and export orders. Soybean meal was up 4.2 percent on the CME to $368 per ton for May 2024 delivery. Prices of soybeans are obviously influenced by projections of harvest in the three major producing nations in South America, the projected 2024 harvest in the U.S. coupled with domestic demand for soy oil, biodiesel and meal.

 

According to a release on April 15th by the National Oilseed Processors Association, whose membership process 95 percent of the U.S. crop, the soybean crush for March 2024 attained 196.4 million bushels of soybeans, lower than the consensus estimate of 197.8 million bushels. This was a new monthly record and up 5.7 percent from March 2023. Crush volume was up 5.5 percent from February 2024 at 186.2 million bushels and 0.6 percent above the previous record crush of 195.3 million bushels in December 2023. April crush data will be posted in the May 17th 2024 edition of EGG-NEWS.

 

On May 8th the CME spot price for soybean oil was up 0.6cents per lb. (+1.4 percent) from the previous week to 43.6 cents per lb. Prices for vegetable oils have fluctuated over a narrow range in past weeks but have decreased with recent higher supply. Asian crude palm oil was also lower this past week on profit taking. It is anticipated that 41 percent of U.S. soy oil was diverted from fuel to biodiesel during 2022 and this proportion will be exceeded in 2023 paralleling the situation in Brazil.

 

On May 8th the CME soybean meal spot price was $381 per ton, $30 per ton higher than the spot price last week and compared to a 52-week range of $323 to $474 per ton.

 

On May 3rd Meat and Bone meal (ruminant) was quoted over a range of $305 to $335 per ton (Av. $320 per ton) and porcine over a range of $330 to $430 per ton with an average of $383 per ton according to the USDA National Animal By-product Feedstuffs Report, unchanged from last week. Prices quoted were for Minnesota plants but with a wide range based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

 

On April 24th conversion of the CNY to the BRL was BRL 0.70, up CNY 0.04 from last week. The conversion of the CNY to the US$ was CNY 7.23, up CNY 0.01 from the previous week consistent with a declining Dollar Index.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipated that soybean imports by China would attain 95.0 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

 

For the 2021-2022 market year net export sales of corn were down 21.5 million metric tons (844 million bushels) compared to the previous market year with cumulative exports of 38.3 million metric tons (1,507 million bushels) 

 

For the 2022-2023 market year net export sales of soybeans were down 5.6 million metric tons (206 million bushels) compared to the previous market year with cumulative exports of 51.5 million metric tons (1,893 million bushels)

 

For Market year 2022-2023 ending September 2023, a record 13.2 million metric tons of soybean meal and cake was exported valued at $7 Billion. Expansion in exports was attributed to orders from The E.U., Asia (Viet Nam) and Latin America. Crush volume was driven by the demand for soy oil to produce biodiesel fuel.

 

During calendar 2023, 46.0 million metric tons (1,810 million bushels) of corn were exported from the U.S., valued at $13,140 million. The top five importers with their respective values expressed as a percentage were:- Mexico, 40.9; Japan, 15.8; China, 12.5; Colombia, 8.6 and Canada, 5.1.

 

During calendar 2023, 49.0 million metric tons (1,800 million bushels) of soybeans were exported from the U.S., valued at $29,910 million. The top five importers with their respective values expressed as a percentage were:- China, 50.6; E.U., 12.0; Mexico, 9.3; Japan, 4.3; Indonesia, 4.1; Taiwan, 2.0 and Egypt, 1.6.

 

COMMENT

 

Subscribers are referred to the December 8th 2023 WASDE #643 for the 2023 harvest. The preliminary USDA projection for 2024 harvests is included in the April 11th WASDE #647, retrievable under the STATISTICS tab. The USDA Planted Acreage Report and the quarterly Grain Stocks Report are posted under the STATISTICS Tab.

 

Following cancellation of the Black Sea Grain Initiative (BSGI) Ukraine commenced limited shipment of commodities from the three main Black Sea and Danube Delta ports that remain functional. Projected harvest during the 2022/2023 season will amount to 49.0 million metric tons, 42 percent lower than for 2021/2022. Exports were projected to attain 38.1 million metric tons, 26.5 percent lower than the previous market year.

 

Either more intense action by Ukraine, a negotiated peace treaty with concessions to the Russian Federation, or their combination will be required to restore unrestricted shipping in the Black Sea. Increasing passage along the costal-route (“Humanitarian Corridor”) has allowed sea-transport of commodities since early August to supply Asia and Africa.

 

Increased multinational naval activity has commenced in the Bab al-Mandeb Strait at the southern end of the Red Sea to restore shipping through the Red Sea and the Suez Canal that carries 15 percent of world sea-freight. Some shipping lines including Maersk of Denmark, Hapag-Lloyd of Germany and CMA of France have suspended transit of the Suez Canal and the Red Sea awaiting a clear resolution of the danger from missiles. Traffic through the Suez Canal is down over 40 percent from September 2023 creating problems for Egypt. Restoring free passage will require destruction of Houthi bases, radar and command installations and mobile launching equipment on the soil of Yemen in addition to interdicting re-supply from Iran. This is in progress.






























































































































































































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