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WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: September 26^th 2024.

OVERVIEW

The prices for corn and soybeans were moderately higher over the recent week continuing the trajectory from previous week. Corn and soybean prices were influenced by uncertainty over yields in Brazil and Argentine; the September 2024 WASDE Report; the August Pro Farmer Crop Tour and by farmers selling to avoid further declines and to make room for the approaching 2024 harvest beginning in strength this week. Warmer weather suggested lower corn and soybean yields and proportionally higher prices deviating from the September WASDE. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory pricing factors included ongoing 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 from the 2024 crop. Sixty percent of the 2024 corn crop is now mature with 14 percent harvested. Concurrently 65 percent of the soybean crop is dropping leaves and 13 percent has been harvested in advance of the five-year average and apparently with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event has commenced and will intensify during the fourth quarter but will not affect the 2024 harvest. The October WASDE, incorporating the September remote USDA Survey and the Pro Farmer August field evaluations should provide updated projections of yields, with USDA updates for anticipated exports and adjusted prices for the 2024 crop.

At 12H00 EDT on September 26^th the CME corn quotation for December delivery was up 2.5 percent to 416 cents per bushel and remaining above the 400 cent comfort level. Corn price was influenced by acreage planted, ethanol demand and the ending stock from the 2023 crop. Farm selling has increased, given the need to make room for the 2024 crop. It is estimated that 61 percent of corn stock was held on farms at the end of July. Export orders for the current market year have increased in response to lower prices. Volumes and price are indirectly influenced by wheat availability as influenced by weather affecting the Black Sea wheat and corn crops and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and continued through August, with recent declines in the Dollar Index, albeit with increased ocean freight. Total exports for the new 2024-2025 market year were 8.6 percent above the first three weeks 2023-2024 year.

Soybeans were priced at 1,051 cents per bushel for November 2024 delivery, remaining above the 1,000-cent psychological threshold. Price was up 3.8 percent compared to 1,013 cents per bushel last week for November delivery. Higher prices were attributed to the projection of ending stock, despite farm selling and taking into account recent export orders and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the 2024-2025 market year are 7.9 percent lower than for the corresponding first three weeks of market year 2023-2024.

Soybean meal was priced at $327 per ton for December delivery, up $5 per ton (+1.6 percent) from last week. Price is influenced by demand coupled with an unexpectedly low crush volume in August reversing the processing trend during the first half of 2024. Price will fluctuate to reflect the CME price for soybeans and the depressed demand for biodiesel due to oversupply and the consequential adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 in the Revised September WASDE Reports updated from August.

On September 26^th at 13H00 EDT the price for WTI was down $3.29 (-4.6 percent) from last week to $68.00. Price today does not reflect concern over Hurricane Helene. It is estimated that 20 percent of Gulf crude production and 30 percent of natural gas recovery were negatively impacted by Hurricane Francine. Current price is enigmatically not affected by uncertainties and tensions in the Middle East. Over the longer term price reflects moderate world demand for crude as economies and especially that of China have retracted requiring stimulation this past week. It is evident that U.S. production is a moderating influence on World price, attaining a record average of 13.4 million barrels per day in July with ample reserves. There was a steady downward trend in the price of WTI during the week resulting in a range of $67.29 for the high retracting to $67.29 at the open on September 26^th.

High U.S. crude production is constraining domestic and international prices. The recent decline in energy costs during the past month contributed to deflation influencing the FOMC in their decision to lower the benchmark interest rate at the September meeting.

Economic data released during the past quarter (Q2 GDP; PCE, Confidence, Productivity, Employment) confirm a slowing economy but with a downward trajectory in inflation. Second Quarter GDP was revised upward to 3.0 percent from the previous projection of 2.8 percent. The data-driven Federal Reserve FOMC lowered the benchmark interest rate by 50 basis points on September 18^th. Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one or two additional reductions in the 10-year rate during 2024. The August and September Non-farm Payrolls and labor data clearly indicated the danger of prolonging the high benchmark interest rate that was negatively impacting the U.S. economy.

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 Q2 2024 GDP and the August 21^st preliminary revision of 2023/2024 job creation, coupled with 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 2.5 percent in August 2024. This is in part a response to a series of 11 FOMC rate raises and eight pauses that curbed inflation and cooled the labor market but without precipitating evident unemployment. There is obvious stability in the bank sectors in both the U.S. and Europe. Lower energy prices are contributing to deflation.
• The Federal Reserve lowered the benchmark interest rate by 0.5 percent at the monthly FOMC meeting on September 18^th, the first of a series of actions after eighth sequential pauses. The Federal Reserve commentary indicated that progress has been made in reducing the rate of inflation with subsequent reductions of 25 basis points at the two remaining meetings in 2024 and extending into 2025. Chairman Powell in Congressional testimony, and at the post-meeting press conference and also documented in FOMC minutes 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. This now appears feasible.
• The August 29^th release by the Bureau of Economic Affairs documented the revised preliminary estimate of Q2 2024 GDP of 3.0 percent up from 2.8 percent, and above the Q1 value of 1.4 percent. The preliminary Q2 GDP value was influenced by higher consumer spending.
• On September 11^th the Bureau of Economic Analysis released the August Personal Consumption and Expenditure Price Index. The core CPI (excluding food and energy) was up 0.3 percent from the previous month, above a 0.2 percent estimate and attained 3.2 percent year-over-year in line with consensus. Headline CPI was up 0.2 percent from July and 2.5 percent from July 2023. Food was up 0.1 percent from July and 2.1 percent from July 2023. The protein category (meat, poultry and fish) was up 0.8 percent from July. Eggs were expectedly up 4.8 percent but with moderation anticipated for September. Food at home was up 0.3 percent from July and 0.9 percent from July 2023. Food away from home was up 0.3 percent from July and 4.0 percent over the year. Personal income was up 0.2 percent from July. The headline PCE is closely followed by the Federal Reserve and confirms that inflation is progressively moderating but still above an annual target of 2.0 percent.
• The August Producer Price Index for Final Demand (PPI) released on September 12^th was up 0.2 percent from July consistent with expectations. This was attributed in part to a 0.4 percent increase in services and a 0.2 percent increase in goods. The PPI was up 1.7 percent over the past 12-months ending in August compared with 2.2 percent for the 12-month period through July. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was up 0.3 percent from July and 3.3 percent over the previous 12 months.
• A Federal Reserve release on September 17^th confirmed that industrial production was higher by 0.9 percent in August compared to a decrease of 0.6 percent in July. Capacity utilization was higher at 77.2 percent and 1.1 percent below the long run 1972-2020 average.
• The September 26^th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during August 2024 showed no change from July compared to a forecast fractional decline. August sales should be viewed against the 9.9 percent increase in July attributed to the Transportation segment and specifically aircraft orders and parts that were up 34.6 percent. Excluding the Transportation component, new orders in August increased by 0.5 percent compared to a decrease of 0.3 percent in July. Shipments of durable goods in the non-defense category were up 0.1 percent in August from the previous month ultimately to be reflected in the quarterly GDP.
• In a September 4^th release the Census Bureau confirmed that factory orders for U.S. manufactured goods rose 5.0 percent in July against an estimate of 4.7 percent and compared to a fall of 3.3 percent in June.
• The September 15^thS. Census Bureau release of the advanced estimate of retail and food sales data for August was up 0.1 percent from the revised July value and up 2.1 percent over 12 months. Food service sales were unchanged from July and up 2.7 percent over 12 months. Grocery store sales were down 0.6 percent from the revised July value and up 1.5 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• The September 23^rd. release of the Global PMI Report for September showed fractional declines in all three segments that were below consensus estimates. Manufacturing PMI was down from 47.9 in August to 47.0 in September on lower orders. The Services PMI was down from 55.7 to 55.4. The Composite PMI was down from 54.6 to 54.4. Values below 50.0 represent contraction.
• The September 3^rd release by the Institute for Supply Management (ISM®) recorded a rise in the Manufacturing Index for August to 47.2 against an expected value of 47.5 but up from 46.8 in July. The August value was still below the bifurcation point of 50 percent between contraction and expansion. The Prices Index rose by 1.1 to 54.0 in August, denoting higher costs for production. U.S manufacturing continues to contract despite an improved economy, attributed to prolonged high benchmark interest rates. The Production Index for August was down from 45.9 in July to 44.8 in August.
• On July 31^st the U.S. Bureau of Labor Statistics reported a 0.9 percent increase in the Employment Cost Index (ECI) over the 2^nd quarter of 2024 against a consensus estimate of 1.0 percent. The year-over-year increase was 4.1 percent and with benefit costs up by 3.8 percent. The July ECI of 0.9 percent compares with a value of 0.9 percent for the 4^th quarter of 2023. The ECI is closely followed by the Federal Reserve FOMC and this data justified in part the 50 basis point drop in the benchmark interest rate in September and strengthens the possibility of additional rate cuts in the 4^th quarter as suggested by Federal Reserve Chairman Powell.
• The September 24^th Consumer Confidence report prepared by The Conference Board for the period ending September 17^th, confirmed a substantial decrease to 98.7 from the revised August value of 105.6, with all segments down, representing the largest decline since September 2021. The Present Situation Index measuring perceptions of current business conditions fell to 124.3 from 133.4 in August. The Expectations Index fell from a revised August value of 86.3 to 81.7 but the third consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predictive of a recession.
• The September 13^th University of Michigan Preliminary Index of Consumer Sentiment for September increased for the second consecutive month to 69.0 from a revised August value of 67.9. The Current Economic Index was 62.9 up from 61.3 in August. This suggests alleviation of concerns among respondents. The Index of Consumer Expectations was 73.0 up from 72.1 in August, denoting an improvement in consumer sentiment influenced by an anticipation of rate cuts and lower inflation despite geopolitical factors. Inflation expectations 12-months hence were down to 2.7 percent from 2.8 percent last month as assessed by the 500 surveyed.
• Non-farm payrolls added 140,000 in August, as documented by the Bureau of Labor Statistics in a September release. This was far lower than the anticipated 161,000, and should be compared to the revised July value of 114,000. Of concern was the downward revision for June from 179,000 to 118,000 jobs added. The August decrease was attributed to workers in the private sector although reductions in health care and construction were constrained. The unemployment rate fell to 4.2 from 4.3 percent with 7.1 million unemployed and with 1.5 million in the long-term category. Real average hourly earnings during July showed a 0.4 percent increase over June to $35.21. Average hours worked increased 0.1 percent to 34.3 hours per week in August. Labor participation was unchanged at 62.7 percent in August. Wage rates increased 3.8 percent over 12-months. Wage rates are closely followed by the Federal Reserve FOMC.
• The August 21^st preliminary revision of job growth by the Bureau of Labor Statistics based on state data suggested that 818,000 fewer jobs were actually created from April 2023 through March 2024 than previously estimated. The discrepancy represented an apparent overstatement of 68,00 new jobs per month on average. Less than half of the overestimate was in the Professional and Business category (358,000); Leisure and Hospitality, (150,000) and Manufacturing (115,000). The preliminary revision that has mainly political implications should increase the magnitude of the reduction in benchmark rate at the September FOMC Meeting.
• The Bureau of Labor Statistics Job Openings and Labor Survey report released on September 4^th estimated 7.67 million job openings at the end of July, below the forecast of 8.10 million and lower than the revised June value of 7.91. The July job openings number was the lowest value since February 2021 and should be compared with July 2023 at 8.81 million and the peak March 2022 value of 12.2 million job openings during COVID. The hiring rate was 3.5 percent (5.4 million hires); the July total separation rate, 3.4 percent (5.4 million); the quit rate 2.1 percent (3.3 million); and the layoff rate 1.1 percent, (1.8 million).
• The seasonally adjusted initial jobless claims figure of 218,000 released on September 26^th for the week ending September 21^st was unexpectedly down by 4,000 from the revised value for the previous week and the lowest for four months. The weekly value was higher than the Reuters estimate of 225,000, settling market concern over a rapidly slowing economy. The four-week moving average was 224,750. The Bureau of Labor Statistics estimated 1.834 million continuing claims for the week ending September 14^th (up 13,000 from the revised value for last week), compared to a peak on November 27^th 2021 at 1.928 million. The August unemployment rate declined to 4.2 percent from 4.3 percent in July. There is clear evidence from data over the past three months that the labor market is cooling as confirmed by Chairman Powell in Congressional testimony and release of downward revised figures for job creation. The jobs market is still tight, but with sporadic weekly fluctuation in new claims due to weather or scheduled plant shutdowns.
• The September 5^th Bureau of Labor Statistics report recorded a 2.5 percent increase in non-Farm Productivity for Q2 2024 up from 0.4 percent in Q1 2024. Labor cost increased by 0.9 percent compared to 4.0 percent for Q1 2024. Output was up by 3.5 percent and hours worked were 1.0 percent higher.
• The ADP® reported on September 5^th that private (excluding government data) payrolls increased by 99,000 in August, down 11,000 from the revised 110,000 in July and compared to the Dow Jones estimate of 140,000 jobs. The increase in employment was mostly in the transportation, utilities, construction and hospitality sectors with 25,000 positions combined and an additional 18,000 in Financial Activities. In contrast losses were recorded in Professional and Business Services (-16,000) and Information (-14,000) Annual pay was up 4.8 percent year-over-year for ‘job-stayers’, unchanged from June and the lowest value since August 2021. The decrease as reported by ADP will not directly influence the probability of short-term future changes in interest rate since their number excluding public sector jobs is regarded as less reliable by the FOMC than the Bureau of Labor Statistics Monthly non-farm payroll report to be considered next week.

STATUS OF THE 2024 CROP

The September 12^th 2024 WASDE #652 projected:-

• Corn area planted for all purposes in 2024 (‘new crop’) will attain 90.7 million acres. According to the September WASDE, yield was projected at 183.6 bushels per acre with a resulting production of 15,186 million bushels with 2,057 million bushels as ending stock. The USDA lowered the average ex-farm price to 410 cents per bushel for the 2024 crop.
• Soybean area to be planted for 2024 will attain 87.1 million acres. According to the September WASDE, yield was estimated at 53.2 bushels per acre with production of 4,886 million bushels with 550 million bushels as ending stock. The USDA held the average season price to 1,080 cents per bushel.
• Crushers are expected to produce 57.08 million tons of soybean meal in 2024. Ending stocks will attain 400,000 tons. The USDA held the average season price at $330 per ton.
• Preliminary data from the Pro Farmer crop tour suggests a corn yield of 181.1 bushels per acre approximately 2.5 bushels lower than the USDA projection in the September WASDE. The estimated yield for soybeans was 54.9 bushels per acre approximately 1.7 bushels higher than in the September WASDE.

The preference for planting soybeans in 2024 was based on a favorable projection of the soy to corn benefit ratio despite lower prospects for exports but with higher domestic demand for crushing.

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FACTORS INFLUENCING COMMODITY PRICES

• Weather conditions in the Midwest over the past four weeks may detract from the projected size of the 2024 harvest, especially in south-central Ohio. Unseasonal heat reduced growth and quality in early to late-June followed by heavy rain and flooding in mid-month. The September WASDE confirmed corn acreage to be harvested at 82.7 million acres and soybeans at 86.3 million acres. Projected yields for corn were updated to 183.6 bushels per acre but soybeans were unchanged from the August WASDE Report.

• Weather in areas of the World growing corn and oilseeds especially in Brazil and Argentine turned dry with transition to a La Nina event that is now underway. Harvesting in South America was advanced for the “new” crop of 2024 but was disrupted by flooding in the southern production states mainly affecting Rio Grande do Sul where up to 25 percent of crops may have been lost. It is estimated that the corn harvest will be reduced by 10 million metric tons (370 million bushels) across South America. Planting in many areas of Brazil is delayed by dry weather.

• Geopolitical considerations continue to move markets, especially in the Mideast and Baltic regions. 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.

• 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 2^nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10^th 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 8^th partial shutdown of the Federal Government. Agreement was concluded on the remaining appropriations bills on March 23^rd maintaining Federal funding through October 2024. This week the Speaker of the House managed to negotiate passage of a continuing resolution (341 to 82), funding the Government through December 20^th.

• The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. Despite the respective markup of the House and Senate versions. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility, allocation of funds for climate remediation and requested price supports for crops. According to the non-partisan Congressional Budget Office, the House version contain provisions for farm supports that would be $31 billion higher than projected by the Committee, adding to the National debt. The retiring Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation even if the Farm Bill is delayed through to the 119^th In a recent statement Sen. Stabenow averred that the Farm Bill is “stuck” absent bipartisan concessions. This sentiment for delay is now supported by Glenn Thompson (R-PA) Chair of the House Agricultural Committee. There are now questions whether funding will be available for substantial crop support payments included in the House version. Former Secretary of Agriculture, Gov. Mike Johanns previously expressed doubt as to whether any farm Bill will be enacted by the 118^th Congress.

• The September 12^th WASDE #652 Projected both corn and soybean production parameters with near record harvests for the 2024 crop but with recent questions on quality. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 37.4 percent of the 2024 U.S. crop with a decrease in ending stock to 550 million bushels as projected in the September WASDE Report. The projection of corn exports will amount to 13.5 percent of the 2024 crop with ending stocks down 0.8 percent from July to 2,057 million bushels.

• Rabobank projected the soybean crop in Brazil will be down from mid-crop projections of 155 million metric tons (5,695 million bushels). Exports should attain 100 million metric tons (3,674 million bushels). It is anticipated that Brazil will crush 56 million metric tons (2,057 million bushels). 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 range from 115 million metric tons (4,526 million bushels) as estimated by CONAB (the production association in Brazil) to 122 million metric tons (4,648 million bushels) by the USDA, from all three sequential harvests. 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 the previous year impacted by drought.

• The 2024 wheat crop from Russia will be down 11.8 percent from 2023 to 80.7 million metric tons. This is due to severe weather during winter followed by drought. The Ukraine wheat crop will attain 22 million metric tons in 2024, unchanged from 2023. Deficits in production will place upward pressure on prices for coarse grains.

• The Dollar Index (DXY) was 100.9 at 12H00 EDT on September 26^th, up 0.1 point from last week and based on recent U.S. economic data resulting in a 0.5 percent reduction in the benchmark interest rate in September. The DXY has ranged from 100.9 to 106.2 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.

• On September 26^th conversion of the CNY to the BRL was BRL 0.78, down CNY 0.02 from last week. The conversion of the CNY to the US$ was CNY 7.14, down CNY 0.07 from the previous week consistent with a fractional rise in the Dollar Index.

INGREDIENTS

The following quotations for the months of delivery as indicated were posted by the CME at 12H00 EDT September 26^th 2024, compared with values at 12H00 EDT on September 19^th 2024 (in parentheses): -

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

Corn: Dec. delivery quotation up 10 cents per bushel. (+2.5 percent)

Soybeans: Nov. delivery quotation up 38 cents per bushel (+3.8 percent)

Soybean Meal: Dec. delivery up $5 per ton ( +1.6 percent)

The CME spot prices for feedstuffs per short ton at 11H00 EDT on September 26^th 2024 with prices for the previous week were:-

• Corn (ZC): $147 per ton, up $2 (+1.4 percent) from the previous week. 52-week range $135 to $181
• Soybean Meal (ZM): $327 per ton, up $6 per ton (+1.9 percent) from the previous week. 52-week range $330 to $461

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 0.4 cent per dozen increase in the nest-run production cost for eggs this past week, compared to September 19^th due to increases in the spot prices of soybean meal and corn.

Values for other common ingredients per short ton:-

• Meat and Bone Meal: According to the USDA National AnimalBy-product Feedstuffs Report on September 20^th:-
• Porcine range: $300 to $355 with an average of $335 per ton, unchanged for two weeks;
• Ruminant range: $310 to $345 per ton (Av. $328 per ton) (ex MN) unchanged for two week. Price varies according to plant and location
• Wheat Middlings: According to the USDA National Mill-Feeds andMiscellaneous Feedstuffs Report on September 20^th, consignments from St. Louis, MO. and other Midwest locations: $115 to $130 per ton (Av. $123 per ton) up $5 per ton (+4.2 percent) from the previous week.

• DDGS: According to the National Grain and Oilseed Processor Feedstuffs Report on September 20^th DDGS, (IA.): range was $115 to $155 (Av. $133 per ton), up $5 per ton (+3.9 percent) from last week reflecting slightly higher corn prices. The average Pacific Northwest price was up unchanged at $235 per ton. Price varies according to plant and location and is expected to fluctuate with the price of corn

• Miscellaneous: University of Missouri Extension Service By-Product Feed Price Listing for September:-
• Bakery Meal, (MO & TX): $150 per ton.
• Rice Bran, (AR & CA): $120 to $200 per ton. (Av. $140).

The CME soybean price for November 2024 delivery at 12H00 EDT on September 26^th was up 3.8 percent compared to last week to 1,051 cents per bushel. The current price of soybeans is a reflection of availability for domestic crushing to produce oil, domestic consumption and export orders. Soybean meal was up $5 (+1.6 percent) on the CME at $327 per ton for December 2024 delivery. Prices of soybeans are obviously influenced by projections of harvests 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 September 16^th by the National Oilseed Processors Association, whose membership crushes 95 percent of the U.S. crop, the soybean crush for August 2024 was unexpectedly down 12.6 percent from July to 158.0 million bushels of soybeans, a three-year low. The consensus estimate was for 171.3 million bushels. The August crush was down 2.2 percent from August 2023 at 161.5 million bushels. Low crush in August was due to plants undergoing pre-harvest maintenance and lower demand for biodiesel.

On September 26^th the CME spot price for soybean oil was up 2.6 cents per lb. (+6.3 percent) from the previous week to 43.7 cents per lb. Prices for vegetable oils have fluctuated over a narrow range in past weeks but the increase is attributed to demand for cooking oils despite the oversupply of biodiesel. It is anticipated that 41 percent of U.S. soy oil was diverted from fuel to biodiesel during 2023 and this proportion will be exceeded in 2024 paralleling the situation in Brazil.

EXPORTS

The FAS Export Report for corn, released on September 26^th for the week ending September 19^th, the third week of the 2024-2025 market year, confirmed that outstanding export orders for corn amounted to 12.51 million metric tons (492.32 million bushels) with carryover. Net orders for the past week attained 0.54 million metric tons (21.06 million bushels). Shipments recorded during this week amounted to 1.10 million metric tons (43.45 million bushels), cumulatively 8.6 percent higher than for the corresponding weeks of the previous market year 2023-2024. Outstanding sales for the 2025-2026 market year are 0.11 million tons (4.3 million bushels) with no orders 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 September 19^th reflecting the third week of the new market year, recorded outstanding export orders amounting to 16.29 million metric tons (598.49 million bushels) due to carry over. Net orders this past week attained 1.88 million metric tons (58.05 million bushels). Shipments attained 0.52 million metric tons (19.03 million bushels), cumulatively 7.9 percent lower than the corresponding weeks of market year 2023-2024.

 (Conversion 36.74 bushels per metric ton)

For the week ending September 19^th outstanding orders for soybean meal and cake attained 1.03 million metric tons. Net orders this week for soybean meal and cake amounted to a net negative 7,900 metric tons due to seasonal cancellations. During the past week 264,200 metric tons of meal and cake combined was shipped. The quantity of 12.85 million metric tons exported during market year 2023-2024 to date is 5.6 percent higher than the volume for the corresponding weeks of the previous market year. For the next market year outstanding sales have attained 3.96 million metric tons with 279,900 tons ordered this past week.

ENERGY

A recent U.S. Energy Information Administration (U.S. EIA) report estimated that fuel ethanol blending would average 1 million barrels per day in 2024, up 2.0 percent from 2023. For the week ending September 20^th, 86.3 percent (91.1 percent for the previous week) of the U.S. ethanol fermentation volume was operational, based on the most recent 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 a seasonal increase in driving and the emergency waiver to dispense E15 blend during summer. There are limited prospects to increase the quantity exported comprising approximately 12 percent or the production equivalent of less than four days operation based on June shipments.

During June 2024 (the last month for which US Energy Information Administration data is available) ethanol exports were down 5.7 percent from the previous month to 148 million gallons (3.481 million barrels). Importing nations and regions of significance and their proportions of total volume (rounded) for the month included:- 30.7 percent to Canada; 31.2 percent to Europe; 12.8 percent to Central, South America and the Caribbean; 19.5 percent to Africa, Asia and the Middle East, predominantly India, Philippines, and Singapore; 5.6 percent to Mexico. Brazil with a high demand for fuel ethanol placed a tariff on U.S. imports to protect a growing domestic industry based on sugar cane. This nation has not imported U.S. ethanol since May.

According to the U.S. EIA, for the week ending September 20^th 2024 the industry produced on average 994,000 barrels of ethanol per day, down 5.2 percent from the week ending September 13^th and below the one-million gallon per day benchmark.

On September 20^th ethanol stock was down 1.1 percent to 23.5 million barrels, an approximately 23-day reserve. This past week demonstrated higher demand for ethanol, given relative changes in the weekly production level (output down 5.2 percent and inventory down 1.1 percent for the most recent week)

Current Energy Prices:-

• The price of WTI was down $3.29 per barrel, (-4.6 percent) to $68.00 per barrel compared to the past week at 11H00 on September 26^th. The decrease was consistent with a rise in inventory and reflected decreased demand. WTI is down 21.7 percent year-to-date with a range of $65.79 to $86.87 per barrel. Issues affecting price last week included a potential increase in the conflict premium for Middle East crude and a decrease in output from Libya. Disruption of shipping in the Red Sea continues, resulting in an escalation in bulk and liquid sea-freight. Fewer reports of attacks are attributed to multinational deterrence of Houthis but mostly to a reduction in vessels transiting the waterway to and from the Suez Canal through the Bab el Mandeb Strait. Reduced demand from China is evident. Turbulence in oil markets at beginning of August was attributed to concern over U.S. employment and the World economy. OPEC+ is responsible for 40 percent of world output, with projected increases in production during October. Reductions announced in mid-2023 were ignored by Russia, Iraq and Kazakhstan, with The Economist (June 1^st 2024) documenting widespread cheating within OPEC.

On September 13^th U.S. strategic reserve was up 0.2 percent to 381 million barrels with a nominal storage capacity of approximately 700 million barrels. In 2009 a total of 725million barrels was stored. The ending stock of crude held at Cushing OK. on September 20^th was down 0.5 percent from last week to 22.8 million barrels and 46.7 percent down from the previous high on June 23^rd 2023. Hydrocarbon energy contributed materially to inflation during the third quarter of 2023 but was an important factor in deflation over the fourth quarter through to the present. On September 20^th Baker Hughes reported 588 rigs were in operation in the U.S. down two rigs from September 13^th suggesting consistent exploration but compared to 630 during the corresponding week in 2023. Average U.S. crude production will average 13.3 million barrels per day in 2024.

• Ethanol quoted on the CME (EH) on September 26^th 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 September 26^th RBOB gasoline traded on NASDAQ (RB) at $1.96 per gallon, down 2 cents (-1.0 percent) from the previous week. Despite the lower prices in past weeks, escalation will occur if the price of crude rises in the intermediate term. The 52-week range for RBOB gasoline is $1.96 to $2.85.

• The AAA national average regular grade gasoline price was $3.22 per gallon on September 26^th, unchanged from last week. Gasoline is now $1.06 per gallon more expensive than ethanol but has a 63 percent higher BTU rating. Despite the lower price this past week escalation may become evident following weather related refinery shut-downs. Future stability in fuel cost is anticipated given the prospects for a continuing low benchmark WTI price.

• The AAA national average diesel price was $3.58 per gallon on September 26^th down 2 cents (-0.6 percent) from the previous week but with prospects for future increases due to an extremely low national stock and reduced refinery operation. Increases are currently restrained by a decline in the trucking industry.

• CME Henry Hub natural gas was priced at $2.75 per MM BTU on September 26^th up 45 cents (+8.5 percent) from the previous week on higher demand and the impending disruption from Hurricane Helene. Generally milder weather and lower industrial use have depressed price. The Administration embargo on new LNG export terminals has limited exploration.

EXPORT HISTORY

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 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 the 2023-2024 market year accumulated exports of corn attained 54.28 million metric tons (2,136 million bushels) up 36.9 percent from market year 2022-2023. For the 2023-2024 market year accumulated exports of soybeans attained 44.51 million metric tons (1,635 million bushels) down 14.9 percent from market year 2022-2023.

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.

COMMENTS

Subscribers are referred to the preliminary USDA projection for 2024 harvests included in the September 12^th WASDE #652, under the STATISTICS tab. in this esition.

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. Pre-invasion Ukraine exported 6 million tons of grains and oilseeds each month. After a drastic reduction exports in 2023, by July 2024 volume increased to 4.2 million metric tons. Over the past 12-months about 2,050 vessels transported 39 metric tons of agricultural commodities with the Port of Odessa now handling 80 percent of exports. 

Increased multinational naval activity is ongoing in the Bab al-Mandeb Strait to restore shipping through the Red Sea and the Suez Canal that carried 15 percent of world sea-freight. Nearly all 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 70 percent from mid-September 2023 creating a fiscal problem for Egypt. Restoring free passage will require either destruction of Houthi bases, radar and command installations and mobile launching equipment on the soil of Yemen or action by Iran to constrain their proxy forces. This will be a long process.