WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: October 31^st 2024.

OVERVIEW

The prices for corn and soybeans were appreciably lower over the past week reversing the trend over the previous week. Soybeans were down 2.0 percent and corn down 2.5 percent. Corn and soybean prices were influenced by uncertainty over yields in Brazil and Argentine. There was minimal response to the October WASDE Report. Farmers are selling both old and new crop to avoid further declines and to make room for the approaching 2024 harvest continuing in strength this week. 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. More than 80 percent of the 2024 corn crop is “in the bin”. Concurrently 90 percent of the soybean crop 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 together with the Pro Farmer August field evaluations provided updated projections of yields, with USDA updates for anticipated exports and adjusted prices for the 2024 crop.

At 11H00 EDT on October 31^st the CME corn quotation for December delivery was down 2.5 percent to 411 cents per bushel. 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 new crop. USDA estimated that 44 percent of old corn stock was held on farms at the beginning of September. 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, despite an increase in the Dollar Index, adding to increased ocean freight. Total exports for the new 2024-2025 market year are 35.3 percent above the first seven weeks of the 2023-2024 market year.

Soybeans were priced at 983 cents per bushel for November 2024 delivery, again falling below the 1,000-cent psychological threshold. Price was sown 2.0 percent compared to 1,003 cents per bushel last week for November delivery. Lower prices were attributed to the projection of ending stock, 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 5.8 percent higher than for the corresponding first seven weeks of market year 2023-2024.

Soybean meal was priced at $302 per ton for December delivery, down $10 per ton (-3.5 percent) from last week. Price is influenced by demand coupled with a reestablished crush volume in September restoring 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 October WASDE Reports updated from September.

On October 30^th at 21H00 EDT the price for WTI was $68.93 down $2.09, (-2.9 percent) from last week. The current price now reflects recovery from Hurricane Milton. Current price is not materially affected by uncertainties and tensions in the Middle East but reassured that retaliatory action as announced by Israel would not include Iranian oil installations. Over the longer term price reflects moderate world demand for crude as economies and especially that of China have retracted requiring central bank stimulation in late August. 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 fluctuation in the price of WTI through October 30^th with the range during the week extending from $71.02 on October 23^rd down to $68.93 on October 30^th.

Ample U.S. crude production is constraining domestic and international prices. The recent decline in energy costs during the past two months 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 growing 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 increase in GDP to 3.0 percent and coupled with recent economic parameters including the ECI, CPI and PPI. 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 followed by 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 October 30^th release by the Bureau of Economic Affairs documented an advanced estimate of Q3 2024 GDP of 2.8 percent based on preliminary figures although this value will be revised. This figure compares to the Q2 GDP of 3.0 percent and the 2.9 percent value for entire 2023. The first estimate of the Q3 GDP was influenced by higher consumer spending especially on non-durable goods.
• The October 10^th release of the Consumer Price Index (CPI) for September showed a 0.2 percent rise over August and an annual rise of 2.4 percent. The monthly value is compared to an anticipated 0.1 percent. Core CPI (excluding food and fuel) was up 0.3 percent in September with an annual increase of 3.3 percent. Food increased 0.4 percent with eggs highlighted at 8.4 percent and chicken up 0.7 percent. For September shelter was up 0.2 percent. Notwithstanding the unexpected increase in CPI during September additional reductions in benchmark interest rates are anticipated during this quarter.
• On September 27^th the Bureau of Economic Analysis released the September Personal Consumption and Expenditure Price Index. The core PCE (excluding food and energy) was up 0.1 percent from the previous month, below a 0.2 percent estimate and attained 2.7 percent year-over-year and compared to a consensus of 2.3 percent. The Headline PCE was up 0.1 percent from August and 2.2 percent from August 2023. Food was up 0.1 percent from August and 1.1 percent from August 2023.. 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 September Producer Price Index for Final Demand (PPI) released on October 11^th was unchanged from August against an expectation of a 0.2 percent rise. This was attributed in part to a 0.2 percent increase in services and a 1.0 percent increase in food. The PPI was up 1.8 percent over the past 12-months ending in September compared with 1.9 percent for the 12-month period through August. 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 from August and 2.8 percent over the previous 12 months.
• A Federal Reserve release on October 17^th confirmed that industrial production was lower by 0.3 percent in September compared to an increase of 0.3 percent in August. Capacity utilization was lower at 77.5 percent and was 2.2 percent below the long run 1972-2020 average.
• The October 7^th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during September 2024 increased by 0.2 from August and 12.1 percent year-to-date, following a 0.6 percent decline during August. Excluding the Transportation component, new orders in September increased by 1.7 percent compared to an increase of 2.8 percent in August. Shipments of durable goods in the non-defense category were down 0.9 percent in September from the previous month ultimately to be reflected in the quarterly GDP.
• In an October 3^rd release the Census Bureau confirmed that factory orders for U.S. manufactured goods fell 0.2 percent in August against an estimate of no change and compared to a revised rise of 4.9 percent in July.
• The October 15^thS. Census Bureau release of the advanced estimate of retail and food sales data for September was up 1.5 percent from the revised August value and up 7.7 percent over 12 months. Food service sales were up 0.7 percent from August and up 9.4 percent over 12 months. Grocery store sales were down 0.6 percent from the revised July value and up 4.0 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• The October 1^st release by the Institute for Supply Management (ISM®) reported an unchanged Manufacturing Index for September at 47.2 against an expected value of 47.5. The September value was still below the bifurcation point of 50 percent between contraction and expansion. The Prices Index fell by 5.7 points to 49.8 in September, denoting lower costs for production. U.S manufacturing does not currently reflect an improved economy, and manufacturing has yet to recover from prolonged high benchmark interest rates. The Production Index for September was up 5.0 points from 44.8 in August to 49.8 in September.
• On October 31^st the U.S. Bureau of Labor Statistics reported a 0.8 percent increase in the Employment Cost Index (ECI) over the 3^rd quarter of 2024. The year-over-year increase in wages and salaries was 3.9 percent and with benefit costs up by 5.8 percent. 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 October 29^th Consumer Confidence Report prepared by The Conference Board for October, confirmed a substantial increase to 108.7 from the revised September value of 992, with all segments up. The Present Situation Index measuring perceptions of current business conditions rose 14.2 points to 138.0 in October. The Expectations Index increased from a revised September value of 82.8 to 89.1 and was the fourth consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predicting a recession.
• The October 11^th University of Michigan Index of Consumer Sentiment for October fell to 68.9 from a revised September value of 70.1. The Current Economic Index was 62.7 in October down from 63.3 in September. The Index of Consumer Expectations was 72.9 down from 74.4 in September, denoting deterioration in consumer sentiment despite the September rate cut and lower inflation. Geopolitical factors and uncertainty over the upcoming election have adversely influenced sentiment. In perspective sentiment is up 8 percent above September 2023 and 40 percent above the low in June 2022.
• Non-farm payrolls added an unanticipated high 254,000 in September, as documented by the Bureau of Labor Statistics in an October 4^th This was higher than the anticipated 140,000, and should be compared to the upwardly revised August value of 159,000.. The unemployment rate fell to 4.1 from 4.2 percent with 6.8 million unemployed and with 1.6 million in the long-term category. Real average hourly earnings during September showed a 0.4 percent increase over August to $35.36. Average hours worked in manufacturing declined fractionally to 33.7 hours per week. Labor participation was unchanged at 62.7 percent from August. Wage rates increased 4.0 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 (“JOLTS) released on October 29^th estimated 7.44 million job openings at the end of September, unexpectedly below a forecast of 8.00 million and lower than the revised August value of 7.86 million. The September job openings number was the lowest since January 2021 and was down 1.2 percent over 12 months. The peak job openings figure was 12.2 million in March 2022 during COVID. The September hiring rate was 3.5 percent (5.5 million hires); the September total separation rate, 3.1 percent (5.2 million); the quit rate 1.9 percent (3.2 million); and the layoff rate 1.2 percent, up 0.2 percent from August at 1.8 million.
• The seasonally adjusted initial jobless claims figure of 216,000 released on October 31^st for the week ending October 26^th was down by 12,000 from the revised value of 238,000 for the previous week. The weekly value was lower than the Reuters estimate of 230,000. The four-week moving average increased to 238,750. The Bureau of Labor Statistics estimated 1.862 million continuing claims for the week ending October 19^th (down 26,000 from the revised value for last week), compared to a peak on November 27^th 2021 at 1.928 million. The September unemployment rate fell to 4.1 percent. 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, strikes or scheduled plant shutdowns. Unemployment data has now recovered from the effects of Hurricanes Helene and Milton but the strike by Boeing machinists is still contributing to claims.
• 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 October 30^th that private (excluding government data) payrolls increased by an unexpected 233,000 in October, up 74,000 from the revised 159,000 in September and compared to a consensus estimate of 111,000 jobs. The increase in employment was mostly in the service-related sectors amounting to 211,000 positions. Individual categories included the Transportation, Trade and Utilities sector, (+51,000); Construction, (+37,000); Hospitality, (37,000); and Professional and Business Services, (+20,000); Information (+7,000). Manufacturing was down 19,000. Annual pay was up 4.6 percent year-over-year for ‘job-stayers’, down 0.1 percent from August 2024. The increase as reported by ADP will not directly influence the probability of short-term future changes in interest rate since the number, although based on 25 million positions, excludes the public sector. Monthly ADP data is regarded as less reliable by the FOMC than the Bureau of Labor Statistics Monthly non-farm payroll report.

STATUS OF THE 2024 CROP

The October11^th 2024 WASDE #653 projected:-

• Corn area planted for all purposes in 2024 (‘new crop’) will attain 90.7 million acres. According to the October WASDE, yield was projected at 183.8 bushels per acre with a resulting production of 15,203 million bushels with 1,999 million bushels as ending stock. The USDA held the average ex-farm price at 410 cents per bushel for the 2024 crop.
• Soybean area to be planted for 2024 will attain 87.1 million acres. According to the October WASDE, yield was estimated at 53.1 bushels per acre with production of 4,582 million bushels with 550 million bushels as ending stock. The USDA held the average season price at 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 October WASDE. The estimated yield for soybeans was 54.9 bushels per acre approximately 1.8 bushels higher than in the October 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.

FACTORS INFLUENCING COMMODITY PRICES

• According to the National Oceanic and Atmospheric Administration (NOAA) the La Nina event in progress will result in warmer and drier conditions on the Central and Southern Plains. It is projected that 52 percent of the wheat crop will be impacted by drought. In contrast heavier than usual rainfall will occur in the Great Lakes and Ohio Valley regions benefitting crop growth and ensuring uninterrupted passage on the Mississippi waterway.

• Rainfall in areas of the World growing corn and oilseeds especially in Brazil and Argentine that have 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.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. creditworthiness 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. Before this deadline the Speaker of the House managed to negotiate passage of a continuing resolution (vote; 341 to 82), funding the Government through December 20^th beyond the 2024 election.

• 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. In contrast USDA Secretary, Tom Vilsack predicted passage of a Farm Bill during the post-election ‘lame duck” session.

• The October 11^th WASDE #653 Projected both corn and soybean production parameters with near record harvests for the 2024 crop with favorable quality. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 37.5 percent of the 2024 U.S. crop with a decrease in ending stock to 550 million bushels as projected in the October WASDE Report. The projection of corn exports will amount to 13.7 percent of the 2024 crop with ending stocks down 2.8 percent from August to 1,999 million bushels.

• Soybean production in Brazil will attain 166.1 million metric tons (6,103 million bushels), up 12.7 percent from the 2023-2024 season despite drought in northern states. The projected in crease for the 2024-2025 season is based on a 2.8 percent larger area planted amounting to 117 million acres.

• 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 104.1 at 17H00 EDT on October 30^th, down 0.3 points from last week and near a ten week high. The increase was in part based on recent U.S. economic data subsequent to 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 October 30^th conversion of the CNY to the BRL was BRL 0.81, down CNY 0.01 from last week. The conversion of the CNY to the US$ was CNY 7.14, unchanged from the previous week consistent with the stability of the Dollar Index.

INGREDIENTS

The following quotations for the months of delivery as indicated were posted by the CME at 11H00 EDT October 31^st 2024, compared with values at 12H00 EDT on October 24^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 down 11 cents per bushel. (-2.5 percent)

Soybeans: Nov. delivery quotation down 20 cents per bushel (-2.0 percent)

Soybean Meal: Dec. delivery down $10 per ton (-3.2 percent)

The CME spot prices for feedstuffs per short ton at close on October 30^th 2024 with prices for the previous week were:-

• Corn (ZC): $147 per ton, down $3 (-2.0 percent) from the previous week. 52-week range $135 to $181
• Soybean Meal (ZM): $302 per ton, down $13 per ton (-4.1 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

The nest-run production cost for eggs this past week, was down 0.9 cents per dozen compared to October 24^th due to the decreases in the spot prices of corn and soybean meal.

Values for other common ingredients per short ton:-

• Meat and Bone Meal: According to the USDA National AnimalBy-product Feedstuffs Report on October 25^th:-
• Porcine range: $300 to $355 with an average of $335 per ton, unchanged for six weeks;
• Ruminant range: $310 to $325 per ton (Av. $318 per ton) (ex MN) unchanged over three weeks.

Prices vary according to plant of origin and location 

• Wheat Middlings: According to the USDA National Mill-Feeds andMiscellaneous Feedstuffs Report on October 25^th, consignments from St. Louis, MO. and other Midwest locations: $125 to $150 per ton (Av. $138 per ton) up $2 per ton (+1.5 percent) from the previous week.

• DDGS: According to the National Grain and Oilseed Processor Feedstuffs Report on October 25^th DDGS, (IA.): range was $125 to $162 (Av. $140 per ton), up $4 per ton (+2.9 percent) from last week reflecting slightly higher corn prices. The average Pacific Northwest price was unchanged at $240 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 October:-
• 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 11H00 EDT on October 24^th was down 2.0 percent compared to last week to 983 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 down $10 per ton (-3.2 percent) on the CME to $302 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 October 15^th by the National Oilseed Processors Association, whose membership crushes 95 percent of the U.S. crop, the soybean crush for September 2024 was up 7.8 percent from August to 170.3 million bushels of soybeans. The consensus estimate was for 170.3 million bushels. The September crush was up 2.9 percent from September 2023 at 165.5 million bushels. Low crush in August was due to plants undergoing pre-harvest maintenance and on lower demand for biodiesel.

On October 29^th the CME spot price for soybean oil was down 0.7 cents per lb. (-1.6 percent) from the previous week to 42.8 cents per lb. Prices for vegetable oils have fluctuated over a narrow range in past weeks but the increase is attributed to demand for biodiesel and cooking oils. Malaysian palm oil has increased by 16 percent from the mid-August low to 46.0 cents per lb. up 0.8 cents per lb. (+1.8 percent). It is anticipated that 41 percent of U.S. soy oil was diverted from fuel to biodiesel during 2023 and that this proportion will be exceeded in 2024 paralleling the situation in Brazil.

EXPORTS

The FAS Export Report for corn, released on October 31^st for the week ending October 24^th, for the 2024-2025 market year, confirmed that outstanding export orders for corn amounted to 19.07 million metric tons (750.44 million bushels) with carryover. Net orders for the past week attained a substantial 2.34 million metric tons (92.18 million bushels). Shipments recorded during this week amounted to 0.79 million metric tons (31.81 million bushels), cumulatively 35.3 percent higher than for the corresponding weeks of the previous market year 2023-2024. Outstanding sales for the 2025-2026 market year are 0.69 million tons (27.16 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 October 24^th, recorded outstanding export orders amounting to 15.95 million metric tons (586.00 million bushels) due to carry over. Net orders this past week attained 2.27 million metric tons (83.51 million bushels). Shipments attained a substantial 2.45 million metric tons (89.02 million bushels), cumulatively 5.8 percent higher than the corresponding weeks of market year 2023-2024. Outstanding sales for the 2025-2026 market year amount to 10,000 metric tons (0.37 million bushels), with no orders this past week.

 (Conversion 36.74 bushels per metric ton)

For the week ending October 24^th outstanding orders for soybean meal and cake amounted to 4.71 million metric tons due to carryover to the third week of market year 2024-2025. Net orders this week for soybean meal and cake attained a net 208,400 metric tons. During the past week 300,000 metric tons of meal and cake combined was shipped. For market year 2024-2025 outstanding sales attained 2,000 metric tons with 1,000 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 October 24^th, 93.8 percent (93.8 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 availability of E15 blend. 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 July shipments.

During July 2024 (the last month for which US Energy Information Administration data is available) ethanol exports were down 6.8 percent from the previous month to 138 million gallons (3.247 million barrels). Importing nations and regions of significance and their proportions of total volume (rounded) for the month included:- 45.6 percent to Canada; 24.6 percent to Europe; 11.5 percent to Central, South America and the Caribbean; 16.2 percent to Africa, Asia and the Middle East, predominantly India, Philippines, and Singapore; 1.8 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 October 25^th 2024 the industry produced on average 1,082,000 barrels of ethanol per day, up 0.1 percent from the week ending October 18^th and continuing above the one-million gallon per day benchmark.

On October 25^th ethanol stock was down 2.0 percent to 21.8 million barrels, an approximately 22-day reserve. This past week demonstrated fractionally higher demand for ethanol, given relative changes in the weekly production level (output up 0.1 percent and inventory down 2.2 percent for the most recent week)

Current Energy Prices:-

• The price of WTI was down $2.09 per barrel, (-2.9 percent) to $68.93 per barrel compared to the past week at 21H00 on October 30^th. The decrease was attributed to decreasing demand and a rumor of a delay in a planned increase in output. WTI is unchanged year-to-date with an extreme 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 but with a reduced threat of retaliatory attacks on oil installations in Iran. 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 Houthi terrorists 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. Saudi Arabia warned of price declines hinting at $50 to $60 per barrel unless output is curtailed.

On October 25^th U.S. strategic reserve was up 0.3 percent to 385.8 million barrels up 8.6 percent year-to-date 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 October 25^th was up 2.8 percent from last week to 25.3 million barrels and 40.8 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 October 25^th Baker Hughes reported 585 rigs were in operation in the U.S. unchanged from October 18^th suggesting consistent exploration but compared to 625 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 October 30 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 October 30^th RBOB gasoline traded on NASDAQ (RB) at $1.96 per gallon, down 4.0 cents (-2.0 percent) from the previous week. Despite the lower prices in past weeks, escalation will occur in the unlikely event that crude rises in the intermediate term. The 52-week range for RBOB gasoline is $1.87 to $2.85.

• The AAA national average regular grade gasoline price was $3.14 per gallon on October 30^th, down two cents (-0.6 percent) from last week. Gasoline at the pump is now $0.98 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 October 30^th down one cent (-0.3 percent) from the previous week but with prospects for future increases due to an extremely low national stock and reduced refinery operation following two hurricanes. Increases are currently restrained by a decline in the trucking industry.

• CME Henry Hub natural gas was priced at $2.82 per MM BTU on October 30^th down 41 cents cents (+17.0 percent) from the previous week on lower demand and the disruption from Hurricanes Helene and Milton. 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 October 11^th WASDE #653, in this edition.

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.