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WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: September 12^th 2024.

OVERVIEW

The prices for corn and soybeans were moderately down from the previous week partly reversing the sharp rise last week. Corn and soybean prices were influenced by the August 2024 WASDE Report, the Pro Farmer Crop Tour and by farmers selling to avoid further declines and to make room for the approaching 2024 harvest beginning in strength from mid- September. More moderate weather conditions suggested high corn and soybean yields and proportionally lower prices as confirmed in the August WASDE. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory 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. The August WASDE Report contained updated values from the extensively revised June/July Reports. A third of the 2024 corn crop is now mature with some harvesting underway. Concurrently almost all (95 percent) of the soybean crop is setting pods and a quarter of the crop is dropping leaves consistent with the five-year average but apparently with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event is expected during the fourth quarter but will not affect the 2024 harvest. The September WASDE and USDA Survey and field evaluations should provide updated projections of yields, anticipated exports and adjusted prices for the 2024 crop.

At 12H00 CDT on September 12^th the CME corn quotation for September delivery was down 1.6 percent to 382 cents per bushel for September delivery. 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 2023-2024 market year were 36.9 percent higher than for the 2022-2023 year.

Soybeans were priced at 980 cents per bushel for September 2024 delivery, still below the 1,000-cent psychological threshold. Price was down 1.9 percent compared to 999 cents per bushel for September delivery last week. Lower prices were attributed to the projection of ending stock, more 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 2023-2024 market year were 14.9 percent lower than for market year 2022-2023.

Soybean meal traded at $313 per ton for September delivery, down 1.9 percent from $319 per ton last week. Price was influenced by demand coupled with high crush volumes for consecutive months from December 2023 through July 2024 inclusive, although with a lower volume in June. 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 August WASDE Reports updated from July.

On September 11^th at 18H00 EDT the price for WTI was lower by $2.63 (-3.7 percent) from last week to $67.31. Price this past week was influenced by Hurricane Francine, resulting in a transitory $2 per barrel spike on September 11 ^th. Current price is independent of the geopolitical uncertainties and tensions in the Middle East. The progressive decline in price reflects moderate world demand for crude as economies and especially that of China have retracted. 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 downward trend in the price of WTI during the week resulting in a range of $67.31 down to a September 10^th low of $63.78.

High U.S. production is constraining domestic and international prices. The recent decline in energy cost during the past month has contributed to deflation influencing the FOMC in their anticipated lowering of 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 passed on lowering the benchmark rate on July 31^st. Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one or two reductions in the 10-year rate during 2024 in the fall. The August and September Non-farm Payrolls and labor data clearly indicated the danger of prolonging the high benchmark interest rate that is negatively impacting the U.S. economy. Qualified commentators are now suggesting that the Fed is “behind the curve” again on adjusting rates downward with a consensus for a 25 basis points or a now unlikely 50 basis points reduction at the September meeting. The markets responded favorably to the remarks by FOMC voting members and Chairman Powell at the Jackson Hole Summit on August 23^rd almost confirming a reduction in the benchmark interest rate at the September Federal Reserve Meeting.

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 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 held the benchmark interest rate steady at the monthly FOMC meeting on July 31^st, the eighth sequential pause. The Federal Reserve commentary indicated that progress has been made in reducing the rate of inflation with a pivot at the September FOMC meeting with a reduction of at least 25 basis points. 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 that 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 August 15^th confirmed that industrial production fell 0.6 percent in July compared to an increase of 0.3 percent in June. Capacity utilization was lower at 77.8 percent (78.8 percent in June) and 1.9 percent below the long run 1972-2020 average.
• The August 26^th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during July 2024 confirmed a sharply higher 9.9 percent increase against a forecast value of 4.0 percent, compared to a revised decline of 6.9 percent in June. The fall in June was mainly due to the Transportation segment and specifically aircraft orders and parts that were down 20.5 percent. Excluding the Transportation component, new orders in July decreased by 0.2 percent compared to an increase of 0.1 percent in June. Shipments of durable goods in the non-defense category were down 0.4 percent in July 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 August 15^thS. Census Bureau release of the advanced estimate of retail and food sales data for July was up 1.0 percent from the revised downward change of -0.2 percent in June and up 2.7 percent over 12 months. Food service sales were up 0.3 percent from June and 3.4 percent from July 2023. Grocery store sales were up 1.0 percent in July compared to June and up 2.8 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• 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 strengthened the possibility of a rate cut in September as suggested by Federal Reserve Chairman Powell.
• The August 27^th Consumer Confidence report prepared by The Conference Board for the period ending August 21st, confirmed an increase to 103.3 from the revised July value of 101.9. The Present Situation Index measuring perceptions of current business conditions improved from 133.1 in July to 134.4. The Expectations Index rose from 81.1 to 82.5 in August, the second consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predictive of a recession.
• The August 18^th University of Michigan Preliminary Index of Consumer Sentiment for August increased for the first time in 5 months from a revised July value to 67.8.The Bloomberg forecast was 66.9. The Index was down 2.3 percent from the corresponding month in 2023. The Current Economic Index (60.9 down from 62.7 in July) suggests present concerns. The Index of Consumer Expectations (72.1 up from 68.8 in July) denotes an improvement in consumer sentiment influenced by an anticipation of rate cuts and lower inflation despite geopolitical factors. Inflation expectations 12-months hence were unchanged at 3.0 percent among 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 230,000 released on September 12^th for the week ending September 7^th was down by 2,000 from the revised value for the previous week and the lowest for eight weeks. The weekly value was consistent with the Reuters estimate of 230,000, settling market concern over a rapidly slowing economy. The four-week moving average was 230,750. The Bureau of Labor Statistics estimated 1.850 million continuing claims for the week ending August 31^st (up 5,000 from last week), the most since November 27^th 2021 at 1.928 million. The 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 July 12^th 2024 WASDE #651 projected:-

• Corn area planted for all purposes in 2024 (‘new crop’) will attain 90.7 million acres. According to the August WASDE, yield was projected at 183.1 bushels per acre with a resulting production of 15,147 million bushels with 2,073 million bushels as ending stock. The USDA lowered the average ex-farm price to 420 cents per bushel for the 2024 crop.
• Soybean area to be planted for 2024 will attain 87.1 million acres. According to the August WASDE, yield was predicted at 53.2 bushels per acre with production of 4,949 million bushels with 560 million bushels as ending stock. The USDA lowered 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 suggest a corn yield of 181.1 bushels per acre approximately 2 bushels lower than the USDA projection in the August WASDE. The estimated yield for soybeans was 54.9 bushels per acre approximately 1.7 bushels higher than the August 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

• Weather conditions in the Midwest over the past four weeks have not detracted from the size of the 2024 harvest. Unseasonal heat reduced growth and quality in early to late-June followed by heavy rain and flooding in mid-month. The August WASDE adjusted corn acreage to be harvested down by 0.5 percent and soybeans up by 1.2 percent. Projected yields for corn and soybeans were respectively increased by 1.2 and 2.3 percent from the July WASDE Report.

• Weather in areas of the World growing corn and oilseeds especially in Brazil and also Argentine provided favorable rain recently under the influence of a strong El Nino event that has now officially ended. (Downward pressure on prices). 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. Transition to a La Nina will result in the onset of drought in regions of South America during the 4^th quarter of 2024 onwards.

• 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 withdrew a bill to extend funding for six months due to conservative objection to the magnitude of spending and opposition to inclusion of an extraneous proof-of-citizenship requirement to be enrolled as a voter.

• 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 is doubtful that any farm Bill will be enacted by the 118^th Congress.

• The August 12^th WASDE #651 Projected both corn and soybean production parameters with near record harvests 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 40.6 percent of the 2024 U.S. crop with a decrease in ending stock to 245 million bushels as projected in the August WASDE Report. The projection of corn exports suggests that exports will amount to 12.4 percent of the 2024 crop with ending stocks down 2.7 percent from July to 2,202 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 deficit will place upward pressure on coarse grains

• The Dollar Index (DXY) opened at 101.6 on September 12^th, up 0.5 points from last week and based on recent U.S. economic data suggesting a cut in benchmark interest rate in September despite declining bond rates. 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 12^th conversion of the CNY to the BRL was BRL 0.80, up CNY 0,01 from last week. The conversion of the CNY to the US$ was CNY 7.14, unchanged from the previous week despite a 0.5 point 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 12^th 2024, compared with values at 14H00 CDT on September 5^th 2024 (in parentheses): -

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

Corn: Sept. delivery quotation down 6 cents per bushel. (-1.6 percent)

Soybeans: Sept. delivery quotation down 19 cents per bushel (-1.9 percent)

Soybean Meal: Sept. delivery quotation down $6 per ton (-1.9 percent)

The CME spot prices for feedstuffs per short ton at 10H00 EDT on September 5^th 2024 with prices for the previous week were:-

• Corn (ZC): $145 per ton, down $2 (-1.4 percent) from the previous week. 52-week range $135 to $181
• Soybean Meal (ZM): $321 per ton, down $2 per ton (-0.6 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 0.3 cent per dozen decrease in the nest-run production cost for eggs this past week, compared to September 5^th due to an increase in the spot price of soybean meal offset by lower corn.

Values for other common ingredients per short ton:-

• Meat and Bone Meal: According to the USDA National AnimalBy-product Feedstuffs Report on September 6^th:-
• Porcine range: $300 to $355 with an average of $335 per ton, unchanged from last week;
• Ruminant range: $310 to $345 per ton (Av. $328 per ton) (ex MN) unchanged from the previous week. Price varies according to plant and location
• Wheat Middlings: According to the USDA National Mill-Feeds andMiscellaneous Feedstuffs Report on September 6^th, consignments from St. Louis, MO. and other Midwest locations: $100 to $115 per ton (Av. $108 per ton) up $9 per ton (+9.1 percent) from the previous week.

• DDGS: According to the National Grain and Oilseed Processor Feedstuffs Report on September 6^th DDGS, (IA.): range was $120 to $135 (Av. $125 per ton), unchanged from last week reflecting stable to slightly lower corn prices. The average Pacific Northwest price was up $2 per ton to $233 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 August/September:-
• Bakery Meal, (MO & TX): $150 per ton.
• Rice Bran, (AR & CA): $120 to $200 per ton. (Av. $140).

The CME soybean price for September 2024 delivery at 12H00 CDT on September 12^th was down 1.9 percent compared to last week for September delivery to 980 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 1.9 percent on the CME to $313 per ton for September 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 August 15^th by the National Oilseed Processors Association, whose membership processes 95 percent of the U.S. crop, the soybean crush for July 2024 was up 4.1 percent from June to 182.9 percent million bushels of soybeans, and above the consensus estimate of 182.4 million bushels. The July crush was up 5.5 percent from July 2023 at 173.3 million bushels.

On September 11^th the CME spot price for soybean oil was down 1.9 cents per lb. (-4.6 percent) from the previous week to 39.3 cents per lb. Prices for vegetable oils have fluctuated over a narrow range in past weeks but the decrease is attributed to an 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 12^th for the week ending September 5^th, the first week of the 2024-2025 market year, confirmed that outstanding export orders for corn amounted to 12.80 million metric tons (503.9 million bushels) due to carry overs. Net orders for the past week attained 0.67 million metric tons (26.23 million bushels). Shipments recorded during the first working week of market year 2024-2025 amounted to 0.56 million metric tons (21.96 million bushels), 23.0 percent lower than the first week of the previous market year 2023-2024.

(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 5^th reflecting the first week of the new market year, recorded outstanding export orders amounting to 13.930 million metric tons (511.8 million bushels) due to carry over. Net orders this past week attained 1.47 million metric tons (54.15 million bushels). Shipments for the first working week of market year 2024-2025 attained 0.31 million metric tons (11.53 million bushels) 23 percent lower than the first week of market year 2023-2024.

 (Conversion 36.74 bushels per metric ton)

For the week ending September 5^th outstanding orders for soybean meal and cake attained 1.46 million metric tons. Net orders this week for soybean meal and cake amounted to a net negative 3,000 metric tons with seasonal cancellations. During the past week 193,300 metric tons of meal and cake combined was shipped. The quantity of 12.43 million metric tons exported to date is 6.3 percent higher than the volume for the corresponding weeks of the previous market year. For the next market year outstanding sales have attained 3.40 million metric tons with 279,000 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 September 6^th, 93.8 percent (92.1 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 April 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 6^th 2024 the industry produced on average 1,080,000 barrels of ethanol per day, up 1.9 percent from the week ending August 30^th continuing above the one million gallon per day benchmark.

On September 6^th ethanol stock was up 0.6 percent to 23.7 million barrels, an approximately 23-day reserve. This past week demonstrated higher demand for ethanol, given relative changes in the weekly production level (output up 1.8 percent and inventory up 0.6 percent for the most recent week)

Current Energy Prices:-

• The price of WTI was down $2.63 per barrel, (-3.7 percent) to $67.31 per barrel compared to the past week at 18H00 on September 11^th The decrease was despite a fall in inventory and reflected lower demand. On September 10^th price was up $2 as a result of disruption caused by Hurricane Francine. WTI is down 7.4 percent year to date. Issues affecting price last week included a relaxation 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 with an evident depression in the price of WTI. 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.

The U.S. strategic reserve was up 42 million barrels to 419 million barrels with a nominal storage capacity of approximately 600 million barrels. The ending stock of crude held at Cushing OK. on September 6^th was down 6.5 percent from last week to 24.6 million barrels and 42.3 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 6^th Baker Hughes reported 582 rigs were in operation in the U.S. down one rig from August 30^th suggesting consistent exploration and compared to 632 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 11^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 11^th RBOB gasoline traded on NASDAQ (RB) at $1.89 per gallon, down 7 cents (-3.6 percent) from the previous week. Despite the higher price this past week additional escalation may become evident in CME trading and ultimately at the pump as demand increases through the few remaining weeks of summer. The 52-week range for RBOB gasoline is $1.98 to $2.80.

• The AAA national average regular grade gasoline price was $3.25 per gallon on September 11^th, down 4 cents (-1.2 percent) from last week. Gasoline is now $1.15 per gallon more expensive than ethanol but has a 63 percent higher BTU rating. Future stability in fuel cost is anticipated given the prospects for a continuing low benchmark WTI price.

• The AAA national average diesel price was $3.65 per gallon on September 11^th down 4 cents (-1.1 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 $2.27 per MM BTU on September 11^th unchanged from the previous week on lower demand attributed to milder weather and lower industrial use. Gas prices are depressed following an Administration embargo on new LNG export terminals. Warm weather has depressed demand

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 August 12^th WASDE #651, under the STATISTICS tab. and to be updated next week.

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.