Global Commodities Research13 February 2024J P M O R G A Nwww.jpmorganmarkets.comGlobal Commodities ResearchPriya R Suneja(91-22) 6157 4721priya.suneja@jpmchase.comJ.P. Morgan India Private LimitedNatasha Kaneva(1-212) 834-3175natasha.kaneva@jpmorgan.comJPMorgan Chase Bank NAAgri commodity price movements - active contract%Source: Bloomberg Finance L.P., J.P. Morgan Commodities Research, 09 February•At face value, the USDA�s February WASDE was bearish CBOT Soybeans; neutral/bearish CBOT Corn and CBOT Wheat; and bullish ICE #2 Cotton. The focus remains on South American weather, particularly on Brazilian safrinha corn production potential. Although the USDA has slightly reduced its estimate for Brazil�s soybean supply, significant reductions in the future iterations could be expected as the early harvest yields continue to disappoint.•US ending stocks increased on the month for soybean, corn and wheat, surpassing the trade expectations, driven by cuts in US soybean exports and lower consumption estimates for wheat and corn. CBOT grains, meals and beans finished the session down on the day.•Key upcoming events to monitor include the USDA�s Outlook Forum on February 15th and 16th and the release of the Malaysian Palm Oil Board January fundamental update on February 13th. Expectations call for a 9% MoM reduction in inventories due to decreased production amid wet weather.•Trade recommendations: We stay long the agri complex via an index. Our price forecasts sit above futures curves, and markets are discounting supply-side and geopolitical risks, which remain heightened in our view.Table 1: World Fundamentals 2023/24Million tonnes/blFeb 24Jan 24Prior MYAverageLowHigh2023/24 ending stocksCorn322.1 325.2 300.3 324.6 322.0 328.0 -1.0%7.3%-0.8%Soybeans116.0 114.6 103.6 113.0 111.0 115.0 1.2%12.0%2.7%Wheat259.4 260.0 271.2 260.5 257.0 263.5 -0.2%-4.3%-0.4%Cotton83.7 84.4 83.0 84.4 84.0 85.0 -0.8%0.9%-0.8%% change v av trade expecUSDATrade EstimatesMOM % changeYOY % changeSource: USDA, Bloomberg Finance L.P., J.P. Morgan Commodities ResearchUSDA world corn inventories declined by 1% on the month to 322 million tonnes, with decreases in Brazil, Mexico, and Serbia production partially offset by increases in India and Turkey. US exports remained constant at 2.1 billion bu, contrary to trade expectations. While, Ukraine saw a 2 million tonne increase in exports. EU imports were revised downward by 0.5 million tonnes, but still remained relatively high, while China�s imports remained unchanged (5 million tonnes above government�s estimates). In Brazil, although safrinha plantings are progressing well, lower corn prices may deter farmers from planting, as evidenced by lower-than-expected seed sales. USDA has lowered Brazil�s corn planted acreage to 21.9 million ac (down 0.5 million ac) prompting production cuts of 3 million tonnes to 124 million tonnes while exports were further r...
