#5 | Hot Chocolate

Cocoa is now more expensive than copper, making yet another new all-time high at $10,324 per ton this morning.

Futures surged 60% during the month of March, are up 145% year-to-date and sit 270% higher than where they were trading just one year ago as extreme weather has decimated Africa's growing crop. 

#4 | A Pleasant Surprise

It was a big win for the farmer in last week's Prospective Plantings report as USDA's survey-based 2024 planted area found nearly two million less corn acres than expectations heading into the report.

Additionally, and perhaps even more important, those two million ‘missing’ acres didn't find their way into soybeans in this initial estimate of 2024 area.

March 2024 corn acreage was reported at 90.0 million, right near the lowest of pre-report estimates, 1.8 million below the average pre-report guess and down from 94.6 in 2023.

Soybean acreage came in at 86.5 million, up 2.9 million from 2023's final area and right in line with the average pre-report guess.

#3 | Where did all the acres go?

If there was one burning question we were left with after March's initial acreage report, it is: where did all the acres go?

When looking at the corn+soybean area pool, 2024's Prospective Plantings came in at 176.5 million, down from 178.2 in 2023 and a full 2 million acres less than the average pre-report guess. In fact, last week's area was so low, it came in below even the lowest of average estimates.

It wasn't just corn and beans though, as 2024's principal crop area was reported 6.3 million acres below 2023's final acres with the largest year-on-year declines noted in central southern areas of the country.

Aside from corn, the largest year-on-year area declines included winter wheat, hay and a variety of smaller alternative crops. Also interesting to note wheat saw large changes with soft red winter seeing its largest January to March decline in decades, but its losses were partially offset by a large uptick in hard red wheat plantings.

While last week's friendly initial estimates were welcomed with open arms, I must caution you to be on the lookout for an uptick in area by the time June's acreage report rolls around. Barring a disastrous spring or some other unforeseen event, history tells us we will likely find back a few acres given our relatively low starting point.

#2 | The only constant is change

High prices tend to cure high prices - in the form of less expensive substitutes.

There is no better example of this than the change in veg oil flows in and out of the United States, as soybean oil exports hit record lows, while palm oil imports make new highs.

US palm imports have doubled since biodiesel mandates began in the mid-2000s, helping satisfying domestic food and feed demand left open as soy oil began to be used for fuel.

The most interesting thing is palm oil is strictly prohibited in biofuel use here in the United States (because of its association with tremendous amounts of deforestation in some of the most biodiverse tropical forests on the planet).

So… we aren’t using imported palm oil to fuel cars, simply as a replacement in food and feed applications for soybean oil that is being used to fuel cars.

Okay. Got it.

#1 | One Net Long

After 20 consecutive weeks of a net short position in soybean oil, managed money moved to the long side for the first time since October in the week ending March 26.

With its new-found net long of a whopping 951 contracts, soybean oil is the only commodity without a net short position. Funds' purchasing of oil is welcomed with open arms as early January was the last time anything in the corn + wheats + soy complex saw a net long position.

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