Written Commentary
SOYBEANS
The soybean complex finished mixed with soybeans and soybean oil lower, while soybean meal was slightly higher in the spot contracts, with deferred up $5 per ton. After failing to trade above yesterday’s high overnight, Mch-23 soybeans sold off, down near $.30 at today’s low before recovering to close $.18 lower. Soybean oil closed 100 – 150 lower in sympathy with the lower energy prices. China has reportedly purchased several cargoes of Brazilian soybeans for April/May shipment. The US Ag Attaché slashed their Argentine soybean production forecast to 36 mt, well below last month’s official USDA forecast of 45.5 mt. StoneX Group raised their Brazilian soybean production forecast to 154.2 mt up from 153.8 mt previous. Dec-22 US census soybean crush at 187.4 mil. bu. was below expectations and down from 189.4 in Nov-22 and well below 198.2 in Dec-21. Cumulative crush in the first 4 months of the Sept-22/Aug-23 MY have reached 741 mil. bu. down 1.2% from YA, vs. the USDA forecast of up 1.9%. Cumulative crush represents 33% of the USDA forecast, well below the historical average of 36.5%. In order to reach the current USDA forecast crush Jan thru Aug will need to reach 1.504 bil. bu. The largest amount ever crushed over this timeframe was 1.456 bil. in 2020. Pace analysis suggests a lower crush est. from the USDA in the Feb-22 WASDE. I’m guessing 20 – 30 mil. bu. reduction. Soybean oil stocks jumped to 2.306 bil. lbs. above expectations despite the lower than expected crush. Oil stocks were above the 2.108 bil. in Nov-22 however well below the 2.466 in Dec-21. Export sales tomorrow expected at 25 – 50 mil. bu. soybeans, 200 – 400k tons meal, and 0 – 10 mt oil.
CORN
Prices closed near their highs in very choppy 2 sided trade. Old crop futures lagged closing up $.01 – $.02, while new crop contracts jumped $.05 – $.06. Mch-23 corn had violated its 100 day MA intraday, only to rally to new highs in late trade. Light rains continue to linger across southern Cordoba, southern Santa Fe and much of Buenos Aires. This rain event is expected to clear of by tomorrow without near as much accumulated totals and coverage as the past 2 rain events thru Central Argentina. Conditions will turn dry thru much of Central Argentina the next week to 10 days. Central growing regions of Brazil will continue to experience modest harvest delays as rains are heavier than desired. Northern growing areas in Mato Grosso however will have a slighlty drier pattern emerge enabling better harvest progress into mid-Feb. Overnight Ukraine government officials stated their 2023 grain harvest may reach 49.5 mt in 2023, well above yesterday’s est. from the President of the Ukrainian Agribusiness Club of only 35-40 mt. It appears Egypt may have cancelled their recent corn tender. The US Ag Attache in Brazil forecasts their corn crop at 125.5 mt, in line with the official USDA est. of 125 mt. Ethanol production last week jumped to 1,028 tbd, up from 1,012 the previous week. Production was above expectations and just above the pace needed to reach the current corn usage forecast of 5.275 bil. bu. Despite the higher than expected production, stocks slipped to 24.4 mb, down from 25.4 the previous week on improved demand. EU corn imports since July-22 have reached 16.5 mt, well above the 9.5 mt YA. Brazil’s corn exports in Jan-23 totaled 6.348 mmt, well above the 2.732 mmt from YA. StoneX Group raised their Brazilian corn production forecast by 1.2 mmt to 129.9 mmt. Corn used in the production of ethanol totaled just over 425 mil. bu. in Dec-22, down 5.5% from Nov-22 and down 11% from Dec-21. Cumulative corn use in the first 4 months of the MY at 1.708 mil. bu. are down 6% from YA, vs. the USDA forecast of down 1%. Pace analysis suggests the USDA corn usage forecast is a bit high, however I believe the USDA will hold off from making a change next week. Production rates have been on the rise while gasoline consumption was up 3% from YA. To reach the current USDA forecast production will have to exceed YA by 1.75% Jan thru Aug. That’s the first YOY weekly increase in gas consumption in 4 months. Corn exports tomorrow expected at 28 – 48 mil. bu.
WHEAT
With little fresh news in the wheat market today, prices were left to move up or down in sympathy with corn and soybeans. That said with corn higher and soybeans lower, wheat prices were little changed. Chicago was steady to $.02 higher, while KC and MGEX were $.02 – $.05 higher. Chicago Mch-23 closed right at its 50 MA for the 2nd straight day. Both KC and MGEX Mch-23 contracts had its highest close in 2023. EU wheat exports for 2022/23 have reached 18.8 mt, up 6% from YA. Canada is likely to be the main supplier of Algeria’s durum wheat purchase yesterday at $448 – $450/ mt CF, of between 250 and 300k mt. Surprisingly Chicago wheat open interest rose just over 3,100 contracts on yesterday’s strength, suggesting new buyers entering the market, not short covering liquidation from speculative traders. Next week China is expected to auction off 140k mt of state held reserves. Export sales tomorrow expected between 10 – 20 mil. bu.
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