Written Commentary
SOYBEANS
The soybean complex closed mixed with soybeans $.02 – $.06 lower, soybean meal was down $1 – $3, while soybean oil recovered closing 20 – 30 higher. Brazil’s soybean basis continues to slip as harvest accelerates. Harvest progress in their largest producing state of Mato Grosso is nearing the halfway point with overall harvest progress approaching 25%. Michael Cordonnier lowered his Argentine production forecast another 2 mmt to 36 mmt, vs. USDA est. of 41 mmt. He kept his Brazilian forecast unchanged at 151 mmt, vs. USDA at 153 mmt. AgroCounsults lowered their Brazilian forecast by .4 mmt to 153 mmt. Brazil’s soybean exports in Feb-23 are expected to reach 9.39 mmt, up from the previous est. of 9.62 mmt. Tomorrow’s NOPA crush report is expected to show NOPA members increased crush to 181.7 mil. bu. in Jan-23, up from 177.5 in Dec-22, however down from 182.2 in Jan-22. Crush estimates range from 177 – 187 mil. bu. Soybean oil stocks expected to jump to 1.91 bil. lbs. up from 1.79 bil. at the end of Dec-22, however well below the 2.03 in Jan-22. The USDA production forecast among the top 4 soybean exporters at 320.4 mmt as of last week’s WASDE report, 10 mmt above the previous high in 2020/21. Stocks/use among these four exporting countries is now just under 19%, the lowest since 2013/14.
CORN
Prices closed mixed with nearby futures down $.02 – $.03 while new crop contracts were steady to up $.01. Mch-23 came within a $.00 ½ of its Jan. high of $6.88 ¾ before pulling back. Widely scattered rains did occur overnight in northern portions of Argentina. These same areas have chances for addition lite showers into Tuesday night. Good rains also filled in across RGDS and Santa Catarina in Southern Brazil. This is followed by a week to 10 days of dry weather. Temperatures will remain seasonally mild for roughly a week before above normal temperatures return. Next chance for beneficial rain is not until the last few days of Feb or early March. Crop stress will be on the rise for areas not fortunate to have received moisture in recent days. Good 2nd crop corn planting progress should be made in central and northern Brazil thru the end of the week before widespread rains return this weekend and early next week. Dr. Michael Cordonnier lowered his Argentine production forecast by 1 mmt to 43 mmt, vs. USDA est. of 47 mmt. He also lowered Brazilian forecast by 2 mmt to 123 mmt, vs. USDA at 125 mmt. Mexico scrapped its plan to ban GMO corn imports that was to begin at the beginning of next year. GMO corn will be allowed for animal feed and industrial use, however will be banned for human consumption. USDA Ag. Sec. Vilsack expressed his disappointment with the latest GMO corn degree, stating they’ll continue to work with US Trade Representative to ensure the rules based trade system adheres to science. Brazil lowered their Feb-23 corn export forecast to 2.116 mmt, down from 2.292. Look for tomorrow’s ethanol production report to show a modest increase from last week’s 1,000 tbd production pace. The USDA production forecast among the top 4 corn exporters at 548 mmt is down 43 mmt from last year’s record. Stocks/use however among these 4 exporting countries is now just over 8%, up from the previous 2 years, however well below the 10 year average.
WHEAT
Prices closed mixed with nearby futures down $.02 – $.03 while new crop contracts were steady to up $.01. Mch-23 came within a $.00 ½ of its Jan. high of $6.88 ¾ before pulling back. Widely scattered rains did occur overnight in northern portions of Argentina. These same areas have chances for addition lite showers into Tuesday night. Good rains also filled in across RGDS and Santa Catarina in Southern Brazil. This is followed by a week to 10 days of dry weather. Temperatures will remain seasonally mild for roughly a week before above normal temperatures return. Next chance for beneficial rain is not until the last few days of Feb or early March. Crop stress will be on the rise for areas not fortunate to have received moisture in recent days. Good 2nd crop corn planting progress should be made in central and northern Brazil thru the end of the week before widespread rains return this weekend and early next week. Dr. Michael Cordonnier lowered his Argentine production forecast by 1 mmt to 43 mmt, vs. USDA est. of 47 mmt. He also lowered Brazilian forecast by 2 mmt to 123 mmt, vs. USDA at 125 mmt. Mexico scrapped its plan to ban GMO corn imports that was to begin at the beginning of next year. GMO corn will be allowed for animal feed and industrial use, however will be banned for human consumption. USDA Ag. Sec. Vilsack expressed his disappointment with the latest GMO corn degree, stating they’ll continue to work with US Trade Representative to ensure the rules based trade system adheres to science. Brazil lowered their Feb-23 corn export forecast to 2.116 mmt, down from 2.292. Look for tomorrow’s ethanol production report to show a modest increase from last week’s 1,000 tbd production pace. The USDA production forecast among the top 4 corn exporters at 548 mmt is down 43 mmt from last year’s record. Stocks/use however among these 4 exporting countries is now just over 8%, up from the previous 2 years, however well below the 10 year average.
See more market commentary here.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.
