Written Commentary
SOYBEANS
The soybean complex closed lower across the board. Mch-23 soybeans briefly traded above yesterday’s high before pulling back. Despite both products closing lower spot crush margins did firm up a bit however remain roughly $1.40 bu. below last fall’s record high. Mch-23 soybean oil traded under support at $.60 before recovering into todays close. BAGE reports soybean plantings at 99% complete. Crop ratings improved to 7% G/E up from 3% LW and 36% YA. Poor/VP slipped to 54%, down from 60% LW however well above the 22% from YA. There were no export announcements this morning. Late today IMEA reports soybean harvest in Mato Grosso, the largest producing state in Brazil at 25% of their crop, has reached 13.6% down from 32% YA and the long term average of 20%. We are of the opinion will have trouble staying above $15 bu. unless renewed Chinese buying shows up next week. With outstanding sales to China/unknown hovering at over 350 mil. bu. we feel the probability of that is low.
CORN
After trading both sides of unchanged corn prices closed steady in old crop, while new crop contracts were down $.02 – $.03. Resistance for Mch-23 corn is at the Jan-23 high of $6.88 ¾. Good rains continued to fall in top producing areas of Cordoba, Santa Fe, Entre Rios, and Buenos Aires throughout today’s trading session. Rainfall totals of 1.00 – 1.50+” were common. This weather system is expected to move into dry areas of Southern Brazil, RGDS, over the weekend providing much needed rain. Look for continued improvements in both corn and soybean crop ratings. Central Brazil may continue to experience mild harvest delays for the next week, before a slightly drier pattern is established by late next week. Open interest shot up nearly 17,000 contracts yesterday as new longs drove prices higher. BAGE reports Argentine corn plantings have reached 94%. Ratings improved with 12% of the crop G/E up from 5% LW, however still well below the 31% from YA. Safras & Mercado cut their 1st corn crop est. for Brazil by 1.2 mt, to 23.7 mt citing drought conditions in RGDS. Their total corn production forecast stands at 125.3 mt, just above the USDA’s 125 mt forecast. IMEA reports 2nd crop corn plantings in Mato Grosso at 6% complete, behind the historical average of 18%. Historically Mato Grosso produces 43% of the nation’s 2nd corn crop. I believe the recent uptick in US exports will extend another month or 2. Brazil’s first crop has likely gotten smaller, while 2nd crop plantings are a bit delayed. That said I don’t think that window of demand will be strong enough or long enough to cause the USDA to change their current export forecast of 1.925 bil. We’ll get the USDA census corn usage for ethanol production from Dec-22 next week. Right now leaning towards a modest reduction from the current USDA forecast of 5.275 bil. bu.
WHEAT
Prices closed mixed in 2 sided trade. Both Mch-23 KC and MGEX wheat flirted all day with its 50 day MA. KC wheat performed the best today perhaps building a bit more weather premium for a mild artic outbreak next week. Much of the recent snow cover is Kansas has melted ahead of potential subzero temperatures next week. Today’s high temps across Kansas are in the upper 40’s to low 50’s. Next Tues. Jan. 31st looks to be the coldest. Chicago wheat open interest was down only 600 contracts yesterday, suggesting new longs in the marketplace nearly equaled speculative traders cover short positions. KC wheat O.I. was up just over 2,000 contracts. The US attache forecasts Australian wheat production at a record 37 mmt, with exports reaching 28 mmt. Both are just above the USDA forecast of 36.6 mmt and 27.5 mmt respectively. The Russian Ag. Ministry raised their wheat export tax to 4,365.3 roubles/mt for the period ending Feb. 7th, up from 4,283.2 roubles/mt previous. South Korea bought 68k mt of Australian feed wheat for $343.85/mt CF for spring shipment
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