Ag Market View for Jan 6.23
While closing with over $.20 gains, Mch-23 soybeans failed to trade back above the $15 level. Nearby soybean meal futures surged into new contract highs while soybean oil closed with modest gains. Soybean exports were decent at 32 mil. bu. old and new crop combined. In addition the USDA announced the sale of 132k tons (5 mil. bu.) of soybeans to unknown. Both product sales were weak. The BAGE reports soybean plantings advanced 10% in the past week to 82% complete, still below the average pace of 93%. Conditions deteriorated with only 8% of the crop rated as G/E, down from 10% last week. Probably more concerning is the fact poor/VP ratings increased 10% to 38%. YA ratings were 50% G/E and only 13% poop/VP. Safras and Mercado lowered their Brazilian soybean crop to 153.4 mt, down from 154.5 previous. Still slightly above Refinitiv est. yesterday at 152.6 mt and USDA forecast of 152 mt. IHS Markit (formerly Informa) slashed their Argentine soy forecast 10 mt to 40 mt (USDA 49.5) while holding their Brazilian forecast steady at 152.5 mt. USDA at 152 mt.
Prices closed up $.01 – $.02 after trading both sides of unchanged. Corn was unable to maintain early strength due to drier SA forecasts as US demand remains weak. Forecasts eliminated nearly all prospects for rain over the next 7-10 days in Argentina. Light, scattered showers still possible next weekend, however nothing that would alter the deepening drought. Temperatures are expected to remain well above normal. Conditions across all but the very southern growing regions of Brazil remain favorable. If verified look for lower to sharply lower crop estimates from Argentina, and slightly higher estimates for Brazil despite heat and dryness across Rio Grande Do Sul. Export sales were poor at only 13 mil. bu. The USDA did announce the sale of 112k tons (4.5 mil. bu.) of corn to Mexico, 1 mil. was for new crop. The BAGE reports Argentine corn plantings advanced 7% to 70% complete, below the YA pace of 77%. Only 13% of the crop is rated G/E, vs. 41% YA. IHS Markit cut their Argentine corn forecast 4 mt to 49 mt (USDA 55) and lowered their Brazilian forecast .5 mt to 127.5 mt. (USDA 126) The Ukraine Ag. Ministry reports corn harvest has reached 22.1 mt, vs. the USDA forecast of 27 mt. Roughly 25 – 30% of their crop remains unharvested. Mexico’s president is expected to speak with President Biden next week regarding their proposed GMO corn import ban starting in 2024.
All 3 classes could not hold the overnight strength, closing lower on the day while seeing steep losses for the week. US demand remains weak as Black Sea grain continues to weigh on global prices. Old crop exports were a new MY low at only 1.7 mil. bu. YTD commitments are down 6% from YA, vs. USDA down 3%. The BAGE estimates wheat harvest at 99.5%. They kept their production forecast unchanged at 12.4 mt. Egypt is seeking 30k – 60k mt of wheat with World Bank funding for Feb shipment. IHS Markit raised their Australian production forecast 2 mt to 39 mt, well above the USDA’s 36.6 mt forecast. IHS also raised their 2023 US winter wheat acres to 24.1 mil. up 950k from their previous forecast and up 1.6 mil. from YA. Despite the large increase in planted acres, harvested acres only expected to jump 240k as abandonment rates are expected to be higher than normal due to drought in Southern plains. We don’t look for any changes to the 2022/23 US balance sheet next week with ending stocks remaining at 571 mil. Next week we’ll provide a new crop wheat balance sheet forecast incorporating the USDA’s planting acreage data. While the 7 day forecast offers little moisture across the drought areas of the southern plains, the 6-10 day does suggest some relief.
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