Written Commentary
SOYBEANS
The soybean complex was sharply lower with soybeans down $.15 – $.30, soybean meal down $7 – $13, while soybean oil plunged 200 – 250. May-23 soybeans violated support at $14.25, the 50% retracement from last summer’s low to the Feb-23 high. Next support is $13.95, the 62% Fibonacci retracement. I’ll also point out there is a gap on the May-23 chart between $13.59 and $13.69 from last July. May-23 soybean meal broke thru its 100 day MA support trading down to its lowest level since early Dec-23. Spot soybean oil is at its lowest level since Dec-21, while challenging long term support between 50 – 51. $.50 lbs for soybean oil also represents a 62% retracement from the Covid low near $.25 in the Spring of 2020, and the all-time high of $.9140 in Spring of 2022. Spot board crush margins plunged another $,28 today to $1.46, the lowest since June-22. Brazilian basis continues to weigh on global soybean prices. There is increased talk of Brazilian imports into the US SE. With US gulf basis 1.10 over May-23, while basis at the Port of Paranagua .75 under, Brazilian soybeans are roughly $68/mt cheaper than the US. Not sure the ocean freight, nor how long it would take to transact, but the threat is narrowing the gap. Old crop exports at 6 mil. bu. was disappointing. YTD commitments are down 8% vs. the USDA forecast of down 7%. Lower production from Argentina appears to be old news. Brazil’s crop is a record large and likely getting bigger, while funds that are still long soybeans and meal, scrabbling to get out. BAGE kept their Argentine soybean forecast unchanged at 25 mmt.
CORN
Prices closed $.01 – $.02 lower in very choppy 2 sided trade. In early trade May-23 made a new high for the month at $6.44 on strong exports before getting drug lower by weakness in the soy complex. Prices recovered well off their lows to settle with modest losses. Rainfall this week across Argentine has been widespread and welcome, however unlikely to provide much benefit to this year’s crops. Drier conditions in Central Brazil should enable 2nd corn plantings to wrap up soon. Old crop exports at 122 mil. bu. were the highest in 2 years and above expectations. Most of the business was the announced sales to China last week, however Japan was a good buyer with 27 mil. while Mexico purchased 9 mil. In addition the USDA announced another sale of 123k tons (5 mil. bu.) to China. Announced sales this week have reached 17 mil. bu. YTD commitments are still down 34% from YA, vs. the USDA forecast of down 25%. With current commitments representing 74% of the current USDA export forecast, below the historical average of 80%, future sales need to stay strong vs. past years for the USDA to warrant raising their current export forecast of 1.850 bil. BAGE kept their corn production forecast unchanged at 36 mmt.
WHEAT
Except for nearly Chicago contracts, wheat prices were higher. KC and MGEX were both up $.06 – $.09. Chicago May-23 has held the $8.53 ½ low from Mch-23 on the weekly charts. Export sales were weak at only 5 mil. bu. YTD commitments are down 5% from YA, vs. the USDA forecast of down 3%. Winter wheat areas in drought slipped to 51%, the lowest since last July and down from its peak of 75% last fall. Spring wheat areas in drought are down to 43%, the lowest since Sept-22 and down from its peak of 79%. KC May-23 inverse to Chicago May-23 reached a new high at $1.59 bu. The Mch-23 contract peaked at $1.55 in February.
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