Ag Market View for Mar 6.23
The soybeans complex closed mixed with beans up $.06 – $.12, soybean meal up $6 – $12 with most contracts making new contract highs, while soybean oil was down 65 – 80. Brazil’s soybean harvest is estimated between 40 – 45% as of late last week, about 10% behind the historical average. Safras & Mercado estimate Brazilian farmers have sold 35% of their 2022/23 soybean harvest, below 49% from YA and the historical average of 52%. They also lowered their Brazilian production est. to 152.4 mmt, down from 153.4 mmt. CREA estimates Argentina’s soybean crop at only 31.2 mmt, vs. the USDA est. of 41 mmt. Soybean export inspections at 20 mil. bu. were below expectations of 30 – 40 mil. YTD inspections at 1.569 bil. are up 3% from YA, vs. the USDA forecast of down 8%. I look for the USDA to raise ending stocks 20 mil. bu. to 245 mil. due to lower exports. The average trade est. of for stocks to slip 6 mil. bu. to 219 mil. Range of guesses is from 200 – 250 mil.
Prices closed $.01 – $.03 lower in quiet trade. Perhaps some optimisim that progress is being made on extending the Black Sea Grain Initiative. Turkeys Foreign Minister Mevlut Cavusoglu over the weekend said they are working hard to extend the UN backed Black Sea Grain deal. China set its economic growth target for 2023 at 5%. Last year it was set at 5.5% for 2022, ultimately coming in at only 3% held back by Covid restrictions. Hot/dry over the weekend and this week in Argentina before better prospects for rain this coming weekend. The impact on production with rains here forward are becoming increasingly mute. Normal to above normal precipitation across Northern and Central Brazil this week will delay soybean harvest and corn plantings. The USDA did announced the sales of 182.4 mt (7.2 mil. bu.) of corn to an unknown buyer and 110k tons (4.3 mil. bu.) to Japan. The unknown sale is likely the rumored sale to China from last week. CREA lowered their Argentine corn production forecast to 38.6 mmt, well below the current USDA est. of 47 mmt. China also announced a plans to expand grain production by 50 mil. tons in 2023 with a goal of becoming less reliant on imports for greater food security. Export inspections at 35 mil. bu. were above expectations of 20 – 30 mil., however still below the pace needed to reach the USDA export forecast. YTD inspections are down 38% from YA, vs. the USDA forecast of down 22%. I look for a 50 mil. bu. cut in exports on Wednesday with a corresponding increase in ending stocks. This is mostly in line with expectations. The US plans to request formal consultations under the free trade agreement with Mexico over their planed import ban on GMO corn for human consumption.
Wheat was lower across the board with KC down $.16 – $.18, Chicago down $.12 – $.14 while MGEX was down $.08 – $.10. Export inspections at 10 mil. bu. were at the low end of expectations. YTD commitments are down 2% from YA, vs. the USDA forecast of down 3%. I look for no change to the USDA export forecast or ending stocks est. of 568 mil. bu. ABARE raised their Australian wheat production est. to a record 39.2 mmt, just above the USDA forecast of 38 mmt.
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.