Written Commentary
SOYBEANS
The soy complex was mixed with soybeans and soybean oil higher, while meal was lower. AgRural reports Brazil’s soybean harvest at 76%, down from 81% YA. Brazil exported 13.3 mmt of soybeans in Mch-23, the highest monthly total since May-21. US export inspections at 18 mil. bu. were in line with expectations and just above the 16 mil. bu. needed per week to reach the USDA forecast. The USDA announced the sale of 20k tons of soybean oil to an unknown buyer. After Friday’s close the EIA released the Monthly Biofuels Capacity and Feedstocks Update. Combined biodiesel and renewable diesel capacity grew 1% in Jan-23 to just under 5 bil. gallons annually. In Jan-23 941 mil. lbs. of soybean oil was used in the production of biofuels, up 6% from Dec-22 and up 19% from Jan-22. In the first 4 months of the Oct thru Sept MY soybean oil usage has reached 3.675 bil. lbs. up 9% from YA, vs. the USDA forecast of up 12%. I do not look for the USDA to change their current forecast of 11.6 bil. lbs. of soybean oil used in the production of biofuels. Census crush in Feb-23 reached a record 177 mil. bu., just above expectations of 175.5 mil. In the first 6 months of the Sept thru Aug MY cumulative crush has reached 1.109 bil. bu. down 1% from YA, vs. the USDA forecast of up 1%. In order to reach the current USDA crush forecast of 2.220 bil. bu. Mch thru Aug crush will need to reach a record 1.111 bil. bu., just above the previous record of 1.092 bil. in 2019/20. Soybean oil stocks at 2.361 bil. lbs. were slightly above the average trade est. of 2.351 bil. lbs.
CORN
Prices were mixed with spot May-23 closing $.02 ¾ lower, while deferred contracts were up $.01. Prices continue to adjust to Friday’s USDA stocks and acreage reports and surging energy prices. In a surprise move over the weekend OPEC+ nations announced plans to reduce daily crude oil production by 1.16 mil. barrels per day to boost global prices. These planned cuts come on top of the 2 mil. barrel per day cut announced last Oct-22. After peaking at $.26 ½, the May-23 inverse over July backed up today, as farmers rewarded the recent rally and firm basis with sales heading into Spring planting. The USDA announced the sale of 150k tons of corn to Mexico. Export inspections at 43 mil. bu. were in line with expectations, however below the 49 mil. bu. needed per week to reach the USDA forecast. Also some disappointment there were no shipments destined for China, despite their large purchases in mid-March. Brazil exported 1.34 mmt of corn in Mch-23, while down 41% from the previous month, it was still a record high for March. Corn used in the production of ethanol in Feb-23 totaled 400 mil. bu. down 1.5% from Feb-22 and below expectations of 401 – 415 mil. bu. Total usage in the first 6 months of the 2022/23 MY has reached 2.551 bil. bu. down 5% from YA, vs. the USDA forecast of down 1.4%. In order to reach the current USDA forecast of 5.250 bil. bu., usage the 2nd half of the MY needs to reach 2.699 bil., up 2.4% from YA, however below the record 2.816 bil. bu. used in the last 6 months of the 2017/18 MY. Despite today’s weak usage figure I do not expect the USDA will change their current forecast next Tues. given the recent jump in gasoline consumption. Corn plantings were reported at 2% complete, same as YA and 5-year average.
WHEAT
Wheat couldn’t hold the early strength and closed mixed. Chicago was $.02 – $.04 higher, KC was $.01 – $.02 lower, while MGEX was down $.04 – $.05. Both May-23 KC and MGEX contracts made new highs for the recent move with KC piercing $9.00 before pulling back. The US southern plains remain arid with little prospects for moisture in the next week to 10 days. Export inspections at only 6 mil. bu. were below expectations and the 14 mil. bu. needed per week to reach the USDA export forecast. SovEcon reports Russia exported 4.5 mmt of wheat in Mch-23, more than double the 2.1 mmt they sold in Mch-22. IKAR reports Russian 12.5% protein wheat export price at $273/mt FOB last Friday, up $1 from the previous week. US winter wheat crop ratings showed 28% G/E vs. 30% YA. The CC rating at 72.9% matches that from YA. 6% of the crop is headed vs. 4% YA and 5-year average of 2%.
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