Ag Market View for Dec 22.22
The soybean complex closed lower across the board. Soybeans were $.10 – $.13 lower. Jan-23 futures closed today at $14.67 ¾ and remain stuck in the $14.60 – $14.95 range. Soybean meal was down $3 – $4 per ton. Soybean oil is down 50 – 80 points. Soybean exports at 27 mil. bu. were below expectations of 30 – 50 mil. and down 75% from last week’s huge sale figure of 108 mil. China bought only 20 mil. bu., down from 46 mil. the previous week. YTD commitments are up 4% from YA, vs. USDA forecast of down 5%. Current commitments represent 76% of the USDA forecast, in line with the historical average. Soybean meal sales at 311k tons were above expectations of 150 – 300. YTD commitments are down 3% from YA, vs. USDA forecast of up 1%. IMEA is reporting that soybean harvest has begun in northern growing regions of Brazil. Harvest in Mato Grosso is less than 1% complete across its 11.8 mil HA. The Buenos Aires Grain Exchange reports soybean ratings slipped back to 12% G/E, down from 19% last week and well below 73% from YA. 25% of the crop is P/VP up from 20% LW. The crop is 61% planted, vs. 77% YA and 5-year average of 79%.
After trading up to their highest level in 3 weeks overnight corn prices eased back and closed $.01 – $.02 lower. The Mch-23 high of $6.64 ¾ inched closer to its 100 day MA of $6.68 ¼ before pulling back. Export sales at 25 mil. bu. were at the low end of expectations of 25 – 50 mil. YTD commitments are down 48% from YA, vs. the USDA forecast of down only 16%. Current pace analysis suggests the USDA export forecast of 2.075 bil. is still too high. A day after Ukraine’s Ag. Minister stated their corn production could slip to 22 mt this year, many are now reducing expectations for next year’s crop. UBS lowered their 2023 acreage forecast .8 mil. hectares with production limited to 21.5 mt, roughly half of the preinvasion harvest from 2021. They expect 2023 exports to fall to only 13 mt., the lowest in a decade. Th EU commission lowered their 27 nation corn production est. to 52.1 mt, down from 53.3 mt and falls just below the USDA forecast of 54.2 mt. The BAGE rates the Argentine corn crop at 15% G/E down from 17% last week and well below 76% YA. P/VP rose to 26% from 23%. Plantings have reached 52% vs. 60% YA and 5-year average of 68%. Morning rain in Western Argentina have moved east into Cordoba. This rain event has occurred sooner than expected with coverage and precipitation totals slightly better than expected across key agricultural areas. Moving forward 2 different weather models offer varying amounts and rainfall coverage into early next week. The GFS model being much drier than the EU model. Rains are expected to reach Paraguay and Southern Brazil by the end of the Christmas weekend. Week 2 of the outlook brings cooler temperatures and opportunities for more rain for drought effected areas however much more is needed to put a dent in the current drought pattern.
Prices were mixed with KC up $.02 – $.03, while Chicago and MGEX were $.04 – $.07 lower. KC is adding weather premium as overnight lows were below zero for roughly 50% – 60% of Kansas. The high so far for Mch-23 contract at $8.73 is approaching last week’s high of $8.79 ¼. Export sales at 8 mil. bu. were in line with expectations. YTD commitments are down 8% from YA, vs. USDA forecast of down 3%. Ukraine’s Ag. Minister estimates their 2022 wheat crop at 19.4 mt, just below the USDA est. of 20.5 mt. They expect exports to reach 16.3 mt of wheat, well above the USDA forecast of 12.5 mt. UBS lowered Ukraine’s 2023 wheat acres by .5 mil. HA and production to 19.5 mt. Exports will be limited to 9 mt, just under half of the 18.8 mt shipped from the 2021 crop. The area of US wheat currently experiencing drought fell dramatically in the past week. 67% of the US winter wheat and Spring wheat is in a drought. Winter wheat is down from 71% last week, while Spring wheat was 76% LW.
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.