Written Commentary
SOYBEANS
Soybean futures jumped over 15.00. SMH also jumped over 431. Talk of lower South America supplies is helping SH make new highs. Some in the trade are estimating that final South America soybean crop could be down 21 mmt or 770 mil bu from USDA December estimate. This could increase demand for US soybeans. One analyst lowered his estimate of US 2021/22 soybean carryout to 120. USDA announced another 132 mt US soybeans were sold to China for 2022/23. SX is making new highs on talk US 2022/23 US balance sheet may be tighter now than 2021/22. SN-SX spread is at a new high near +146.
CORN
Corn futures ended higher. CH had an inside day and ended near 6.34. Range was 6.24-6.39. Talk that South America corn crop could be down 825 mil bu could increase demand for US corn exports. Some are now using a US 2021/22 carryout of 1,200 due to higher ethanol and export demand. Market is also concerned about Ukraine shipping 700 mil bu the rest of this market year. CN-CZ corn spread is near +51. Resistance is +56 then +58. Spread should trade over +58 as demand increase. New longs may be adding positions due to positive chart formation. Some feel that US ethanol use should be near 5,425 mil bu vs USDA 5,325. Same group suggest final exports could be 2,680 mil bu vs USDA 2,425. The 7.9 pct stocks to use ratio could suggest a test of 7.00. Any US 2022 weather problem could rally futures to closer to 8.00. Some analyst could see final Brazil corn crop near 106 mmt vs USDA 115. Most are waiting for next 30 days Brazil weather impact on Brazil 2nd crop. Some estimate Argentina crop at 50 mmt versus USDA 54.0. Same group suggest World corn stocks could be down 21 mmt if US carryout is down another 8 mmt. Most doubt USDA will drop World production or stocks that much on Feb 9.
WHEAT
Wheat futures traded higher. Most feel that drop over last few days due to reduced concern about Russia invading Ukraine, slow US export pace and moisture moving across US south plains had weighed on futures. WH ended near 7.69 with range 7.60-7.76. KWH ended near 7.86. Range was 7.76-7.93. KWH found support near 7.87 and 7.89 moving averages. Higher highs in soybeans and soymeal and strong gains in corn helped wheat futures. Unlike US 2021/22 corn and soybean carryout most feel USDA could raise US 2021/22 wheat carryout due to lower exports. Some feel final US exports could be near 760 mil bu vs USDA 825. This could raise final carryout to 698 vs USDA 628. Same group estimates US 2022 wheat acres near 48.0 vs 46.7 ly. “Normal” weather could then suggest a US 2022/23 carryout near 900. KWH remains in a broad range between 7.50 and 8.50 until more is known and Ukraine and US 2022 weather.
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