Written Commentary
SOYBEANS
Soybean futures ended sharply higher. For the last 2 weeks, private and South America government crop groups have been lowering Brazil and Argentina soybean crop sizes. Still the market has been hesitant to accept the lower estimates until today. Soybean futures jumped higher after USDA announced US new crop 2022/23 soybean to China. China needs to buy 8 mmt of soybeans per month to reach 97 mmt import demand. Weekly US soybean export sales are estimated near 750-1,800 mt vs 1,596 last year. There is talk that soybean vessels are waiting at the gulf to load soybeans. Argentina soybean crop could drop below 40 mmt versus USDA 45. Some suggest a Brazil crop may be closer to 125 mmt versus USDA 134. Where does the World get 1,320-1,360 mil bu soybeans if SA crops are down 36-37 mmt?
CORN
Corn futures ended higher. Corn futures followed higher soymeal and Crude oil prices. Weekly US ethanol production was up 1 pct from last week and up 10 pct from last year. Stocks were up 2 pct from last week and up 5 pct from last year. Margins remain negative. Argentina corn crop could drop below 48 mmt and Brazil below 110.0. Ukraine may not be able to export 17 mmt (670 mil bu) if Russia invades Ukraine. Most of Ukraine corn goes to China, EU and N Africa. China may have asked Russia to delay an invasion so they can get the corn they need first. Where does the World get 1,570-1,650 mil bu corn if South America crops are down 36-37 mmt? Domestic Brazil corn prices are near $8. Brazil farmer is not selling corn. Weekly US corn export sales are estimated at 500-1,000 mt versus 589 last week. CK tested Tuesdays low near 6.35 before closing near 6.45. First resistance is near 6.54 then 6.60. Support is near 6.30. Bulls still feel a shift in demand should push CK to new highs, Some feel CK may need to test 7.00 to reflect lower South America supplies, potential drop in Ukraine exports if Russia invades Ukraine and futures need to ration demand before US 2022 corn harvest. There remains concern that US farmers may plant 91.0 million corn acres in 2022 versus 93.4 last year, trend yield could limit US 2022/23 corn carryout to 1,100 mil bu if demand is near 15,035 versus USDA 2021/22 demand of 14,835. Some could see US 2021/22 corn demand closer to 15,155 and carryout near 1,220 versus USDA 1,540.
WHEAT
Wheat futures are on hold. Demand for US wheat exports lags USDA goal. Weekly US wheat export sales are estimated from 50 mt to 500 versus just 84 last week. Hard to define Black Sea wheat prices. Maritime insurance companies are adding to premiums as Black Sea exports are now high risk. US south plains will miss this weeks rains. Could see scattered showers in March favoring south and east but April could be dry. Funds were net even Chicago wheat today after selling 13,000 contracts on Tuesday. Managed funds were net buyers of 21,000 soybeans and 9,000 corn futures today on talk of higher demand. WK is in a range from 7.60-8.20. 30 day outlook calls for normal rains across most of the US SRW crop areas. KWK is in an uptrend from Feb 3 lows at 7.76. With resistance near 8.50. MWK is also in an uptrend from Feb 3 low near 8.94. Resistance is near 9.75. Raw material prices and wages are higher for most food companies forcing increase in products prices. US Central Bank could raise interest rates 4-5 times in 2022. This could drop consumer disposable income and slow US economy. Less than ideal US spring and summer weather could send wheat futures higher.
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