Written Commentary
SOYBEANS
Except for the first few contracts of soybean oil the entire soybean complex was lower. Soybeans were down $.05 – $.09, soybean meal was $3 – $5 lower, while the front months of soybean oil were up 5 – 10. Mch-23 soybeans failed to trade above the monthly high of $15.55 ½ overnight before selling off. There were no export announcements today. South American hedge pressure likely contributed to today’s weakness as Brazil returned from their Carnival Holiday today. BAGE will update crop progress and conditions tomorrow. I expect a modest increase in ratings from better than expected rains across the northern half of the country in the past 7 days. I suspect the market has discounted an Argentine crop of 34 – 36 mmt, down from the current USDA forecast of 41 mmt. The current range of est. falls between 30 – 39 mmt. Both the upper and lower range of est. are possible depending on weather thru mid to late March. Brazilian production likely within 1 – 2 mmt of the current USDA forecast of 153 mmt.
CORN
Prices closed $.04 – $.07 lower and remain in a narrow, sideways trading pattern. Unexpected rains in Argentina, weak demand, and higher interest rates all weighed on commodity valuations. Scattered rains have benefited areas of Central and Northern Argentina much of the day. While overall coverage and rainfall totals are not significant, any moisture was more than expected and much welcomed. More lite rains cannot be ruled out thru Friday before high pressure builds over the weekend with a return to warm, dry conditions. The next organized rain event for Argentina and Southern Brazil is not until the early days of March. Normal to below normal rains across northcentral Brazil will only produce modest harvest delays. No date has been set to begin negotiations to extend the Black Sea Grain Initiative. Mch-23 closed on its low at the 100 day MA support of $6.74. In addition to requesting a 12 month extension to the Black Sea Grain Initiative, Ukraine claims to have roughly 30 mil. mt of grain in silos near ports ready to export if not for the lengthy shipping delays with over 140 ships awaiting inspection. While they didn’t provide a breakdown of these stocks, best guess would be 40% corn, 40% wheat, the balance being barley and sunflower oil. Recently the Rosario Grain Exchange estimated Argentine exports March thru June are likely to drop 40% from YA, as only a small portion of this year’s crop was planted early. While this may lengthen the window where US corn is the most competitive globally, so far there hasn’t been evidence of improved US exports. Cheap milling wheat from Russia and Australia is likely weighing on corn demand. Tomorrow’s ethanol production report is expect a show a modest increase from last week’s pace of 1,004 tbd. Also look for an uptick in stocks from 25.34 mb last week. Corn remains range bound between $6.50 – $6.90.
WHEAT
Prices closed $.04 – $.07 lower and remain in a narrow, sideways trading pattern. Unexpected rains in Argentina, weak demand, and higher interest rates all weighed on commodity valuations. Scattered rains have benefited areas of Central and Northern Argentina much of the day. While overall coverage and rainfall totals are not significant, any moisture was more than expected and much welcomed. More lite rains cannot be ruled out thru Friday before high pressure builds over the weekend with a return to warm, dry conditions. The next organized rain event for Argentina and Southern Brazil is not until the early days of March. Normal to below normal rains across northcentral Brazil will only produce modest harvest delays. No date has been set to begin negotiations to extend the Black Sea Grain Initiative. Mch-23 closed on its low at the 100 day MA support of $6.74. In addition to requesting a 12 month extension to the Black Sea Grain Initiative, Ukraine claims to have roughly 30 mil. mt of grain in silos near ports ready to export if not for the lengthy shipping delays with over 140 ships awaiting inspection. While they didn’t provide a breakdown of these stocks, best guess would be 40% corn, 40% wheat, the balance being barley and sunflower oil. Recently the Rosario Grain Exchange estimated Argentine exports March thru June are likely to drop 40% from YA, as only a small portion of this year’s crop was planted early. While this may lengthen the window where US corn is the most competitive globally, so far there hasn’t been evidence of improved US exports. Cheap milling wheat from Russia and Australia is likely weighing on corn demand. Tomorrow’s ethanol production report is expect a show a modest increase from last week’s pace of 1,004 tbd. Also look for an uptick in stocks from 25.34 mb last week. Corn remains range bound between $6.50 – $6.90.
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