Written Commentary
SOYBEANS
The soybean complex was mixed following a late rally in meal which enabled the product to scratch out a slightly higher close. Soybeans were down $.05 – $.08 while soybean oil was down 80 – 90. Mch-23 soybeans filled a gap left from Sunday’s opening. No export announcements today. The late day strength in soybean meal was likely triggered by another reduction in Argentine soybean production. The BAGE lowered their forecast another 4.5 mmt to 33.5 mmt, vs. the USDA est. of 41 mmt. Most estimates are now coming in between 32 – 35 mmt. No major shocks from today’s Outlook Board. US production in 2023 is forecast to reach a record just over 4.50 bil. bu. Acres are slightly higher while the USDA trendline yield est. matches the previous record of 52 bpa. Ending stocks are expected to increase to 290 mil., the highest in 4 year. Stocks/use still tight at 6.5%. Crush at 2.310 bil. bu. is a record, largely to supply continued expansion of advanced bio-fuel production. Soybean oil usage for biofuels is forecast to increase 7.8% to 12.5 bil. lbs. Soybean meal exports are forecast at a record 14,500 tons as the US is likely to pick up market share lost by Argentina. Expectations for tomorrow’s export sales report are 15 – 35 mil. soybeans, 150 – 350k mt soybean meal, and 0 – 7k mt of soybean oil.
CORN
Prices finished $.13 – $.15 lower in old crop while new crop futures were down $.06 – $.08. Mch-23 violated both its 100 and 50 MA’s closing at its lowest level in 6 weeks. Additional showers were scattered about Argentina overnight and this morning. Coverage and rainfall totals have been minimal while additonal scattered rains remain possible thru Friday before a hot, dry pattern takes hold thru the end of February. The next chance for meaingful rains are in the opening days of March. Scattered rains were also noted across northern and central Brazil triggering modest harvest delays. Harvest across Mato Grosso will likely reach 80% – 85% by the end of February. Heavier widespread rains are expected in week 2 of the outlook. At today’s Outlook Conference USDA Ag. Sec. Vilsack stated Mexico’s intentions to limit GMO corn imports is not a situation that allows for compromise. If renewed talks do not make progress the next step is to begin a formal complaint under the USMCA trade pact. Right now Mexico is the largest importer of US corn with 44% of the 2022/23 MY commitments. THE BAGE lowered their corn production forecast by 3.5 mmt to 41 mmt, well below the USDA forecast of 47 mmt. Ethanol production rebounded to 1,029 tbd last week, up from 1,014 tbd the previous week. Production was slightly above expectations and above the pace needed to reach the USDA corn usage forecast of 5.250 bil. There was 103 mil. bu. of corn used in the production process last week. Stocks rose to 25.6 mil. barrels, slightly above expectations and the highest since April-22. The Outlook Board expects US corn acres to increase 2.4 mil. this year to 91.0 mil. Trendline yields are expected to be a record 181.5 bpa resulting in production reaching nearly 15.1 bil. Usage is forecast to rise 600 mil. to 14.490 bil. resulting in ending stocks rising to 1.887 bil., the highest in 4 years. Stocks/use at 13% also the highest in 4 years. Export sales tomorrow are expected between 25 – 50 mil. bu.
WHEAT
Prices were mostly lower with KC down $.08 – $.14, MGEX down $.04 – $.06, while CGO was mixed. Mch-23 KC violated its 50 day MA at $8.64 ¼ closing into new lows for the month. 57% of the winter wheat area remains in a drought, unchanged from LW. HRW wheat occupies nearly all of the drought area, while SRW wheat area remains well watered. 64% of the Spring wheat areas remain in drought, unchanged from last week. The Outlook Board forecasts all US wheat acres at 49.5 mil., the highest in 7 years. The trendline yield at 49.2 bpa results in production reaching 1.890 bil., the highest in 4 years. Usage at 1.967 bil. leaves ending stocks at 608 up 40 mil. Feed usage is expected to jump 20 mil. bu. to 100 mil. as HRW remains competitive with corn in southern plains cattle country. 2023/24 exports are only expected to rebound 50 mil. to 825 mil. Export sales tomorrow are expected between 6 – 18 mil. bu.
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