Written Commentary
SOYBEANS
Nearby soybeans were actually up a touch for the week along with soybean meal. Soybean oil was down slightly. For the week spot board crush margins improved $.07 to $2.37 bu. Soybean oil product value dipped to 38%, holding just above the recent low of 37%. Soybean exports last week at 20 mil. bu. were at the low end of expectations. YTD commitments have slipped below the pace from YA, down 1.5% vs. the USDA forecast of down 8%. Meal sales at 66k tons were below expectations. YTD commitments are down 8% from YA, vs. USDA forecast of down 1%. The BAGE did lower their Argentine production forecast yesterday by 4.5 mmt to 33.5 mmt. Crop ratings slipped from 9% G/E to only 3%. Poor/VP rose from 56% to 60%. The lower production forecasts from Argentina continues to support soybean meal. Argentina will likely need to import more soybeans from Brazil to satisfy meal export commitments. The USDA is already forecasting Argentine soybean imports at 6.25 mt, nearly double the previous MY. Argentina’s Ag. Sec. reported soybean crush in Jan-23 at only 1.9 mmt, was down from 2.6 mmt in Dec-22 and down 24% from Jan-22. The soybean complex seemed to take the sub 35 mmt soybean forecast from the BAGE in stride, either sensing it won’t go much lower, or any further reductions are likely to be offset by higher production from Brazil. With harvest volume totals from Brazil nearly reaching 50 mmt US exports are likely to continue to fall vs. the YA pace.
CORN
Prices closed right on their lows with spot Mch-23 dipping below $6.50 in late trade. On the spot weekly chart corn closed just below its 100 week MA at $6.52 ¼. Macro factors combined with uneventful export data drove today’s “risk off” sentiment. This morning’s stronger than expected inflation and economic data drove the US Dollar index to its highest level in 7 weeks. The Jan-23 PCE index at +.6% was the highest since June-22 and above expectations. The YOY Jan PCE index was up 5.4%, while the core reading at +4.7% was above expectations of +5%. Jan-23 consumer spending rose 1.8%, above expectations of +1.4% and the highest in nearly 2 years. Today’s data supports the higher for longer interest rate argument which continues to weigh on commodity valuations. There were no export announcements this AM. While we are a long way from realizing a 1.90 bil. corn carry-out, perhaps seeing it in print from the USDA’s Outlook conference may have triggered the idea that corn is heading much lower if Mother Nature is cooperative in 2023. Export sales from last week at 32 mil. bu. were in-line with expectations. YTD commitments are down 40% from YA, vs. USDA forecast of down only 22%. Exports likely to be cut 50 – 100 mil. bu. in March. BAGE lowered their Argentine corn production forecast by 3.5 mmt to 41 mmt. Corn still worried about the Mexico’s plan to ban human consumption of GMO corn starting in 2024.
WHEAT
Prices closed sharply lower. All 3 classes were down between $.45 – $.65 this week. Mch-23 Chicago made new contract lows in late trade, however held support on the weekly chart above $7.02 ½. KC Mch-23 closed at a $1.33 ½ premium to Chicago, likely forming a low this week at $1.20. A year ago today when Russia invaded Ukraine Mch-22 Chicago closed at $9.26, up the daily limit of $.50. Prices peaked 2 weeks later at $14.25. What a difference a year makes. Despite the war, the USDA forecasts combined exports from Russia/Ukraine at 57 mmt, up 10% from the previous year, the 2nd highest on record. Old crop exports last week were decent at 12 mil. bu. YTD commitments are down 6% vs. USDA forecast of down 3% from YA. Iraq reportedly purchased 250k mt of Australian wheat. Price is believed to be $428/mt CF.
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