Ag Market View for Feb 9.23
The soybean complex closed mixed in a choppy 2 sided trading session. Soybeans finished down $.01 – $.06. Mch-23 soybean meal surged $15 higher at its peak, closing at $495.50 up $13.60 for the session. Deferred contracts were $4 – $8 higher. Soybean oil was down 130 – 155. Spot board crush margins improved to $2.20 with soybean meal product share back up to 63%. With additional Argentine soybean forecasts coming between 35 – 38 mmt, (vs. USDA 41 mmt) the market senses more of the global meal trade will be shifted to Brazil or the US. The USDA’s 4.5 mmt reduction in the Argentine crop yesterday had minimal impact on their crush and soybean meal export forecasts. Offsetting their production loss were imports up 1.25 mmt, exports cut 1.5 mmt, ending stocks down 1.0 mmt, while crush was only reduced .7 mmt. Soybean meal exports barely budged, down .3 mmt to 26.2 mmt. Any further production cuts from the USDA will have a greater impact on global soybean meal trade. Old crop soybean exports at 17 mil. bu. were below expectations. YTD commitments are still up 2% from YA, vs. USDA forecast of down 8%. As we expected the USDA didn’t revise their export forecast in yesterday’s WASDE report. Soybean meal sales at 182k tons were in line with expectations. Soybean oil sales at nearly 2k tons were the highest in weeks. The BAGE lowered their soybean production forecast 3 mmt to 38 mmt. Crop ratings were mixed as G/E improved 1% to 13%, however poor/VP also increased going from 46% to 48%. Year ago ratings were 40% G/E and 19% poor/VP.
Prices closed $.05 – $.08 lower making new lows at the close. The Mch-23 contract experienced an outside day down, closing at its lowest level in nearly 3 weeks. Next support is its 50 day MA, currently $6.65 ¼. Rain forecasts for Argentina have been pushed back 24 hours to early next week. In addition rain totals across Southern Argentina have been reduced to .25 – 1.00”. Central and northern growing regions still expected to receive .50 – 1.50”. Week 2 of the outlook returns to a warm dry pattern. Widespread soaking rains for drought areas of RGDS in southern Brazil are forecast over the next few weeks. Cumulative totals of .50 – 2.00” are expected. Lighter amounts for Northern Brazil should allow good harvest progress.Exports sales at 46 mil. bu. were in line with expectations. YTD commitments are down 41% from YA, vs. the USDA forecast of down 22%. China was the largest buyer of Brazilian corn in Jan-23 with nearly 985k tons. Cumulative purchases of Brazilian corn by China now exceed 2.1 mil. tonnes since approving imports from the SA country just this past Nov. In the USDA WASDE report yesterday Brazil’s corn export forecast was raised to 50 mmt, surpassing the US, 48.9 mmt, as the world’s largest corn exporter. Strategie Grains lowered their 2023/24 EU corn production forecast to 63.4 mmt, down from 63.8 mmt, however well above last year’s drought ravaged crop of only 54.2 mmt. Argentine corn ratings slipped to 20% G/E, down from 22% LW. Poor/VP increased 2% to 34%. YA ratings were 28% G/E and 25% Poor/VP.
Prices closed lower in all 3 classes. Chicago and MGEX were down $.05 – $.08, while KC finished down $.14 – $.17. After failing to take out yesterday’s high and overhead resistance at the 100 day MA at $9.03 ¾, Mch-23 KC pulled back. After recently peaking at $1.40 over Chicago this week, the spread pulled back to $1.20 today. Export sales were weak at only 6 mil. bu. combined both old and new crop. YTD commitments are down 6% from YA, vs. the USDA forecast of down 3%. US spring wheat areas in drought held steady at 64%, same with winter wheat at 58%. Strategie Grains lowered their 2022/23 EU wheat export forecast to 30.1 mmt, down from 31.8 mmt last month. The also raised their 23/24 soft wheat production forecast to 129.7 mmt, up from 129.3 mmt last month. Algerian wheat purchases this week are expected to have reached 360 – 390k mt. The price is expected to average roughly $330/mt CF.
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