Written Commentary
SOYBEANS
Mch-23 soybeans closed at $15.39 3/4 , up $.12. If Mch-23 is able to close above $15.41 ¾, last week’s high on spot weekly chart, the next resistance is the contract high of $15.72 ¼. If the current forecast verifies I find it hard to believe this recent price surge will hold. Domestic stocks are tight, however global stocks at a 4 year high, are not. Stocks/use among the top 4 soybean exporters has leveled off at roughly 20% the past 4 years. I believe the Argentine crop could fall further, however I think this would largely be offset by higher production from Brazil. I’m also of the opinion the Chinese import forecast is still too high. I’d look to sell rallies above $15.50, placing a stop above the contract high. Meal prices closed up $4 – $5 per ton, while soybean oil was up 50 – 75. Crush margins improved today after being under heavy pressure late last week. Today’s NOPA crush report for Dec-22 at only 177.5 mil. bu. was well below expectations of 183 mil. and down from 179 mil. in Nov-22. Despite crush being below expectations, oil stocks at 1.791 bil. lbs. were above expectations of 1.725 bil. lbs. The USDA announced the sale of 119k tons (4 mil. bu.) of soybeans to an unknown buyer. Meal prices are up $3 – $4 per ton, while soybean oil is up 45 – 55. Crush margins are improving slightly after being under heavy pressure late last week. Today’s NOPA crush report from Dec-22 at only 177.5 mil. bu. was well below expectations of 183 mil. and down from 179 mil. in Nov-22. Despite crush being below expectations, oil stocks at 1.791 bil. lbs. were above expectations of 1.725 bil. lbs. Export inspections at 76 mil. bu. were well above expectations and the pace needed to reach the revised USDA forecast. There were 47 mil. bu. destined for China. Brazil’s soybean harvest has begun, however remains less than 1% complete.
CORN
Mch-23 corn saw an outside day up, closing above the Dec22 high. Next resistance is the Oct-22 high of $7.11 ¾. Today’s trade seemed to shrug off forecasts indicating better prospects for rain in drought areas of Argentina. Improved moisture has been hinted at for weeks now, however so far results have been quite disappointing. After another 2-3 days of hot/dry weather, good rains are expected late this week into the weekend followed by the next rain event the middle part of next week. More rains are expected in the 10 – 14 day outlook. Rains are desperately needed to start falling this week to stabilize crop potential and avoid further global demand shifts. Friday’s CFTC report showed Money Managers were heavy sellers of corn last week. The USDA announced the sale of 150k tons (6 mil. bu.) of corn to Columbia. Export inspections at 31 mil. bu. were above expectations however still below the pace needed to reach the revised USDA export forecast of 1.925 bil. Egypt is tendering for corn for Feb shipment. The tender is expected to close this Thur. Jan. 19th. Chinese pork production rose 4.6% last year to 55.4 mmt, the highest since 2014, this despite their population shrinking last year for the first time in over 60 year. As we saw in Thursday report, any further production losses in Argentina will led to a similar amount coming off their exports. (production and exports cut 3 mmt last week) From a supply standpoint I believe Brazil can absorb more exports, however logistically it may be difficult given the sheer volume of soybeans also being exported thru ports. Global supplies of corn are again approaching the 10% level. Stocks among the top 4 exporters are expected to level off at 46 mmt same as YA, with stocks/use expected to rebound to just above 8%, up for the 2nd consecutive year.
WHEAT
Wheat prices closed strong in all 3 classes, getting caught up in the wave of speculative buying. KC and Chicago closed $.04 – $.08 higher, while MGEX was up $.03 – $.06. Egypt estimates their wheat reserves stand at a 4.5 month supply. Russia raised their wheat production forecast to 104.4 mmt, up from 102.7 previous, well above the USDA forecast which remains at 91 mmt. IKAR raised their Russian wheat export forecast to 45.5 mt, above the USDA forecast of 43 mt. Export inspections at 12 mil. bu. were in line with expectations and an improvement over last week, however remain below the pace needed to reach the USDA forecast of 775 mil. Above normal moisture continues to appear in the 6-10 day forecast for all winter wheat growing areas.
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