Written Commentary
SOYBEANS
The soybean complex closed lower across the board. Seemed as if the Argentine radar weighed on prices a bit into the close. Mch-23 did hold above the $15 support level closing at a $.05 inverse over May-23. Products were down hard resulting in crush margins sharply lower for the 2nd consecutive Friday. Spot board crush margins closed under $2.00 for the first time in 6 months. Old crop soybean exports were strong at 36 mil. bu. In addition the USDA announced the sale of 220k tons (8 mil. bu.) of soybeans to an unknown buyer. YTD soybean commitments are up 5% from YA, vs. the revised USDA forecast of down 8%. Soybean meal sales at 363k tons were above expectations. Virtually no new soybean oil sales, as expected. The BAGE estimated Argentine soybean plantings at 96%, up from 89% last week. Ratings slipped again with 3% G/E, down from 4% LW and 29% YA. 60% of the crop is poor/VP, up from 56% LW and 30% YA. Their production forecast remains at 41 mmt, vs. USDA at 45.5 mmt. If we assume the BAGE production figure of 41 mmt, holding everything else steady, global soybean production would still be a record at 383.5 mmt, up 15 mmt (4%) from the previous record in 20/21. Chinese customs data show final 2022 soybean imports at 91.1 mmt, down 6% from 2021. Imports from Brazil were 54.4 mmt down 6%. Imports from the US at 29 mmt were down 10%. A survey of US farmers by Farm Futures projects 2023 soybean acres at 88.9 mil. acres up from 87.45 mil. in 2022 and well above the USDA baseline est. of 87 mil. acres in Nov-22. Sunday night’s open will hinge on Argentina’s forecast.
CORN
Prices were mixed with all contracts closing within $.01 of unchanged. Today’s radar has shown moderate to heavy rains in some of the driest, most productive corn and soybean growing regions in Argentina. Forecasts into early Feb. are trending wetter for Argentina, with above normal rains expected for the first time in months. Moisture across the bulk of Brazil is expected to be normal with no major early harvest delays. Mch-23 briefly violated support at its 100 day MA, intra-day, however closed back above it. Export sales were strong at 45 mil. bu of old crop, the highest since late Nov-22. YTD commitments are still down 46% from YA, vs. the revised USDA forecast of down 22%. BAGE estimates Argentine corn plantings at 89%, up from 83% LW. They slashed their production forecast 5.5 mmt to 44.5 mmt, vs. USDA est. of 52 mmt. Losses down to the mid 40’s are likely to be absorbed from other exporters without too much demand shuffling. The FF survey projects 2023 corn areas at 90.5 mil. acres up from 88.6 mil. acres in 2022, however below the USDA baseline est. 92 mil. The smaller increase in corn acres attributed to a bigger jump in wheat plantings last fall. Cattle of feed was generally in line with expectations.
WHEAT
All 3 classes of wheat closed higher as chart support below the market held. Old crop wheat exports at 17 mil. bu. were above expectations. YTD commitments are down 6% from YA, vs. the USDA forecast of down 3%. The FF survey shows all 2023 wheat acres at 48.8 mil. up 7% from YA, the highest since 2016. They place winter wheat acres at only 34.9 mil., well below last week’s USDA forecast of 37.0 mil. They estimate Spring wheat acres at 13.9 mil. up 12% from YA. Wheat prices are likely chop around in a sideways trading pattern for the foreseeable future. Selling tends to let up under $7.25 basis Mch-23 Chicago. Same with KC Mch-23 at $8.25, and $9.00 for Mch-23 MGEX. Rallies capped by huge Russian supplies limiting US exports and higher than expected US winter wheat acres.
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