Written Commentary
SOYBEANS
The soybean complex was mixed in quiet 2 sided trading. Soybeans were up $.06 – $.14 as Mch-23 surged to a $.06 premium over May-23. After holding key support at the 50 day MA at $14.77 ¾ Mch-23 rallied, closing into new highs for the day. Soybean meal was up $2 – $6, while soybean oil was down 25 – 45. Mch-23 soybean oil tested $.60 lb. this morning, its lowest level in 6 weeks. Malaysian palm oil was down 3.6% overnight. Malaysian palm oil exports thru Jan 25th are down roughly 34% from same period last month. Indonesian officials indicate the government has lowered the crude palm oil reference price to $879.31/mt for the first half of Feb-22, down from $920.57/mt the 2nd half of Jan-22 in an effort to shed excess inventory. The USDA announced the sale of 130k tons (5 mil. bu.) of soybeans to an unknown buyer. There has been discussion in recent days of Brazil’s storage capacity in light of record harvests of corn, soybeans, and wheat. Combined production of the 3 crops is expected to surge 13.5% over YA to 287.5 mmt, up 34 mmt year over year. Unless weather draws out Brazil’s soybean harvest, I suspect Brazilian soybean export offers Feb. forward will remain aggressive to shed excess inventory ahead of the 2nd corn harvest beginning in June-23. Another big unknown is how much buying will come out of China after this week’s New Year’s Holiday. Export sales tomorrow are expected at 25 – 50 mil. for soybeans, 0 – 10 mt soybean oil, and 150 – 400 mt for soybean meal.
CORN
Prices closed $.02 – $.03 lower in quiet 2 sided trading. Mch-23 corn closed at $6.74 ¾, just above its 100 day MA. Yesterday’s open interest in corn jumped just over 11,600 contracts suggesting new speculative longs entering the market on the price surge. One of the weather models at midday hinted at less rain for Central Argentina, while other models maintain an above normal precipitation outlook for Argentina into early February. Normal to above normal rains across central Brazil will still benefit later planted corn and soybeans however harvest will be held in check for the early planted soybeans, which in turn will slow the planting of their 2nd corn crop. The USDA announced the sale of 100k tons (4 mil. bu.) of corn to an unknown buyer. Ethanol production increased to 1,012 tbd in the week ended Fri. Jan. 20th, up from 1,008 tbd the previous week. There was 102 mil. bu. of corn used in the production process, just below the pace needed to reach the USDA corn usage forecast of 5.275 bil. bu. Ethanol stocks surged to 25.1 mt, above expectations and the highest since April-22. Overall gasoline demand remains weak, down 4.3% from YA. Gasoline demand has been below the previous year’s pace for 16 consecutive weeks. Export sales tomorrow are expected at 25 – 50 mil. bu.
WHEAT
All 3 classes of wheat closed higher continuing to rebound from Monday’s lows. KC wheat was up $.07 – $.10, while Chicago and MGEX were up $.05 – $.07. Chicago wheat open interest was down just over 3,500 contracts yesterday, suggesting speculative short covering. I suspect today’s O.I. will also show a decline. India is expected to offer 3.0 mil. mt of bulk wheat to domestic end users to soften consumer prices and wheat prices recently hit record highs. Iraq reportedly bought 150k tons of Australian wheat for April shipment at $445/mt CF. SovEcon reports that in the first 6 months of the 2022/23 MY Algeria has bought over 1.1 mt of Russian wheat, roughly double the amount they purchased the previous MY. Perhaps some of today’s buying was short covering fearing added tensions in the Ukraine/Russian war after both the US and Germany announced they plans to send tanks to Ukraine to aid in their war effort. The next artic outbreak is not expected to harm the US winter wheat crop as recent snow cover should provide adequate insulation from the sub-zero temperatures. Export sales tomorrow are expected at 6 – 18 mil. bu.
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