Written Commentary
SOYBEANS
After trading both sided of unchanged in early trade the entire soybean complex closed lower. Soybean contracts were down $.30 – $.32, falling back below the $15 level. Soybean meal was down $5 – $6, (Jan-23 down only $1.70) while soybean oil was down 65 – 110 points. Deliveries against Jan-23 contracts were 655 soybean oil and 93 soybeans. Still no soybean meal deliveries. Friday’s COT report showed MM’s were net long nearly 130,000 contracts of soybean meal. By weeks end we est. they are holding a record long position of 145,000 contracts coming into today’s trade. Export inspections at 54 mil. were below expectations. YTD inspections at 1.052 bil. are down 7% from YA, vs. the USDA forecast of down 5%. Soybean oil usage in the production of biodiesel reached 906 mil. lbs. in Oct-22, while 3% from the previous month, it was up 9% from Jan-21 vs. the USDA forecast of up 12%. Brazil’s soybean exports in Dec-22 reached 2.02 mt, down from 2.64 in Nov-22 and 2.71 in Dec-21. Census crush in Nov-22 at 189 mil. bu. was just below expectations. In the first 3 months of the 22/23 MY soybean crush has reached 554 mil. bu. up .4% from YA, vs. the USDA forecast of up 1.4%. The cumulative crush figure represents just under 25% of the USDA MY forecast of 2.045 bil. bu., slightly below the historical average of 27%. Despite a slight reduction in crush margins from their recent peak, overall margins remain historically strong. Look for the USDA to hold their crush forecast steady in next Thursday’s report. Soybean oil stocks grew to 2.108 bil. bu. up from 2.094 in Oct-22, however were slightly below expectations of 2.203 bil.
CORN
Fears of a global economic slowdown triggered by high interest rates and surging Covid cases in China fueled today’s risk off sentiment from speculative traders in a host of commodities. In addition South American rainfall totals and coverage since last Friday were at the high end of expectations. The heaviest rains fell in southern Cordoba and Southwest Buenos Aires where 1.5” – 2” rainfall totals recorded. Other areas in Central Argentina and Southern Brazil received much less. The forecast for the rest of this week and into the weekend features a return to a hot/dry weather pattern with high temperatures expected to reach mid 90’s possibly topping 100 degrees in Argentina. Midday maps appeared drier in the extended outlook. South American forecasts will be the primary price driver until at least the Jan. 12th production, stocks and acreage report. Corn also traded both sided of unchanged in early trade before selling off. Nearby futures closed $.07 – $.08 lower with the Mch-23 contract closing at $6.70 ½, just below its 100 day MA. Export inspections at 26 mil. bu. were at the low end of expectations. YTD inspections are down 27% from YA, vs. USDA down 16%. Brazilian corn exports in Dec-22 were 6.4 mt, well above the 3.4 mt from Dec-21. As Brazil’s exportable supplies of corn start to diminish in early 2023 the US should see a window of better global share until Brazil’s 2nd harvest in the late Spring early Summer. Ukraine’s corn exports since July-22 have reached 12.6 mt, up 9% from YA. After today’s close the USDA reported corn used in the production of ethanol in Nov-22 totaled 447.4 mil. bu. down 4% from YA. Cumulative usage in the first 3 months of the 22/23 MY, is also down 4% from YA vs. the USDA forecast of down 1%. I expect the USDA will lower their current corn usage forecast 50 – 75 mil. bu. in next week’s report.
WHEAT
Prices closed lower across the board, effectively wiping out Friday’s surge higher. All 3 classes finished between $.15 – $.18 lower. With large supplies continuing to be shipped from Russia, now India has stated they are considering selling just over 2 mt of wheat on the open market in order to help control inflation. That decision will be announced in the next week to 10 days. Since July-22 Ukraine’s wheat exports have reached 8.4 mt, however that is down nearly 50% from YA. Export inspections at only 3 mil. bu. were well below expectation. YTD inspections are down 3% from YA, in line with the USDA forecast.
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