Ag Market View for Jan 31.23
The soybean complex closed mixed in choppy, two sided trade. Nearby soybeans were $.01 – $.03 higher, while deferred closed $01 – $.04 lower. The high in Mch-23 soybeans at $15.43 ¾ inching closer to resistance at $15.48 ½. Soybean meal was down $3 – $5 ton as speculative traders pare back from their record long position. Soybean oil was up 60 – 90. Brazilian soybean basis weakened on yesterday’s futures price surge. Celere’s raised their Brazilian soybean est. to 154.8 mt, and raised their export forecast to 97.5 mt vs. USDA forecasts are at 153 mt and 91 mt respectively. Conab est. Brazilian harvest at 5% vs 12% YA. Their production est. is 152.7 mt. Dr. Cordonnier left his SA production est. unchanged at 39 mt for Argentina and 151 mt for Brazil. To me the Celere’s export est. at 97.5 mt, 6.5 mt above the USDA, seems reasonable with that demand likely being shifted from Argentina. That would lower Brazil stocks to 27 mt unchanged from YA, (without even raising Brazil’s prod), and drop stocks/use to 17.6%, below the 20% from YA, however above the 14.4% in 2019/20. Egypt’s GASC bought 35k tons of vegetable oil in a international and local tender, 19K soybean oil at $1,330/mt and 10k sunflower oil at $1,236/mt. Dec-22 US census soybean crush after Wednesday’s close.
After trading both sided of unchanged corn prices closed $.02 – $.04 lower in old crop, while new crop was steady to $.01 higher. Mch-23 corn failed to take out its monthly high of $6.88 ¾, however also held above the 100 day MA support on the late day weakness. Forecasts still offer modest rain in Argentina Wed/Thur. with heaviest totals west and south of the main production areas followed by a 7–10 days of dry conditions. Central Brazil still expected to experience modest harvest delays. While there was no new export announcements there was supportive economic data from China along with a lower Employment Cost Index report in the US. Overnight the IMF raised their forecast for global GDP in 2023 to +2.9% from their previous est. of +2.7%. This as a result of stronger economic growth expected from China. The IMF raised their Chinese GDP forecast for 2023 to +5.2% from +4.4%. The US ECI report showed a 1% increase in the 4th Qtr., down from +1.2% in Q3 and slightly below expectations of +1.1%. This data suggests easing inflationary pressures in the US while also improved odds of a soft economic landing. The President of the Ukrainian Agribusiness Club suggests 2023 grain harvest will fall to 35-40 mt. Corn production expected at only 15-17 mt, with exports limited to 10 mt. Despite the Russian invasion Ukraine produced 27 mt of corn in 2022 with exports expected to reach 20.5 mt. Production in 2021 was 42 mt with 27 mt being exported. Egypt’s recent corn tender expected to close tomorrow. China’s pig herd expanded 1.9% in Dec-22 to 452.6 mil. head and is up .7% from Dec-21. Tomorrow’s weekly ethanol data is expected to show production down a bit from last week’s 1,012 tbd. Stocks are expected to drop a bit from last week’s 25.1 mb level. Corn used in the production of ethanol from Dec-22 is out after Wednesday’s close.
All 3 classes of wheat closed higher on the day, well off the overnight lows, and well off the midmorning highs. I suspect O.I. will show a decline as speculative traders were busy covering short positions ahead of month-end. Chicago was up $.07 – $.08, KC up $.04 – $.06, and MGEX was steady to up $.02. Mch-23 Chicago wheat closed right at its 50 MA at $7.61 ¼. Part of today’s rally is being blamed on supply nervousness from the Black Sea Corridor. Waiting time for incoming vessels to clear inspections is running 3 – 6 weeks, with only 2 – 3 vessels being released per day. Of the 7 states reporting crop conditions yesterday 4 saw improvement (KS, TX, NE, SD) while 3 saw deterioration. (OK, CO, MT) The President of the Ukrainian Agribusiness Club suggests 2023 wheat production will fall to only 12-15 mt, with exports limited to 7 mt. Despite the Russian invasion Ukraine produced 21 mt of wheat in 2022 with exports expects reaching 13 mt. Production in 2021 was 33 mt with nearly 19 mt being exported. Algeria reported to have bought 250k – 300k of durum wheat at $448 – $450/mt CF. Jordan reportedly bought 60k of optional origin wheat for June shipment at 336.50/mt CF. Egypt’s GASC tender for 30k – 60k of wheat under the World Bank loan program expected to close on Thursday.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.