Ag Market View for Jan 4.23
After seeing higher trade overnight the soybean complex pulled back by mid-session closing slightly lower. Soybeans were down $.06 – $.09, soybean oil down 35 – 45, while soybean meal was down $2 – $3 (Jan-23 up $6). Deliveries against Jan-23 contracts were 20 soybean oil and 16 soybeans. Still no soybean meal deliveries. The USDA did announce the sale of 124k tons (4.5 mil. bu.) of soybeans to an unknown buyer. Census crush in Nov-22 at 189.5 mil. bu. were slightly below expectations. In the first 3 months of the 2022/23 MY soybean crush has reached 554 mil. bu. up .4% from YA, vs. USDA forecast of +1.4%. With US crush margins still strong, I expect no change in the USDA crush forecast of 2.045 bil. bu. in next Thursday’s USDA report. Bean oil stocks at 2.107 bil. lbs. were slightly below expectations and down 12% from YA. Meal stocks at 319k tons were down 9% from Oct-22. Since 1990 there has been only 4 years where the USDA lowered production in Oct. followed by increased production in Nov. like we saw in 2022. In 3 of those 4 years the final USDA production forecast was above the Nov estimate. We look for the USDA to raise their 2022 soybean production forecast by 30 mil. to 4.376 bil. in next week’s report. The average yield would rise to 50.5 bpa, up from 50.2 bpa.
By mid-morning prices plunged in sympathy with lower energy prices. Global recessionary fears caused by high interest rates and soaring Covid cases in China continue to weigh on expected global demand. Mch-23 corn low of $6.52 ½ was down $.18, its lowest level in nearly 2 weeks. The next support is the mid Dec-22 low of $6.44. The market seems to be shrugging off this week’s hot/dry forecast for Argentina and Southern Brazil while focusing on weak demand and prospects for higher production and stocks in next week’s USDA report. Since 1990 there has been only 3 years where the USDA lowered production in Oct. followed by increased production in Nov. like we saw in 2022. In all 3 years the final USDA production forecast was above the Nov estimate. We look for the USDA to raise their corn production forecast 75 mil. bu. to just over 14 bil. bu. in next week’s report. The average yield would increase 1 bpa to 173.3 bpa. Corn used in ethanol production for Nov-22 was 447.4 mil. bu. down 4% from YA while cumulative usage in the first 3 months of the 2022/23 MY is also down 4% vs. USDA forecast of down 1%.
Prices plunged today with lows in both Chicago and KC wheat down more than $.30 bu. MGEX was down $.17 – $.18 at their lows. Next support for Mch-23 Chicago is $7.38 ¾, vs. today’s low $7.44 ¼. Support for Mch-23 KC is $8.30 ¾, vs. today’s low of $8.36 ½. Mch-23 MGEX managed to hold above support at $9.00. Cheap wheat from the Black Sea continue to weigh on global wheat values. Brazil’s ANEC reports exports in 2022 reached 3.2 mt, nearly 3 times the 2021 volume. While little moisture is in store for the drought plagued US southern plains for the next week, both the 6-10 and 8-14 day forecasts suggest normal to above normal precipitation. Speculative traders were sellers across the board today.
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.