Written Commentary
SOYBEANS
The soybean complex closed mixed. Old crop soybeans were $.02 – $.03 higher, new crop was steady to $.02 lower. Nearby soybean meal contracts were $1 – $2 higher, with new crop $2 – $3 lower. Soybean oil was up 30 – 40. May-23 soybean briefly pierced support at its 100 day MA at $14.85 ½ before rebounding. NOPA crush at 11 AM CST tomorrow is expected to show NOPA members crushed 166 mil. bu. in Feb-23, up from 165 mil. in Feb-22. Est. range from 162 – 173 mil. bu. Soybean oil stocks are expected to jump to 1.886 bil. lbs. up 3% from Jan-23, however down from 2.059 bil. lbs. in Feb-22. Dr. Michael Cordonnier lowered his Argentine production forecast another 3 mmt to 28 mmt, vs. USDA est. of 33 mmt. He held his Brazilian production forecast unchanged at 151 mmt vs. the USDA at 153 mmt. Conab estimates Brazilian soybean harvest at 53% as of Mch 11th, down from 63% YA. It’s hard to envision much more of a drop in Argentine (and Paraguay) production without offsetting higher production in Brazil. Ending stocks among the top 4 soybean exports, US, Brazil, Argentina and Paraguay, at 57 mmt is the lowest in 8 years. Combined stocks/use at just under 18% is the lowest since the last major US drought in 2012/13.
CORN
Prices closed $.02 – $.07 higher. This morning’s CPI report showed inflation rose .4% in Feb-23 vs. expectations of up .5%. YOY CPI rose 6.0% vs. up 6.4% in January, marking the 8th consecutive monthly decline. Despite complaints from Russia the Black Sea Grain Initiative has been extended another 120 day. The midday GFS model lowered prospects for meaningful rain in Argentina thru the end of the week. It’s becoming too late for rains to help salvage Argentine crops after months of drought. Above normal rain across central and northern Brazil this week will continue to delay soybean harvest and corn plantings. The USDA announced the sale of 614k tons (24 mil. bu.) to China for Spring shipment. This business was likely executed on last week’s price decline. Sources suggest China may have bought an additional 1.0+ mt from the US for summer delivery, before Brazil’s 2nd crop is likely available. Dr. Michael Cordonnier lowered his Argentine corn production forecast another 3 mmt to 37 mmt. Texas corn plantings advanced 10% last week to 30% complete, just above YA and the 5-year average. Planting progress across the Gulf coast expected to experience some delays this week with above normal rainfall. A bipartisan group of Senators from Midwest farm states re-introduced a bill that would allow the nationwide sale of E15 ethanol. Earlier this month the EPA proposed to make the higher ethanol blend available in midwestern states effective in the summer of 2024. It appears the CFTC has released another week of COT data. It shows a huge decline in corn holdings by Money managers.
WHEAT
Prices were higher across the board as news that an extension of the Black Sea Grain Initiative was likely already discounted by the market. KC and MGEX wheat were $.14 – $.18 higher, while Chicago was $.09 – $.12 better. Recent wheat sales from the Black Sea region have been comparable to US corn prices at the gulf. The last wave down in price has stirred up a lot of buying interest. This week Saudi Arabia has bought over 1.0 mmt, Algerian 540k perhaps more, Jordan bought 120k for Aug. shipment at $310/mt CIF. Tunisia is seeking 245k tons. Today Egypt stated their wheat reserves sit at nearly 3 ½ months of usage. Winter wheat conditions in Kansas held steady at only 17% G/E, however there was a 1% shift from poor to fair. In Colorado G/E improved 11% to 40% G/E, while Oklahoma slipped 9% to 30% G/E and Texas fell 2% to 17% G/E. The heaviest rains this week once again favor areas east of drought stricken Western Kansas, Nebraska, Oklahoma, and the Texas panhandle.
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