Ag Market View for Mar 22.23
The soybean complex was lower across the board with soybeans down $.18 – $.26, soybean meal down $4 – $9, while soybean oil was down 150 – 160. Weak Brazilian basis continues to weigh on global oilseed valuations as storage is becoming limited. May-23 soybeans closed at its lowest level since Dec 1st and below the $14.50-$14.75 range I thought would hold. Nearby soybean oil closed at its lowest level since Dec-21. Spot board crush margins plunged another $.19 to $1.46 bu., its lowest level since July-22. BAGE will be out tomorrow with an update on Argentine crop conditions. AgroCousult raised their Brazilian production forecast 2 mmt to 155 mmt vs. the USDA forecast of 153 mmt. They expect Brazil to export 96 mmt of this year’s harvest, well above the USDA est. of 92.7 mmt. The USDA FAS forecasts Chinese bean imports in 2023/24 will increase to 97.5 mmt, up from the USDA est. of 96 mmt in 22/23. Export sales tomorrow expected at 15 – 30 mil. bu. soybeans, 125k – 300k tons soybean meal, and 0 – 10k tons soybean oil.
Prices were up $.03 to down $.02 with spot contracts performing best. As expected the Federal Reserve raised the Fed funds target range by 25 bp’s to 4.75% – 5.00%. Fed Chair Powell stated that the Fed is “strongly committed to returning inflation to its 2% target.” Future policy decisions will be made meeting-by-meeting based on the totality of the data, while acknowledging additional policy firming may be appropriate. An improved weather picture in SA will likely have little impact on this year’s corn and soybean crops in Argentina. It will aid Brazil in wrapping up 2nd corn plantings and the remaining soybean harvest. The USDA announced the sale of 178k tons of old crop corn to China. Total announced sales to China since last Monday are just over 2.4 mmt, nearly 96 mil. Agroconsults lowered their Brazilian corn forecast 5.4 mmt to 125.5 mmt, still above the USDA forecast of 125 mmt. They expect Brazil to export 51.9 mmt of corn, vs. the USDA forecast of 50 mmt. Ethanol production slipped to 997 tbd in the week ended Fri. Mch 17th, down from 1,014 tbd the previous week. Corn usage at 100 mil. bu. was below the level needed to reach the USDA forecast. For the week overall gasoline demand was actually up 3.7% from YA. MM’s were net sellers of 75k contracts in the week ended Mch. 4th, flipping their position to a net short of just over 54K. Heavy rains across the mid-south will limit early planting progress.
Prices were lower across all 3 classes with Chicago down $,15 – $.20, MGEX down $.09 – $.12, and KC down $.07 – $.09. May-23 Chicago was able to hold above its Mch-23 low of $6.53 ½ on the spot weekly chart. Cheap Russian wheat continues to be the driving force for lower prices. SovEcon kept their 2023 Russian production forecast at 85.3 mmt, down from just over 100 mmt in 2022. The deadline for Jordan’s tender for 120k mt of milling wheat is Mch. 28th. Turkey is seeking 695k of mill grade wheat also with a Mch. 28th deadline. KC May-23 inverse to Chicago May-23 reached a new high at $1.49 bu. The Mch-23 contract peaked at $1.55 in February.
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