Written Commentary
SOYBEANS
The soybeans complex closed mixed with beans up $.06 – $.12, soybean meal up $6 – $12 with most contracts making new contract highs, while soybean oil was down 65 – 80. Brazil’s soybean harvest is estimated between 40 – 45% as of late last week, about 10% behind the historical average. Safras & Mercado estimate Brazilian farmers have sold 35% of their 2022/23 soybean harvest, below 49% from YA and the historical average of 52%. They also lowered their Brazilian production est. to 152.4 mmt, down from 153.4 mmt. CREA estimates Argentina’s soybean crop at only 31.2 mmt, vs. the USDA est. of 41 mmt. Soybean export inspections at 20 mil. bu. were below expectations of 30 – 40 mil. YTD inspections at 1.569 bil. are up 3% from YA, vs. the USDA forecast of down 8%. I look for the USDA to raise ending stocks 20 mil. bu. to 245 mil. due to lower exports. The average trade est. of for stocks to slip 6 mil. bu. to 219 mil. Range of guesses is from 200 – 250 mil.
CORN
Prices closed $.01 – $.03 lower in quiet trade. Perhaps some optimisim that progress is being made on extending the Black Sea Grain Initiative. Turkeys Foreign Minister Mevlut Cavusoglu over the weekend said they are working hard to extend the UN backed Black Sea Grain deal. China set its economic growth target for 2023 at 5%. Last year it was set at 5.5% for 2022, ultimately coming in at only 3% held back by Covid restrictions. Hot/dry over the weekend and this week in Argentina before better prospects for rain this coming weekend. The impact on production with rains here forward are becoming increasingly mute. Normal to above normal precipitation across Northern and Central Brazil this week will delay soybean harvest and corn plantings. The USDA did announced the sales of 182.4 mt (7.2 mil. bu.) of corn to an unknown buyer and 110k tons (4.3 mil. bu.) to Japan. The unknown sale is likely the rumored sale to China from last week. CREA lowered their Argentine corn production forecast to 38.6 mmt, well below the current USDA est. of 47 mmt. China also announced a plans to expand grain production by 50 mil. tons in 2023 with a goal of becoming less reliant on imports for greater food security. Export inspections at 35 mil. bu. were above expectations of 20 – 30 mil., however still below the pace needed to reach the USDA export forecast. YTD inspections are down 38% from YA, vs. the USDA forecast of down 22%. I look for a 50 mil. bu. cut in exports on Wednesday with a corresponding increase in ending stocks. This is mostly in line with expectations. The US plans to request formal consultations under the free trade agreement with Mexico over their planed import ban on GMO corn for human consumption.
WHEAT
Wheat was lower across the board with KC down $.16 – $.18, Chicago down $.12 – $.14 while MGEX was down $.08 – $.10. Export inspections at 10 mil. bu. were at the low end of expectations. YTD commitments are down 2% from YA, vs. the USDA forecast of down 3%. I look for no change to the USDA export forecast or ending stocks est. of 568 mil. bu. ABARE raised their Australian wheat production est. to a record 39.2 mmt, just above the USDA forecast of 38 mmt.
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