Written Commentary
CORN
Prices were $.06 – $.08 lower today with old crop contracts establishing new contract lows. Modest support for spot Mch-24 is at $4.09 with psychological support at $4.00. Weekly EIA ethanol production is delayed until tomorrow. Production estimates range from 1,014 – 1,090 tbd compared to 1,083 tbd pace the previous week. While demand for ethanol production and exports have been solid, it hasn’t been strong enough to significantly increase usage forecasts and cut into stocks at nearly 2.20 bil. bu. Speculative traders continue to pile into the short side of the market overwhelming end user buying. This afternoon the Rosario Grain Exchange lowered their Argentine production forecast 2 mmt to 57 mmt, still above the USDA forecast of 55 mmt. After recently slipping into my downside target range of $4.00 – $4.25 prices have quickly probed the lower end of this range. Global fundamentals remain bearish if Brazil (big if) is able to produce the size of crop the USDA forecasts, however this is likely becoming discounted in price.
SOYBEANS
The soybean complex was lower across the board with beans down $.12 – $.18 with session lows on the close, meal was down $4 – $6, while oil was 45 – 60 lower. Mch-24 beans filled the small gap left from yesterday’s opening and traded to its lower level in 9 months. Next support is at contract lows from last May at $11.45. Support for Mch-24 meal is at last week’s low at $339. Support for Mch-24 oil is at this month’s contract low at 44.49. Much of Brazil remains in a favorable weather pattern with a good mix of rain and sunshine over the next few weeks. Heavier rains will favor NE growing regions with isolated flooding possible. Drier areas in MGDS are expected to see relief over the next week. Timely showers late this week for much of Argentina should continue to support favorable crop development. Brazilian soybean exports in February are expected to reach 7.3 mmt, down slightly from the 7.55 mmt YA. AgroConsults lowered their Brazilian production forecast 1.6 mmt to 152.2 mmt, above most est. between 145 – 150 mmt, however below the Feb-23 USDA forecast at 156 mmt. This afternoon the Rosario Grain Exchange lowered their Argentine production forecast 2.5 mmt to 49.5 mmt, now slightly below the USDA forecast of 50 mmt. Spot board crush margins were steady today at $.85 bu. with oil PV remaining below 40%. This should enable crush to increase a touch from the current USDA forecast of 2.30 bil bu. Global production has exceeded global usage in 7 of the past 10 years.
WHEAT
With the exception of Mch-24 Chicago, prices were lower across all 3 classes. Mch-24 Chicago closed at a nickel inverse over May as exporters are likely struggling to secure enough SRW to fill Chinese purchases late last year. Wheat is also likely benefiting from additional US sanctions on Russia expected on Friday. KC and MGEX were both $.04 – $.08 lower. Mch-24 Chicago premium to Mch-24 corn at $1.72 has rallied $.90 bu. since November. Yesterday’s surge higher is largely believed to be generated by speculative short covering. This was supported by Chicago wheat OI falling nearly 8k contracts. KC OI however rose just over 1,200 contracts. Wheat conditions in TX fell 2% last week to 40% G/E. Russia’s Ag. Minister states they may export up to 70 mmt of grain in 2024, up from his previous est. of 66 mmt. He also states that Russia has executed its pledge to ship 200k mt of free grain to 6 African nations.
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