Written Commentary
SOYBEANS
The soybean complex closed higher across the board, surging into new highs in late trade. Talk that China may have secured up to 4-5 cargoes of US soybeans over the past few days fueled the strong close. Today’s high in Mch-23 soybeans at $15.43 ¼ was just below resistance at the Jan-23 high of $15.48 ½. Mch-23 meal set a new contract high, however pulled back to close just under $500 per ton. Malaysian palm oil stocks grew to 2.268 mmt in Jan-23, just above expectations of 2.18 mmt and well above YA levels of 1.551 mmt. Production in Jan-23 slipped to 1.38 mmt, in line with expectations and below YA level of 1.551. Argentine crop conditions were little changed. BAGE reports 13% of the crop is G/E, up from 12%. 48% of the crop is poor/VP, up from 46%. They also cut production 3 mmt to 38 mmt, vs. USDA est. of 41 mmt. A lot of uncertainty heading into the weekend. Markets on Super Bowl Sunday night will be driven by SA weather updates over the weekend, and any further demand talk from China. If China is back for more US soybeans early next week fearing lower supplies from SA, this could be the trigger taking prices back to last summer’s highs just above $15.70. Without confirmation of Chinese purchases, soybean prices are likely to remain range bound $15 – $15.50.
CORN
Despite today’s strong close the corn market still seems range bound. Key resistance still rests at $6.88 ¾, vs. today’s close of $6.80 ½. While a prolonged military conflict would restrict Ukraine’s ability to plant a corn crop this coming Spring, corn seemed to be a follower of wheat and soybeans today. Forecasts have reduced expected rains early next week for Central Argentina and Southern Brazil to .25” – 1.25” with just over 50% coverage. Midday forecasts suggest even less rainfall totals. This is roughly half of what forecasts suggested earlier in the week. Hot/dry conditions are expected to return the last week of Feb. The good news is harvest is accelerating in northern Brazil. There were no new export announcements. US trade representative have given Mexico til next Tues. Feb. 14th to provide an explanation behind the science for Mexico’s planned ban on GMO corn imports. The responses given will guide the next steps the US will take to resolve the dispute. Argentine corn ratings slipped this week with G/E down 2% to 20%, while poor/VP increased 2% to 34%. The Ukraine Ag. Ministry reports 2022 corn harvest has reached 93% with volume reaching 26.4 mt, consistent with the USDA forecast of 27 mmt.
WHEAT
Wheat prices surged today driven by fears that a major military offensive by Russia in Eastern Ukraine will disrupt the flow of cheap wheat from the Black Sea region to the world marketplace. Seemingly every rally attempt the last few months have been capped by lower Russian wheat offers. With this being threatened speculators were large buyers with a “get me out” attitude, while end users extended forward coverage. KC wheat closed $.25 – $.30 higher as Mch-23 trading to its highest price in 2 ½ months. Today’s high at $9.13 ¼ is just shy of Fibonacci resistance at $9.18. Chicago Mch-23 reached a 1 ½ month high at $7.90, next resistance is the Dec-22 high of $7.99, followed by the 100 day MA at $8.11 ½. Today’s high in Mch-23 MGEX at $9.35 ¾, just shy of resistance at its 100 day MA of $9.41. Ukraine’s Ag. Ministry reports 2022 wheat harvest at 20.2 mt, no change from last report. IKAR estimates Russia will export a record 46 mmt of wheat in the 2022/23 MY, vs. the USDA forecast of 43.5 mmt. Since last Aug-22 the UN brokered Black Sea Grain deal has been very effective in stabilizing and reducing global food costs. Combined exports from Ukraine/Russia have remained over 25% of the global share. If the grain deal isn’t extended before it expires in March and supplies from the Black Sea are threatened, wheat prices have likely bottomed. Look for added price volatility in coming weeks and months.
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