Written Commentary
SOYBEANS
The soybean complex closed mixed with soybeans up $.01 – $.02, soybean meal was up $4 – $6 making new contract highs in old crop, while soybean oil was sharply lower in sympathy with energy prices. Spot board crush margins improved slightly this week driven by surging soybean meal prices. Soybean meal product value surged to nearly 63%, its highest level in 2 years. I like being short old crop soybeans above $15.25 looking for move below $14.75. Use a stop just over $15.50 in case Argentina misses out on rains thru the end of Feb. Spot soybean oil below $.60 should provide good value with biodiesel capacity expanding quickly this year. The USDA announced the sale of 132k tons (5 mil. bu.) of new crop 2023/24 soybeans to an unknown buyer. The BAGE reports Argentine soybean conditions improved again this past week. G/E improved 5% to 12%. Fair improved 3% to 42%. Poor/ VP fell 8% to 46%. 48% of the soybean crop is blooming, vs. 64% YA and long term average of 68%. They left their production forecast unchanged at 44.5 mmt, vs. USDA at 45.5 mmt. Another private est. today place production at 40 mmt. Safras & Mercado estimate Brazilian farmers have sold only 30.5% of this year’s crop, below YA and historical average of 45%. Brazil’s harvest is 6% as of Feb. 1st, nearly 1 week behind normal. Traders are not expecting any change to US stocks in Wednesday’s USDA WASDE report. Argentine production expected to drop another 4 mmt.
CORN
Prices closed $.01 – $.02 higher in volatile 2 sided trade. Mch-23 can’t seem to get too far away from its 100 day MA at $6.74 ½. I maintain spot corn is range bound between $6.50 – $6.90 until we have a better handle on US 2023 acres and Brazil’s 2nd corn crop. A dry pattern is expected over Argentina for at least the next week. Their next rain event isn’t expected until next weekend or early the following week. Temperatures are expected to be normal the next few days with above normal temperatures arriving early next week. No major issues with Brazil’s weather outside some harvest delays in northern Mato Grosso. Harvest in other areas is accelerating. The BAGE reports Argentine corn conditions improved last week with 22% of the crop G/E up 10%. Fair slipped 3% to 46%. Poor/VP fell 8% to 31%. 35% of the crop is silking vs. 40% YA and long term Ave. of 42%. 2% of the crop is mature vs. 6% YA. Ukraine’s Ag. Minister reports 91% of their 2022 corn crop has been harvested, with volume reaching 25.9 mt so far. Consistent with the USDA forecast of 27 mt. Late Wed. Brazil’s Ag Ministry ended its ethanol import tax exemption. The tax will be 16% thru the end of 2023, before rising to 18% next year. Without the tax exemption ethanol exports to Brazil, the largest importer of US ethanol, will likely end. Roughly 6% of the 2nd Brazilian crop has been planted, down from the 5 year average of 10%. Harvest of the 1st crop at 10% is just above the 5-year average of 7%. Traders expect a slightly boost to US ending stocks next week, while Argentine production expected to drop 4 mmt
WHEAT
Prices closed lower in all 3 classes experiencing volatile 2 sided trading. Chicago and MGEX closed $.02 – $.04 lower, while KC was down $.07 – $.08. Like corn, Chicago Mch-23 reverted back to its 50 day MA at $7.56 ½. In Egypt’s latest tender they purchased 535k mt from Russia with an average price of $323.70/mt CF for Feb/Mch shipment. Ukraine’s Ag. Minister estimates 2022 wheat harvest at 20.2 mt vs. USDA est. of 21 mmt. IKAR has lowered their 2023 Russian wheat production est. by 3 mmt to 84 mmt. SovEcon maintains their 2023 Russian forecast at 86 mmt. Both of these 2023 forecasts are below their 2022 est. at just over 100 mmt. Russia’s Ag Ministry raised their export tax for wheat by 3% to 4,496.6 roubles/mt for the period ending Feb.14th. Cheap Russian wheat continues to halt any rally attempt. Traders expect a slight uptick in US wheat ending stocks.
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