Written Commentary
SOYBEANS
The soybean complex closed mixed with soybeans steady to up $.04, soybean meal up $1 – $2, while soybean oil was down 20 – 30. Before today’s USDA data Conab raised their Brazilian soybean forecast to 152.9 mmt, up .2 mmt. In addition the Rosario Grain Exchange slashed their Argentine production forecast to 34.5 mmt, down from 37.0. The USDA held their Brazilian soybean forecast steady at 153 mmt, while lowering their Argentine forecast by 4.5 mmt to 41 mmt, at the low end of expectations. Argentine soybean exports were cut 1.5 mmt, while Brazil exports rose 1 mmt. The only change to the US balance sheet was a 15 mil. bu. reduction to crush, raising ending stocks to 225 mil. bu. Lower crush led to lower product production. Soybean oil exports were cut 100 mil. lbs. more than offsetting the lower production resulting in ending stocks increasing to 1.936 bil. lbs. The reduced soybean meal production was offset by a 200k ton reduction in domestic usage. As we expected the USDA left their export forecast unchanged at 1.990 bil. bu. While price has been shifting global demand to SA, current export commitments are still up 5% from YA, vs. the USDA forecast of down 8%. By holding off this gives the market another month to measure what impact China’s reopening may have on soybean demand and to see if any addition harvest delays impacts supplies from Brazil. US stocks remain tight at 225 mil. bu. while stocks/use ratio at 5.2% is the lowest in 7 years. Despite the lower production from Argentina, global stocks are still expected to jump this year
CORN
Prices closed $.02 – $.04 higher in 2 sided traded. Mch-23 cannot get to far away from it’s 100 day MA. While nothing in today’s data stood out as bullish, nothing was particularly bearish either. That said it appears we’re back to trading the same things we were before the report. South American weather seems to be improving however most private production forecasts are still below today’s downwardly revised USDA estimates. Still awaiting indications from China on their economic recovery and demand implications following the lifting of Covid restrictions. Prior to today’s USDA report Conab lowered their Brazilian corn production est. by 1.4 mmt to 123.7 mmt, below expectations for an increase to 127 mmt. The Rosario Grain Exchange also cut their Argentine corn production forecast to 42.5 mmt, down from 45 mmt. The USDA held their Brazilian corn forecast steady at 125 mmt, while lowering their Argentine forecast by 5 mmt to 47 mmt. The USDA simply shifted 3 mmt of corn exports from Argentina to Brazil. The USDA also increased Ukraine’s exports 2 mmt. The only change to the US balance sheet was a 25 mil. bu. cut to ethanol production, raising ending stocks to 1.267 bil. Ethanol production last week slipped to 1,000 tbd, down from 1,017 tbd the previous week. There was 100 mil. bu. of corn used in the production process last week. As we expected the USDA left their export forecast unchanged at 1.925 bil. bu. While current export commitments are still down 43% from YA, vs. the USDA forecast of down 22%, I believe the window for the US being competitive in the global market will stretch into late Spring or early summer until more is known about the 2nd crop in Brazil. Holding off also gives the market another month to measure what impact China’s reopening may have on global corn demand. US corn stocks remain snug at 1.267 bil. bu. Stocks/use at just over 9%, in line with the past 3 years. Global stocks excluding China remain tight at 88 mmt, down 9 mmt from YA. Global stocks/use remain just above 10%.
WHEAT
Prices closed higher in all 3 classes. Chicago led the way closing up $.10 – $.15. Both KC and MGEX were up $.06 – $.10. Complaints from Russia that the EU isn’t doing enough to unlock Russia grain exports under the negotiated UN deal led to a jump in war premium. Mch-23 KC recorded its highest close, ($8.96) in just over 2 months as dry conditions persist across the US Southern plains. Next resistance for Mch-23 is the 100 day MA, currently $9.04 ¼. Very modest changes in wheat consumption led to ending stocks increasing 1 mil. bu. to 568 mil. There were some by class changes of note. SRW stocks increased 12 mil. bu. to 102 mil. White wheat stocks slipped by 11 mil. while HRW stocks were down 1 mil. bu. Global production changes of note were Australia up 1.5 mmt to 38 mmt, while the USDA finally increased their Russian production forecast, however by only 1 mmt to 92 mmt. Many private estimates are between 100 – 105 mmt. US wheat ending stocks are the lowest in 15 years, while stocks/use at 30% the tightest in 9 years. Since peaking 3 years ago, global stocks continue their modest decline.
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