Written Commentary
SOYBEANS
Old crop soybean futures closed $.06 – $.09 higher while new crop contracts are slightly lower. Mch-23 closed slightly above May-23 after trading to a $.03 inverse intraday. While frequent rain all growing season across north and central Brazil has boosted crop potential, it may have also slowed crop maturation and early harvest efforts. Something to keep an eye on as the US export window is expected to close soon. There were no export sale announcements. Resistance in Mch-23 at $15.37 ½ just above today’s high of $15.33. Short term look for Mch-23 to take out the Dec-22 high possibly challenging the June22 contract high of $15.72 ¼. Crush margins narrowed this week with spot soybeans up $.35 bu. while both products were slightly lower. The BAGE reports soybean plantings have reached 89%. They lowered their planted acres to 16.2 mil. HA, down from 16.7. They also slashed their production forecast to 41 mmt, down from 48 mmt. Crop conditions in Argentine continue to deteriorate with G/E down to 4% from 8% LW. 56% of the crop is in Poor/VP condition, up from 38% last week. Yesterday the USDA lowered their forecast 4 mmt to to 45.5 mmt. China’s General Administration of Customs reports Chinese soybean imports surged to 10.55 mt in Dec-22, up from 7.35 mt in Nov-22 and up 19% from Dec-21. This is the highest monthly import figure in 18 months. Despite the Dec-22 surge 2022 imports at just over 91 mmt were down 5.6% from 2021. Recall yesterday the USDA lowered their 2022/23 Oct thru Sept MY Chinese import forecast 2 mmt to 96 mmt. In the first 3 months Chinese imports are just over 22 mmt, well below the pace needed to reach the lowered forecast. Whether China reaches the current forecast will depend on their ability to recover from their recently lifted Covid restrictions. Dec 1st soybean stocks at 3.022 bil. bu. were 123 mil. bu. below expectations and 125 mil. below YA. Dec 1st stocks are 197% of the Sept/Nov usage, steady with YA, however well above the 164% from the 2020/21 MY.
CORN
Prices closed higher gathering support from the strong soybean market. Mch-23 closed above its 100 MA, next resistance is the Dec-22 high at $6.85. Corn prices seem stuck between soybean prices that want to move higher, and wheat prices that are likely to grind sideways to lower. The USDA was aggressive in lowering their export forecast yesterday, down 150 mil., they made no change to their usage for ethanol. We believe usage for ethanol will slip another 50 – 100 mil. bu. With the big jump in winter wheat acres it may be difficult to see a big jump in US corn plantings this Spring. Recall in the Nov-22 baseline estimates the USDA projected 2023 corn seedings at 92 mil. acres, up 3.4 mil. from 2022. The BAGE reported corn plantings advanced to 83%, up 13% for the week. They also lowered their planted acres to 7.1 mil. HA, down from 7.3 mil HA. Corn conditions also continue to deteriorate with G/E at 7% down from 13% LW, while 47% of the crop is poor/vp, up from 32% LW. The USDA’s revised forecast for Argentine corn at 52 mmt is likely still too high as several private forecasts are in the mid 40’s. Ukraine’s 2022 corn harvest has reached 85% of the 3.6 mil. HA planted (8.9 mil. acres) with volume reaching 23.5 mmt. Seems in line with the USDA production forecast of 27 mmt. US Dec 1st corn stocks at 10.809 bil. bu. were 378 mil bu. below expectations and down 832 mil. from YA. It was also the lowest Dec 1st stocks figure in 9 years. At 251% of Sept/Nov usage, it actually rose from 249% YA and up from 238% 2 years ago. Implied Sept/Nov usage at 4.303 bil. was the lowest in 5 years.
WHEAT
Both Chicago and MGEX wheat closed very near unchanged. KC closed $.07 – $.09 higher. Not much fresh news in wheat. Cheap wheat from the Black Sea continues to leave the US non-competitive in the global market. USDA will not raise the Russian wheat forecast keeping it at 91 mmt, vs. most private estimates at or over 100 mmt. HRW wheat has found its way into feed rations in the far western corn belt as last years reduced corn crop keeps basis sky high. If you assume slightly above normal abandonment to the US winter wheat planted acres and trendline yield of 48.5 bpa, above YA 47 bpa, production reaches 1.40 bil. up 317 mil. from YA. Sideways to lower until something comes along to trigger short covering in Chicago wheat.
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