Ag Market View for May 15.23
The soybean complex was mostly higher with beans finishing $.07 – $.11 higher, soybean meal down $1 – $2 in nearby futures, with back months up $2 – $3, while soybean oil was 20 – 30 higher. July-23 managed to close above the $14 level, however was well off the early session highs. Last week money managers were net sellers of just over 7,900 contracts of soybeans, while being net buyers of 10,250 soybean oil and just over 1,700 meal. This morning’s export inspections at only 5 mil. bu. were a new MY low and well below the 16 mil. bu. needed per week to reach the USDA export forecast of 2.015 bil. bu. YTD commitments are down 1% from YA, vs. the USDA forecast of down 7%. The USDA reported the sale of 100k tons of old crop soybean meal to Poland. NOPA crush in April-23 at 173.2 mil. bu. was slightly below the average trade est. however within the range of guesses. Total implied crush for April-23 is forecast at 183.5 mil. bu., which if realized would be a new record high for the month. Crush in the first 8 months of the MY has reached 1.491 bil. just a few mil. bu. below YA, vs. the USDA forecast of up 1%. In order to reach the current USDA crush forecast of 2.220 bil. bu. crush May thru Aug will need to reach 729 mil. bu. above the previous record for the last 4 months of the MY of 717 mil. This appears unlikely given the recent slump in crush margins. Today’s data continues to suggest the USDA forecast is a touch too high. Soybean oil stocks rose to 1.957 bil. lbs. up from 1.851 bil. the previous month and was above the range of est.
Prices were $.05 – $.08 higher. With no agreement being made to extend the Black Sea Grain Initiative and no additional talks scheduled, it appears highly probable the agreement will expire later this week. Heaviest rains this week to favor Southern KS and OK across the midsouth thru the Ohio Valley region. The northern plains are expected to only see modest rains and warming temperatures, exactly what is needed to enable planting operations to resume. July-23 stopped just shy of last week’s high of $6.00 before pulling back. Next resistance is the 50 day MA, currently $6.12 ¾. MM’s last week were net buyers of 8,500 contracts of corn reducing their short position to 110k contracts. Export inspections at 46 mil. bu. were at the high end of expectations and in-line with the weekly level needed to reach the revised USDA forecast of 1.775 bil. There was 19 mil. bu. destined for China, which is supportive since they cannot cancel what’s already been shipped. In their first look at the global 2023/24 MY balance sheet the USDA has production among the top 4 exporters rebounding to 593 mmt, up from 543 mmt last year. Record production is being assumed in the US and Argentina, while Brazil is expected to be off 1 mmt from this year’s record harvest of 130 mmt. These 3 are expected to more than offset Ukraine’s production forecast at 22 mmt, down from 27 mmt this year, and just over half of the 42 mmt crop from 2 years ago. Stocks to use among the top 4 exporters is expected to rise for the 3rd consecutive year to 11.5%, the highest in 5 years.
Prices were $.21 – $.27 higher across all 3 classes. KC July-23 surged above $9, its highest level in nearly 6 months before pulling back. The surge in MGEX July-23 has stalled near its 100 day MA near $8.74. Chicago July-23 near $6.60 is right at the midpoint of the mid-April high and the May low. MM’s were net buyers last week of 9,400 Chicago wheat reducing their short position to 117k. They were also net buyer of nearly 13K KC wheat, flipping their net position back around to net long 7.5k contracts. Export inspections at 9 mil. bu. were in line with expectations. YTD inspections are down 3% from YA, in line with the USDA forecast. Global production among the top 7 exporters is forecast to fall 10 mmt in the 2023/24 MY. As a result stock/use is projected to slip to just under 14%, its lowest level in over a decade.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.