Written Commentary
SOYBEANS
The soybean complex was mixed. Old crop soybeans were steady to $.03 higher while new crop was up $.06 – $.08. Soybean oil was up 60 – 70, while soybean meal was steady to up $2 ton. Old crop soybean exports at 19 mil. bu. were in line with expectations. YTD commitments at 1.767 bil. are unchanged from YA, vs. the USDA forecast of down 8%. Soybean oil sales at 8k tons were the highest in 4 months. Despite the surge, YTD soybean oil commitments are still down 90% from YA, vs. USDA forecast of down 61%. The USDA also announced the sale of 128k tons (5 mil. bu.) of soybeans to an unknown buyer. Providing support to the soybean complex was AgRural lowering their production forecast for Brazil to 150.9 mmt, down 2 mmt. That is the 2nd downward revision to Brazil’s soy crop this week, both citing lower yields due to drought in RGDS in the deep south. We’ll see if better than expected rains earlier this week will flip these revisions down the road, or if these rains proved to be too little too late. The International Grains Council lowered its world soybean production forecast to 378 mmt, down 7 mmt, just below the USDA est. of 383 mmt. The BAGE reported a sizable drop in crop ratings as only 9% of the crop is rated G/E, down from 13% LW. Probably more significant is the crop rated Poor/VP jumped 8% to 56%. They also cautioned that the potential for an early frost may further damage the drought affected crop. While they didn’t lower their current production forecast of 38 mmt, they implied a lower est. was forthcoming.
CORN
Prices rebounded from midday to close mixed. Old crop futures were within $.01 of unchanged while new crop contracts were down $.01 – $.02. Today’s low in Mch-23 challenged the 100 day MA before a late rebound. Beneficial rains continued to push north thru northern growing regions of Argentina. Rains this week across the northern half of the country have been better than expected and should help stabilze crop prospects. Once this rain event clears a cooler, drier pattern is expected for roughly 1 week before heat returns the closing days of February. The next rain event has been pushed back into early Mch-23. Below normal rains are expected thru the weekend across central and northern Brazil aiding harvest and 2nd crop corn plantings. Above normal precipitation next week will slow down these efforts. Old crop exports at 40 mil. bu. were in line with expectations however will need to see improvement soon or face lower revisions from the USDA. YTD commitments are down 40% from YA, vs. the USDA forecast of down 22%. China has agreed to allow the planting of GMO corn seed on 660k acres this Spring. While this is an important first step in China’s long term goal of becoming more food self-sufficient, this represents less than 1% of their expected acres, disappointing to the seed industry with the slow roll out. According to USDA data, corn yields in China have averaged 6.3 tons/hectare (100 bpa) in the last 5 years, while US yields have averaged 10.9 tons/hectare (173 bpa). While I doubt Chinese farming efficiencies will ever match that of the US, allowing GMO seed is a first step in narrowing the huge gap. The IGC lowered their 2022/23 corn production forecast by 8 mmt to 1.153 bil. mt, putting them in line with the USDA’s Feb-23 forecast of 1.151 bil. mt. The BAGE reported crop conditions slipped to 11% G/E, down from 20% LW. 45% of the crop was rated Poor/VP up from 34% LW.
WHEAT
Prices were mixed with Chicago down $.03 – $.04 while both KC and MGEX were up $.04 – $.06. Export sales at 8 mil. bu. were at the low end of expectations of 6 – 16 mil. Old crop commitments at 607 mil. bu. are down 5.5% from YA, vs. the USDA forecast of down 3%. The IGC left their 2022/23 global wheat production forecast unchanged at 796 mmt, above the USDA forecast of 784 mmt. US winter wheat areas in drought slipped to 57% LW, down 1% and well below the peak of 75% last Nov. US spring wheat in drought held steady at 64%, below its peak of 79% in late Oct-22.
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