Written Commentary
SOYBEANS
Soybean and soymeal futures shot higher on short covering. This could be due to escalation of tension in Ukraine. Soybean futures are a tale of 2 markets. It feels like no one wants to be short soybean and soymeal futures. This despite talk that a change in South America weather could reduce chance of addition crop losses. Some now even estimate Brazil soybean crop at 130 mmt versus some estimates as lows as 124. There is also talk that China has sold 4 mmt of soybean from the reserve and are going to sell another 4 mmt. That would give them a month’s worth of supply and reduce the need to buy old crop US soybeans. Most doubt USDA will make big bullish changes to their Outlook numbers tomorrow. Soyoil futures are higher on higher palmoil prices and talk of higher US biodiesel demand. If not for Ukraine, nearby soybean futures may be close to a short term objective.
CORN
Corn futures traded higher. Feels like corn futures are following wheat and soymeal. CK tested 6.80. Next resistance is 7.00. Most consumers are still short hoping for a break in prices before US planting season. US corn export are behind last year but many forecast March through June demand for US corn could be record high. World especially EU depends upon Ukraine corn exports. USDA may not change numbers to bullish until May. USDA is using a baseline US 2022/23 corn acres at 92.0 and yield 181.0 This would suggest back to back record US corn yield which has never happened. USDA is also using US 2022/23 total corn demand at 14,830 versus some closer to 15,035. Key could be the Carryin. USDA is using 1,540 mil bu while most are at 1,200. 1,200 carryin would suggest A carryout of 1,100 vs USDA baseline estimate of 1,952. EU corn prices continue to rally. EU needs 4-5 mmt of Ukraine exports to satisfy demand. Some feel a war in Ukraine Could reduce the 15 mmt of corn that the World needs to import from Ukraine to satisfy demand. This could shift some demand to US. This could also increase wheat feed demand especially in EU. Brazil domestic corn prices have reached a record $8.25. This could limit Brazil corn exports.
WHEAT
Wheat futures traded sharply higher. WK is near 8.84. Next resistance is 9.00. KWK is near 9.16. Next resistance is 9.50. MWK is near 10.02. Domestic flour buyers say consumers still buying bread products. This with even higher prices. USDA could be 15 mmt too high in World supply and exports even if there is no war in Ukraine and 4-5 mmt too low in World imports. This week Nigeria bought US old crop and new crop HRW. Wheat is still trading mostly Ukraine news with Ukraine declaring a state of emergency and government is seeing cyber-attacks. What will Putin’s next move be? USDA lowered this week KS wheat crop rating to 26 pct G/E vs 30 last month and 40 last year. USDA also dropped OK crop to 9 pct G/E vs 16 last month and 48 last year. TX wheat crop is still rated 10 pct G/E vs 40 last year. Only 20 pct of US HRW soils have adequate topsoil; moisture vs 50-70 last year. NOAA 90 day US south plains forecast called for below rains and above temps.
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