Written Commentary
SOYBEANS
The soybeans complex was higher across the board. Soybeans were up $.10 – $.15, soybean meal was up $2 – $3, while soybean oil was up 80 – 100. While there were no announced export sales today, however there were rumors of Chinese interest. The soybean complex was firm the entire session fueled by rumors of Chinese demand and a strong economic report from China. The Chinese purchasing managers index jumped to 52.6 in Feb-23, up from 50.1 in January. The increase was larger than expected and showed a 2nd consecutive month of expansion in the manufacturing sector. Expectations for tomorrows weekly export sales are soybeans 15 – 35 mil., soybean meal 100k – 325k tons, and soybean oil 0 – 12k tons. Deliveries against Mch-23 soybeans were 178 contracts, down from 411 yesterday. No meal deliveries while soybean oil deliveries were again 8 contracts. Brazil’s soybean exports for Feb-23 totaled 5.2 mmt, down from 6.27 mmt in Feb-22, however well above the .852 mmt in Jan-23. US soybeans crushed in Jan-23 at 191.1 mil. bu. were slightly above expectations of 188 – 191, however down from 194.3 mil. bu. crushed in Jan-22. In the first 5 months of the Sept-22 thru Aug-23 MY crush volume has reached 932 mil. bu. down 1% from YA, vs. the USDA forecast of up 1%. In order to reach the current USDA crush forecast of 2.230 bil. bu. crush Feb-23 thru Aug-23 will need to reach a record 1.298 bil. bu. After lowering their crush forecast by 15 mil. bu. in Feb-23, the current USDA forecast still looks a bit high.
CORN
Very choppy trade in nearby corn futures today. After a lower start prices surged back at midday on rumors of Chinese interest in US corn and sorghum. Talk has surfaced they may have purchased 3 – 4 cargoes of corn and up to 300k tons of sorghum. Old crop futures closed from $.03 ½ – $.11 higher. New crop contracts were steady to down $.01. Spot Mch-23 held key support at the Dec-22 low of $6.23 on the spot weekly chart. Not much change in South American weather. Widely scattered showers are possible the next 24-36 hours in Central Argentina before a week of hot dry weather. Normal to below normal moisture in central and northern Brazil should enable soybean harvest and corn plantings to accelerate. Expectations for tomorrow’s weekly export sales are 20 – 40 mil. bu. Brazil’s corn exports in Feb-23 at 2.28 mmt were down from 6.39 mmt in Jan-23, however well above the .767 mmt in Feb-22. Brazil’s corn exports moving forward the next few months will be minimal until the arrival of their 2nd crop harvest this summer. Ethanol production slipped to 1,003 tbd last week, below expectations and below the pace needed to reach the USDA corn usage forecast. Ethanol stocks slipped to 24.8 mil. barrels, down from 25.6 mb last week and are just below YA stocks at 24.9 mb. Implied weekly gas demand last week was up 4% from YA, the largest YOY increase since June-22. The EPA formally purposed rules to allow the sale of E-15 gasoline in certain midwestern states during the summer months beginning in 2024. Obviously this will have no impact on the 2022/23 balance sheet. The monthly USDA grain crush report showed 444 mil. bu. of corn was used in Jan-23 for the production of ethanol. In the first 5 months of the Sept-22 thru Aug-23 MY corn usage has reached 2.152 bil. bu., down 6% from YA vs. the USDA forecast of down only 1%. In order to reach the current USDA corn usage forecast, 3.1 bil. bu. will need to be used Feb-23 thru Aug-23, up only 1.8% from YA.
WHEAT
Prices were mixed as Chicago and KC both closed $.03 – $.05 higher, while MGEX was down $.02 – $.04. Prices held above their recent lows in uneventful trade. Deliveries against Mch-23 contracts were 580 Chicago, down from 910 yesterday and 234 KC, down from 245. SovEcon lowered Russia’s 2023 wheat production est. to 85.3 mmt, down.7 mmt from previous estimate and down from 104 mmt in 2022. Russia has indicated they would only agree to renewing the Black Sea Grain Initiative if their agricultural good and fertilizers have “unhindered access to global markets.” Tomorrow’s export sales report is expected to range between 6 – 18 mil. bu.
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