Written Commentary
Ag Market View for June 2.23
June 2, 2023
SOYBEANS
The soybean complex was lower across the board as soybeans were down $.12 – $.20, soybean meal down $4 – $6, while soybean oil was 90 – 100 lower. May-23 premium to July has reached $.38 today, just shy of the $.39 ½ high made in early April. May-23 made a new low for the month. Next support is at $14.77 ½. US soybean prices remain $90 – $95/mt over Brazil, threatening additional imports. Shipping data from Brazil shows just over 79k mt of soybeans have been booked for shipment to the US. Earlier this week I wrote how the $100+/mt premium for US soybeans was the highest since 2004. Brazilian harvest likely surpassed 90% this week. The BAGE lowered their Argentine production forecast another 2.5 mmt to 22.5 mmt, well below the official USDA est. of 27 mmt. Harvest has reached 17%, up from 4% LW. Argentina’s soybean crush in March reached 2.1 mmt, down from 2.9 mmt YA, however well above the 1.5 mmt crushed in Feb-23. In the 3rd preferred currency program Argentine farmers to date have only sold 832k mt, well below the 2.05 mmt sold in Dec, and the 4.76 mmt sold last Sept. Of the 6.85 mmt of soybeans China imported in Mch-23, 4.83 mmt were from the US, a jump of 43% from Feb. Imports from Brazil fell 42% to only 1.67 mmt as harvest was delayed. Spot board crush margins continue to soften up closing this week at $.84 bu., closing in on last summer low. Look for US plantings to reach 10 – 14% in Monday’s crop progress report.
CORN
Deferred contracts were down $.09 – $.10, while spot May-23 closed only $.00 ½. Firm basis continue to support bull spreads as farmers are tightening their grip on old crop supplies in the face lower prices. Also the threat of Brazilian imports seem to be weighing on corn and soybean valuations. Given the extended wait times at SA ports however, this does little to solve the US tightness in the short term. May’s inverse over July surged to a new high at $.48 ½ exceeding the YA high of $.45. In 2021 that same spread peaked at $.73 over July on FND. Strength that year was fueled by strong Chinese buying. May recovered from a midday challenge of its 100 day MA at $6.57 ¼. For the week May-23 was down only $.03, while Dec-23 was down $.12. I was surprised with the weakness in new crop given the less than favorable forecast for planting progress. Look for planting progress to reach 16 – 20% in Monday crop progress report. The BAGE held their Argentine production forecast steady at 36 mmt, vs the USDA forecast of 37 mmt. Harvest advanced only 2% in the past week to 15% complete. South Korea’s MFG purchased 69k mt of feed wheat from SA origin, likely Brazil, at $267/mt for Sept delivery. South Korean Nonghyup Feed also purchased 137k tons of feed corn at $268/mt CF for Aug/Sept delivery. Ukraine official state that with the BSGI in doubt their access to the Danube River ports will be critical to their agricultural exports. Of the 2.190 mmt of corn China imported in March, roughly 22.5%, 495k mt were from the US. Today’s COF showed cattle inventories at 96% of YA, just above expectations of 95%.
WHEAT
Prices are down in all 3 classes with KC and MGEX down $.06 – $.09, while KC was able to recover closing steady to down $.02. Both May-23 Chicago and MGEX traded down to 4 week lows. Confidence is increasing that the US southern plains will benefit from its best rains in months by this time next week. Ukraine’s Ag. Minister states 1 mil. hectares of spring grains have been planted down from 1.53 mil. HA YA. Nearly 57% of the grain planted so far has been barley. Spring wheat planting at 169.2k HA is actually up from 164.4 YA. IKAR forecasts Russian 2023 wheat production in 2023 at 84 mmt, while exports should reach 41 mmt. Their export forecast is down from 46 mmt for the 2022 crop. Most private Russian wheat forecast are running in the mid 80’s mmt, however the Russian Ag. Ministry is only forecasting production at 78 mmt. The BAGE reports they expect wheat acres to reach 6.7 mil. HA in 2023, up from 6.1 mil. YA. May-23 KC inverse to Chicago recovered today closing at $1.79, still well below its recent all time high of $2.01.
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