Written Commentary
Ag Market View for June 2.23
June 2, 2023
SOYBEANS
The soybean complex closed lower across the board. Soybeans prices were down $.08 – $.18 led by declines in spot May-23. Soybean meal was down $3 – $6, while soybean oil was 55 – 85 lower. May-23 briefly penetrated both its 50 and 100 day MA resistance above the market, however failed to trade back above the $15.00 level before pulling back. Prices continued to weaken into the close closing below support at $14.75, while also was the low end of our expected trading range for nearby futures. Additional imports from Brazil exist as long as US prices remain at a $90 – $95/mt premium. AgRural estimates Brazil’s harvest has reached 92%, having now caught up with the pace from YA. Once the supply pressure from Brazil lets up I suspect basis will recover helping US prices stabilize in the process. Export inspections at 14 mil. bu. were at the low end of expectations and the lowest in 7 months. YTD inspections however are still up 1% from YA, vs. the USDA forecast of down 7%. Stats Canada report on Wed. is expected to show canola acres at 21.8 mil. up slightly from 21.4 mil. YA. Soybean acres expected at 5.3 mil., same as YA. Argentina imported a record 1.3 mmt of soybeans in Mch-23, with 83% of these imports coming from Paraguay. Friday’s CFTC report showed MM’s were net seller of just over 3k contracts of soybean oil, while being buyers of nearly 10k soybeans and just over 10k soybean meal. The speculative short position in soybean oil at 15,743 contracts is the largest since Sept-2019.
CORN
Prices were down $.08 – $.12 in old crop, while new crop contracts were mixed. After surging to $.53 ½, May’s premium to July has pulled back to $.43 ¾ at today’s close. The USDA announced the cancellation of 327k tons of corn to China. Export inspections at 36 mil. bu. were at the low end of expectations. YTD inspections are down 36% from YA, vs. the USDA forecast of down 25%. Canadian corn acres expected are expected to increase to 3.7 mil. up from 3.6 mil. YA. Ukraine’s Ag. Minister estimate 2022/23 (July-22 thru June-23) grain exports at 40.7 mmt as of today, down from 45.7 at this point YA. Of this corn exports were 24 mmt. The USDA estimates Ukraine’s corn exports at 25.5 mmt for the 22/23 MY. MM’s were net buyers of just over 22k contracts last week, extending their long position to 49,434 contracts.
WHEAT
Wheat prices also backed up from earlier strength closing lower in all 3 classes. Chicago was down $.10 – $.18, KC down $.07 – $.09, while MGEX was $.04 – $.05 lower. Spot Chicago dropped to its lowest level since July-21. KC May-23 premium to Chicago has jumped $.10 to $1.89 ½. I look for this to take out the previous record high of $2.01 this week. Weekend low temperatures in the mid to upper teens across NW Kansas and Nebraska likely caused damage the HRW wheat crop. The extend of the damage will not to be determined for days if not weeks. Look for modest rating declines in this week’s condition report. Good rains are still forecast for this week. Time will tell if it was too late to salvage much of this year’s crop. Export inspections at 13 mil. bu. were in line with expectations and the weekly amount needed to reach the USDA export forecast. YTD inspections are down 3% from YA, in line with USDA. Stats Canada expected to show 2023 all wheat acres at 26.3 mil., up from 25.4 mil. YA. MM’s were modest buyers in both Chicago and KC wheat last week. The MM’s short position in Chicago was just below 103k contracts, while their long position in KC nearly reached 10,600 contracts.
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