Written Commentary
Ag Market View for June 2.23
June 2, 2023
SOYBEANS
The soybean complex was lower across the board with soybeans down $.10 – $.20, soybean meal down $2 – $5, while soybean oil was 50 – 85 lower. May-23 traded to its lowest level in 4 weeks, next support is the Mch-23 low at $14.05. Spot soybean oil traded down to a 5 week low holding just above the Mch-23 low of 51.28. Next support is the low from Dec-21 at 51.00. After the close on Fri. the EIA reports their monthly Biofuels Capacity and Feedstocks Update for Feb-23. Key from this report will be how much expansion we see in Renewable Diesel capacity and the monthly soybean oil usage data. US soybean prices remain $90 – $95/mt over Brazilian prices, which continues to threaten prospects for more imports. Brazil’s exports in April-23 are expected to reach 14.7 mmt, down from last week’s est. of 15.2 mmt. Dr. Michael Cordonnier lowered his Argentine production forecast 1 mmt to 23 mmt, vs. the USDA forecast of 27 mmt. US planting progress advanced 5% last week to 9%, in line with expectations and above YA pace of 3% and 5-year Ave. of 4%. Southern state continue to run above their 5-year Ave. with AR – 34% vs. 15%, LA – 41% vs. 25%, MS – 34% vs. 25%, and TN – 16% vs. 3%. Illinois also made good progress at 15% vs. 6% Ave. Stats Canada tomorrow is expected to show a .5 mil. acre increase in canola acres from YA to 21.8 mil.
CORN
While spot May-23 closed $.04 ¾ lower, deferred contracts all recovered to close with modest gains on the day. The May/July spread narrowed into $.39 at today’s close, well off the $.53 ½ high set yesterday. May-23 held support above the April low at $6.40 ¼. Markets seem to be unfazed by prospects the Black Sea Grain Initiative will expire in just over 3 weeks as Ukraine’s agricultural exports typically wind down in the late spring and summer months. Russia’s latest claim is that Ukrainian attacks on their vessels in the Black Sea is another reason for not wanting to extend the BSGI. Ukraine has denied these claims. Planting progress advanced only 6% to 14% complete, at the low end of expectations however still above the 7% pace from YA and the 5-year Ave. of 11%. By next week the average planting pace jumps to 26%, a figure we may very easily fall short of. The extended 11 – 14 day forecasts however seem to be leaning toward a warmer drier outlook. APK Inform analysts are forecasting 2023 Ukraine corn production at 22.9 mmt, down from the 2022 USDA forecast of 27 mmt. They see exports slipping to 18.2 mmt, down from the USDA forecast of 25.5 mmt from the 2022 crop. This was supposed to be the timeframe ahead of Brazil’s 2nd corn harvest where US sales catch up. YTD commitments are still down 32% from YA, vs. USDA forecast of down only 25%. Without new sales soon it will only get worse once the Chinese cancellations are factored in. Brazil’s 1st corn harvest is 88% complete, matching the YA level. At the moment US corn prices are $30 – $35/mt over Brazil for June, and $45 – $50/mt in July. Weekly ethanol production tomorrow is expecting a modest decline from last week’s production pace of 1,024 tbd.
WHEAT
Prices were lower in all 3 classes today with MGEX and Chicago both $.03 – $.05 lower, while KC was down $.12 – $.15. Spot Chicago futures have slipped to their lowest level since July-21. So far both KC and MGEX have held well above their Mch-23 lows. Winter wheat crop conditions slipped 1% in G/E to 26%, holding just below 27% from YA. Fair also slipped 1% while poor increased 2%. 42% of the crop is rated poor/VP, above the 39% from YA. The overall CC rating continues to run just below YA. 18% of the crop is headed, vs. 10% YA and 5-year Ave. of 14%. Spring wheat planting advanced only 2% to 5% complete, well behind the 12% pace from YA and 5-year Ave. Stats Canada expected to show 2023 all wheat acres at 26.3 mil., up from 25.4 mil. YA. APK Inform analysts are forecasting 2023 Ukraine wheat production at 16.2 mmt, down from the 2022 USDA forecast of 21 mmt. They see exports slipping to 8.8 mmt, well below the USDA forecast of 14.5 mmt from the 2022 crop. Tunisia is seeking 75k mt of optional origin milling wheat in a tender which closes tomorrow.
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