Ag Market View for Jan 9.23

SOYBEANS

The soybean complexed closed mixed with soybeans and meal lower, while soybean oil was slightly higher.  Export inspections at 53 mil. bu. were in line with expectations, down 2.5% from the previous week.  YTD inspections are down 5% from YA, in line with the current USDA forecast.  We look for the USDA to lower their soybean export forecast 20 – 30 mil. bu.  Soybean meal prices closed $5 – $7 lower.  Fridays CFTC report showed Money Managers were holding a record long position at nearly 142,000 contracts as of last Tues. Jan. 3rd.  Given the extreme length by speculative traders, soybean meal in vulnerable to price correction, particularly if rain starts falling in Central Argentina.  Soybean oil prices closed 20 – 40 higher.  Crush margins remain historically strong, we expect no change to the USDA crush forecast of 2.245 bil. bu. despite the 1st Qtr. pace being below expectations.  Probably the most anticipated feature to Thursday’s reports will be the Argentine production forecasts.  Surveyed expectations as reported by wire services expect soybean production to be cut 3 mt to 46.5 mt, down from 49.5 mt in Dec-22.  I would not be surprised to see the USDA not make such an aggressive cut this early.  Not much change expected for the 2022 US crop as the average estimate for 4.357 bil. bu. is up 11 mil.  Barring a significant change to SA weather or the war in Ukraine look for choppy range bound trade between $14.60 – $15.00 basis Mch-23 futures until Thursday’s numbers.    

detassling corn

CORN

Prices closed $.01 lower.  Export inspections at only 16 mil. bu. were below expectations of 20 – 35 mil. and down 42% from the previous week.  YTD inspections at 394 mil. are down 29% from YA, vs. the USDA forecast of down 16%.  We look for the USDA to lower their current export forecast of 2.075 bil. by another 50 – 75 mil.  Speculators were a sizable buyer of corn last week with Friday’s CFTC report showing Money managers added just over 37,000 contracts, extending their long position to 196,457 contracts, their largest position in 2 months.  Since speculative selling has reduced the position size.  Ukraine’s Ag. Minister reports corn exports have reached 13.3 mt since July-22.  In Jan-18 the USDA held their Argentine production forecast steady at 42 mt.  That year’s drought triggered a 3 mt drop in production in Feb, Mch, and April.  Ultimately Argentina’s final production at 32 mt was down 24% from the Jan forecast.  Unlike soybeans that year, production losses in Argentina weren’t offset by increases in Brazil.  Drought conditions in 2018 extended in Brazil in the late Spring months negatively impacting their 2nd corn crop.  The average est. for US production is for a 30 mil. bu. drop to 13.90 bil.  Our estimate if for a 75 mil. bu. increase to just over 14 bil.  Look for range bound trade $6.40 – $6.65 basis Mch-23.

WHEAT

Prices closed mixed with Chicago and KC $.01 – $.03 lower, while MGEX steady to $.02 higher.  Export inspections at 7 mil. bu. were in line with expectations of 6 – 16 mil. and were more than double last week’s historically low figure of 3 mil. bu.  YTD inspections are down 3% from YA, in line with the current USDA forecast.  Ukraine’s Ag. Minister report wheat exports since July-22 have reached 8.6 mt.  The average est. for US winter wheat acre’s is 34.5 mil., up 1.2 mil. from YA.  If realized winter wheat acre’s would be the highest in 7 years.  By class acres HRW – 23.9 mil. 23.1 mil. YA, SRW – 6.9 mil., 6.6 mil. YA, and White – 3.6 mil. unchanged.  Look for the USDA to raise their forecast for Russian wheat, currently at 91 mt.  Most private estimates are over 100 mt.

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