Written Commentary
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June 1, 2023
SOYBEANS
The soybean complex closed mixed. Spot soybeans were up $.02, while deferred contracts were $.05 – $.08 higher. Spot meal was down $4 – $5, while deferred contracts were mixed. Soybean oil was up 80 – 85. Overnight May-23 soybeans peaked at just over $15.30, the highest level in 6 weeks. Spot board crush margins slipped $.04 to $1.04 bu., as soybean oil product share firmed up to 37.5%, its highest level in just over 1 month. Bean oil stocks in yesterday’s NOPA crush report at 1.851 bil. lbs., while in line with expectations, was supportive as the higher production suggested higher daily usage. The average daily usage will only continue to increase as more biodiesel facilities come on line. The USDA attaché to Argentina lowered their production forecast to 23.9 mmt, below the official USDA forecast of 27 mmt. They expect imports will need to reach a record 11 mmt, up from the current USDA forecast of 8.3 mmt, just to achieve a crush of 29.5 mmt. The USDA crush est. for Argentine is 32 mmt. For likely the first time ever Argentina will crush more soybeans than they produce in the 2022/23 MY, only possible by record imports from Brazil. Dr. Michael Cordonnier also lowered his Argentine production forecast. His latest est. at 24 mmt is down 2 mmt. He left his Brazilian forecast unchanged at 153 mmt. US soybean prices at $1.40 bu. over Brazilian supplies is the largest differential in 19 years. US planting progress has reached 4%, vs. YA and 5-year average of 1%.
CORN
After a choppy 2 sided trading session corn closed $.01 – $.04 higher led by strength in new crop contracts. May-23 traded to its highest level in nearly 2 months overnight before pulling back. Next resistance is at the Jan-23 high of $6.86. Higher trade overnight was likely triggered by a stronger than expected GDP estimate from China. Their GDP grew 4.5% in the 1st Qtr., above expectations and above the 2.9% from Q4 2022. Ukraine has denied Russia’s claim that inspections of Ukrainian vessels in the Turkish Straight have resumed. Russia’s Foreign Minister said he expects to discuss the Black Sea Grain Initiative with UN Sec General during his visit to New York next week. Above normal temperatures in the Southern US plains will track NE toward the Great Lakes region the next 24 – 36 hours before much below normal temperatures dive south by the weekend. Healthy rains the next 7 days are expected to favor the eastern 2/3 of the Midwest, in particular the midsouth. A generally cooler than normal pattern expected thru month end keeping planting progress slower than normal. After buying just over 700k tons of US corn last week there have been no new announced sales to China so far this week. China’s imports for Mch-23 reached 2.2 mmt, down 9% from Mch-22. Total 1st Qtr imports at 7.5 mmt are up 6% from YA. China’s 1st Qtr. Pork output rose 1.9% over YA to 15.9 mt, its highest level in at least 5 years. Their total pig inventory is up 2% over YA to 431 mil. US corn plantings advanced only 5% last week to 8%. While still above YA and the 5-year average, progress was below expectations of 10 – 12%. The lower than expected plantings supported Dec-23 as it closed at its highest price since the Mch 31st acreage report. Today high was right at its 50 day MA at $5.71. Dr. Michael Cordonnier lowered his Argentine production forecast by 1 mmt to 35 mmt, vs. the USDA forecast of 37 mmt. He left his Brazilian forecast unchanged at 125 mmt. As of April 16th EU corn imports for 22/23 MY have reached 22.35 mmt, up 75% from YA.
WHEAT
Prices closed mixed with Chicago up $.01 – $.02, MGEX down $.02 – $.04, while KC was $.08 – $.09 lower. KC May-23 stopped just short of reaching $9.00 before backing off. Winter wheat conditions held steady to 27% G/E, vs. 30% YA. There was a 2% drop in fair, with 1% shifting to poor and 1% to VP. 10% of the crop is headed, vs. 7% YA and 5-year average of 8%. Spring wheat planting advanced only 2% to 3% complete, vs. 8% YA and 5-year average of 7%. SovEcon raised their 2022/23 Russian export forecast by .4 mmt to 44.5 mmt. They also raised their 2023 production forecast 1.5 mmt to 86.8 mt, however that’s down from over 100 mmt in 2022. Their initial export forecast for 2023/24 is 43 mmt. EU soft wheat exports as of April 16th have reached 24.4 mt, up 8.5% over YA. China’s wheat imports in Mch-23 totaled 1.33 mmt, up 54% from YA. YTD imports have reached 4.345 mmt, up 43% from YA. Jordan reportedly purchased 50k mt of wheat in today’s tender at $303/mt CF for fall delivery. Ukraine’s Ag Ministry expected 2023 grain production to reach 50 mmt, that’s down only 3 mmt from YA. They didn’t provide a breakdown for their est. Officials in Poland and Ukraine have announced they have struck a deal to resume the movement of Ukrainian grain thru Poland starting on Fri.
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