Ag Market View for Dec 27.22
The soybean complex closed mixed with old crop soybeans closing $.02 – $.05 higher, soybean meal down $2 – $5, while soybean oil was up 1.50 to 1.75. Jan-23 soybeans jumped $.35 bu. in early trade with the high of $15.16 ¾ being the highest trade in 6 months. The higher start was triggered by less rain than hoped for in Argentina and Southern Brazil along with relaxed Covid policies in China. While rains did fall over the Christmas Holiday weekend in Argentina, overall amounts and coverage weren’t enough to erase ongoing drought concerns. This week is mostly dry with near normal temperatures before the next potential rain over the New Year’s weekend offering .50” up to 2” rainfall totals. Following next weekend’s rain forecasts suggest a return to hot/dry pattern in the 11 – 15 day outlook. Today’s sell-off from the early morning strength likely attributed to heavy Brazilian farmer sales in conjunction with a 2% drop in the Real. Jan-23 soybean oil closed at 67.65 up 1.72 while filling a gap from early Dec-23. Next resistance is the 50 day MA, currently 68.66. Friday’s CFTC-COT report had shown Money Managers had extended their long position in soybean meal to 121,263 contracts, their largest position since May-2018. Dr. Michael Cordonnier lowered his Argentine soybean production forecast for a 5th consecutive week to 43 mt, down 2 mt, vs. the USDA Dec-22 estimate of 49.5 mt. Soybean inspections at 64 mil. bu. were above expectations and well above the 29 mil. bu. needed per week to reach the USDA export forecast of 2.045 bil. bu. Last week’s inspections were revised up by nearly 13 mil. YTD inspections are down 7% vs. the USDA forecast of down 5%.
Prices surged early, slipped a bit into mid-session, then rebounded back to near session highs at the close. Mch-23 closed above both its 50 and 100 day MA for the first time in nearly 2 months. Today’s high of $6.75 ¾ is the highest price in 6 weeks. Starting Jan. 8th the Chinese government will no longer require mandatory quarantine for inbound travelers. The USDA did announce the sale of 178k tons (7 mil. bu.) of corn to Japan, most of it for 2023/24 MY. Dr. Michael Cordonnier lowered his Argentine production forecast by 1 mt to 46 mt, and his Brazilian production forecast by .5 mt to 125 mt. This compares to the USDA forecasts of 55 mt and 126 mt respectively. Friday’s CFTC-COT data showed Money Managers selling 13,291 contracts, reducing their long position to only 113,815 contracts, their smallest position since Oct-2020. Corn inspections at 34 mil. bu. were above expectations of 20 – 30 mil., however below the 48 mil. needed per week to reach the USDA export forecast.
All 3 classes of wheat traded both sides of unchanged with Chicago closing $.01 – $.02 lower, KC up $.02 – $.05, while MGEX was mixed. At its high of $8.94 ¾ , Mch-23 KC was up $.20, its highest level in nearly 4 weeks. SovEcon reports Russian Black Sea wheat exports last week were 1.1 mt, up from .840 mt the previous week. This past weekend Egypt’s FASC tendered for 30,000 – 60,000 tons of wheat. Russia was the cheapest at $339/mt for 40,000 mt, while Ukraine offer was $355/mt. US export inspections at 10 mil. bu. were in line with expectations however below the 14 mil. needed per week to reach the USDA export forecast of 775 mil. Last week MM’s sold just over 500 contracts of MGEX wheat extending their short position to 4,427 contracts, their largest short position since Oct-2020.
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