Ag Market View for Jan 5.23
Futures closed down $.08 – $.12 rebounding off the morning lows. The Mch-23 low at $14.65 held above its 50 day MA, currently $14.60. Soybean meal closed mixed, nearby Jan and Mch closing higher, no deliveries, while back months closed $1 – $3 lower. Soybean oil was down 40 – 60. Speculative traders have been moderate to heavy sellers the past 3 days. Barring a dramatic change to the Ukraine war or SA weather forecasts I suspect the selling pressure will ease as we get closer to next week’s crucial USDA reports on Thursday. Old crop soybeans may try to undercut their 50 day MA, however I’d be hard pressed to see them challenge their 100 day MA, currently $14.42 Mch-23, with so much supply risk from Argentina. US census export sales for Nov-22 slipped to 355 mil. bu., down from 359 mil. in Oct-22 and down from 391 mil. in Nov-21. In the first 3 months of the 22/23 MY soybean exports are down 7.5% from YA, vs. USDA forecast of down 5%. Census sales are running 24 mil. bu. over inspection data. Export tomorrow expected to see soybean sales 20 – 40 mil., soybean meal 100 – 300k tons, soybean oil 0 – 10k tons. The BAGE reports soybean plantings advanced 10% in the past week to 82% complete, still below the average pace of 93%. Conditions deteriorated with only 8% of the crop rated as G/E, down from 10% last week. Probably more concerning at the fact poor/VP ratings increased 10% to 38%. YA ratings were 50% G/E and only 13% poop/VP.
Old crop futures closed $.01 – $.02 lower, well off the morning lows. Mch-23 low of $6.48 ½ held support at $6.44. The market has absorbed 3 days of moderately heavy speculative selling. I’d expect this will slow as we approach next week’s reports. So far in early 2023 traders appear more concerned with weak demand and prospects for higher production and stocks from last year’s crop than with Argentine supply concerns. I do not expect old crop futures to drop below the Dec lows, $6.35 for the Mch-23 contracts, prior to next week’s reports. Ethanol production last week plunged to 844 tbd last week, down from 963 tbd the previous week and the lowest production level in nearly 2 years. Corn usage fell to 12.1 mil. bu. per day, well below the 14.65 mbd needed to reach the USDA forecast of 5.275 bil. bu. Despite the huge production drop, stocks only fell .2 mt to 24.4 mb and remain well above YA level of 21.4 mb. Gasoline demand in the last full week of 2022 was down 8% from YA. Implied demand has been below YA levels for 13 consecutive weeks. Given the weak demand climate I expect the USDA to lower their corn usage forecast by 25 – 50 mil. bu. next Thursday. Nov-22 census exports at 96 mil. bu. were up from 82 mil. in Oct-22,however down 48% from YA. YTD census exports are down 35% from YA, while also running 34 mil. bu. over inspections. Tomorrow’s export report expected to show sales last week of 18 – 36 mil. bu. The BAGE reports corn plantings advanced 7% to 70% complete, below the YA pace of 77%.
Prices recovered from the morning selloff with Chicago closing steady to up $.01, MGEX was up $.05 – $.06, while KC finished $.01 – $.02 lower. Prices held support at last month’s lows before rebounding. Tunisia bought 100k mt of soft wheat at an average price of $352.60/mt. Nov-22 census exports at 50 mil. bu. are down from 51 mil. in Oct-22 and from 54 mil. in Nov-21. In the first 6 months of the MY wheat exports are down 2.4% from YA, in line with the current USDA forecast. Export sales tomorrow expected to show sales last week of 6 – 16 mil. bu. The BAGE estimates wheat harvest at 99.5%. The kept their production forecast unchanged at 12.4 mt.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.