Ag Market View for Mar 21.23
The soybean complex was lower across the board with late day selling driving prices into new lows near the close. Soybeans were down $.14 – $.20, soybean meal steady to $2 lower, while soybean oil was down 125 – 175. Despite the weakness, both beans and soybean oil held above yesterday’s low. May-23 crush margins slipped to $1.65, its lowest level since July-22. Dr. Michael Cordonnier lowered his Argentine soybean forecast 2 mmt to 26 mmt, just above the BAGE est. of 25 mmt. He held his Brazilian forecast steady at 151 mmt, vs. the USDA at 153 mmt. AgRural estimates Brazilian harvest has reached 62% as of late last week, vs. 69% YA. Harvest in Mato Grosso has reached 97%, while Parana jumped 18% in the past week to 48% while RGDS is at only 1%. AgroCousult raised their Brazilian production forecast 2 mmt to 155 mmt. They expect Brazil to export 96 mmt of this year’s harvest, well above the USDA est. of 92.7 mmt. Some have suggested today’s sell-off may be attributed to larger outbreaks of ASF in China which is hurting meal demand and weighing on their crush margins as well. Something to keep an eye on although Brazilian soybean exports to China are expected to be near record high in March.
Prices closed down $.02 – $.04 despite the announced sale of 136k tons (5 mil. bu.) of old crop corn to China. Total announced sales to China since last Monday have reached 88 mil. Widespread rains are expected over central areas of Argentina in the next 2 – 3 days. While the moisture is welcome, its impact on this year’s corn and soybean crops will be minimal. A warmer drier pattern has developed over Parana and Mato Grosso do Sul enabling corn plantings to catch up. Additional rains are needed to maintain favorable crop prospects. Dr. Michael Cordonnier lowered his Argentine corn forecast 1 mmt to 36 mmt, matching that from the BAGE. USDA is currently at 40 mmt. AgRural reports Brazil’s 2nd corn plantings have reached 91% vs. 97% YA. Mato Grosso plantings are essentially complete at 98%, while Parana advanced 24% LW to 61% complete. MG typically produces nearly 50% of Brazil’s 2nd corn crop, while Parana represents 15%. Safras & Mercado estimate Brazilian corn exports in 2022/23 MY at only 40 mmt, vs. their forecast of 46.6 mmt back when the Black Sea corridor was first opened. This is well below the current USDA forecast of 50 mmt. AgroConsult lowered their total Brazilian corn production 5.4 mmt to 125.5 mmt. Their 2nd crop estimate was cut 4.1 mmt to 97.2 mmt. Their export forecast for Brazil is 51.9 mmt. US states reporting planting progress vs. their 5-year Ave. as follows: TX – 40% vs. 35%, LA – 87% vs. 26%, MS – 7% vs. 5%,AR – 1% in line with Ave.
Wheat prices were back on the defensive today with all 3 classes closing lower. Chicago led the declines down $.10 – $.17, KC was down $.08 – $.10, while MGEX was off $.05 – $.06. KC May-23 peaked at its 50 MA of $8.43 before retracing. Ukraine’s Ag Minister expects 2023 wheat production to reach only 16.6 mmt, down from the 2022 USDA est. of 21 mmt and well below the 33 mmt harvested in 2022. Both Kansas and Texas saw improved winter wheat conditions this week. Kansas was up 2% in G/E to 17%, while TX improved 6% to 23% G/E. OK ratings slipped 1% to 29% G/E, while CO slipped 4% to 36%. Following a 2nd day of talks with Chinese leader Xi Jinping, Russian Pres. Putin stated that China is Russia’s top trade and economic partner, while adding he hopes to stay in constant contact with Xi.
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.