Ag Market View for Mar 7.23

SOYBEANS

The soybean complex was mostly lower.  Soybeans were down $.06 – $.16.  May-23 had an inside day on the charts with today’s low holding at its 50 MA.  After making new contract highs earlier, soybean meal reversed course closing mixed with nearby contracts down $4 – $6, while new crop futures were up $2 – $3.  Soybean oil is down 110 – 180.  May-23 bean oil challenged its 50 day MA at 58.22.  Conab reported Brazilian soybean harvest has reached 44% as of Mch. 6th, down from 53% YA.  Dr. Cordonnier lowered his Argentine production est. 1 mmt to 31 mmt, well below the USDA Feb-23 forecast of 41 mmt.  Brazilian soybean basis continues to weaken as storage facilities fill up.  Brazil’s storage capacity is estimated at 187 mmt, roughly 15% of that is on-farm storage, vs. expected corn and soybean production of 278 mmt. (corn – 125, beans – 153)  China’s combined Jan/Feb-22 soybean imports  at 16.2 mmt were a record high and up 16% from YA.  YTD imports since Oct-22 have reached 38.2 mmt, up 5% from YA, in line with the current USDA forecast.  The average trade guess for ending stocks is 219 mil. bu. down 6 mil.  The range of est. is 200 – 250.  We have been expecting stocks to increase 20 mil. to 245 mil. due to lower exports.  Feel less confident in that forecast following the large Chinese imports Jan/Feb and continued outlook for lower Argentine production.  The Jan. data from China was delayed and rolled into the same reporting time as Feb. due to the Lunar New Year Holiday. 

CORN

Prices closed $.02 – $.03 lower.  Higher interest rates and a strong US $$$ weighed on commoditity valulations.  The US $$ index surged to its highest level in 3 months while breaking thru resistance at its 100 day MA following Fed Chair Powell’s testimony in front of the US Senate Banking Committee.  Powell stated that interest rates will likely be higher than previously anticipated, while adding we have a long way to go in getting inflation back down to 2%, with that road likely to be bumpy.  Light spotty showers did fall in Southern parts of Argentina overnight, however were south of the major crop producing areas.  Above normal temeratures and below normal rainfall will dominate Argentine weather the next week to 10 day.  Crop potential continues to slip away.  Above normal precipitation is expected across Central and Northern Brazil slowing harvest activities.  There were no export announcements.  Dr. Cordonnier lowered his Argentine corn production 1 mmt to 40 mmt, below the USDA Feb-23 forecast of 47 mmt.  Conab reported 2nd corn crop plantings in Brazil have reached 64%, behind the YA pace of 75%.  Texas reported corn plantings at 20%, up from 5% last week, above the YA pace of 16%, and the 5-year average of 13%.  The Attorney’s Generals from Nebraska and Iowa have threatened to sue the EPA unless they allow the sale of E-15 gasoline this summer, ahead of the proposed start date of April-24.  Mexico’s President stated today they would go to a dispute panel under a regional trade deal if no agreement is made with the US over their plan to regulate GMO corn imports.  This afternoon their Pres. said the 2 parties have a month to resolve the dispute before establishing a settlement panel.  Tomorrow’s weekly ethanol data is expected to show a modest drop from last week’s 1,003 tbd pace. The range of est. is 1.137 bil. to 1.360 bil.    

WHEAT

Wheat was mixed with Chicago and KC up $.02 – $.03, while MGEX was down $.07 – $.10.  May-23 MGEX has slipped to its lowest level in nearly 1 year and within $.10 of its contract low.  Yesterday ABARE raised their 2022/23 Australian wheat production est. to a record 39.2 mmt, up from previous est. of 38 mmt.  They expect exports to reach 28 mmt, in line with the USDA forecast.  Production is expected to drop to only 28.2 mmt in 2023/24 with exports dropping to 22.5 mmt.  Snow continues to accumulate across the northern US plains, helping restore moisture ahead of the Spring planting season.  Some states reported winter wheat conditions yesterday.  The crop condition index improved in Montana and Oklahoma, held steady in Colorado and Texas, while declining in Kansas, Nebraska, and South Dakota.  Only 17% of the Kansas crop is rated G/E, down 2% last week.  53% of the crop is rated poor/very poor, up 2%.  The CC Index for Kansas is currently at a historical low of 68.8 which implies an average state yield near 30 bpa.  SovEcon reports Russian wheat exports in Feb-23 totaled 2.9 mmt, down from 3.8 in Jan-23, and 4.0 in Dec-22.  Today SovEcon lowered their Russian wheat export forecast by .1 mmt to 44.1 mmt, still just above the USDA forecast of 43.5 mmt.

See more market commentary here.

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