Ag Market View for May 18.23


The soybean complex was mixed with soybeans down $.01 – $.05, meal $4 – $11 lower, while oil was 80 – 100 higher.  After making new lows for the move July-23 soybeans closed near the midpoint of the daily range in a choppy session.  Next support is last summer’s low of $12.99.   July-23 meal closed at its lowest level since early Dec-22.  Next support for July-23 is $411.  July-23 oil rebounded from its deeply oversold condition, however had an inside trading day on the charts.  Soybean export sales were decent at 25 mil. however nearly all the sales were for new crop.  Old crop commitments at 1.866 bil. bu. are now down 14% from YA, vs. the USDA forecast of down 7%.  While the gap has narrowed, US soybeans continue to run $40 – $50 per ton over Brazil thru July-23.  Soybean meal sales at 293k tons, 203k old crop, were also within the range of est.  Old crop commitments are still down 1% from YA, vs. the revised USDA forecast of up 2%.  Brazil’s Abiove raised their Brazilian production forecast 1.4 mmt to 155 mmt, matching the USDA.  They also raised their export forecast by 2 mmt to 95.7 mmt, above the USDA forecast of 93 mmt.  The BAGE lowered their Argentine forecast another 1.5 mmt to 21 mmt, well below the USDA est. of 27 mmt.   US soybean areas in drought fell 2% to 19% matching its lowest level in 11 months.   


Prices rebounded to closed mixed, down $.06 in spot July-23, up $.01 – $.02 in new crop futures.  Favorable weather and weak demand continue to drive the bearish sentiment.  The US drought monitor showed cropland area in drought continues to shrink.  The only meaningful rain in the next 5 – 7 days are forecast for the US southern plains, the area still most in need.  A day after agreeing to renew the BSGI for 60 days Russia’s Foreign Minister stated they agreed to the deal to aid the world’s poorest, not to influence Turkey’s Presidential election.  Wire services report at midday that vessel inspections have yet to resume. Today’s low in July-23 at $5.47 is $1.00 ½ below the April high.  This marks the 3rd consecutive year July corn prices have fallen over $1.00 bu. from their Spring high.  The last 2 years July bottomed out in late May or early June before rebounding into expiration.  Dec-23 corn also made a new low for the move before recovering to close back above $5.  Next support is $4.76.  Today’s old crop export sales at -13 mil. reduced YTD commitments to 1.498 bil. down 35% from YA, vs. the revised USDA forecast of down 28%.  The current USDA est. of 1.775 bil. still appears to high.  In addition to the previously announced 11 mil. bu. of cancellation to China, there were also small cancellations to unknown, Costa Rica, Mexico, and Venezuela.  With this week’s cancellations we see China’s outstanding sales down to 73 mil. bu. vs. 211 YA.  US corn prices remain $15 – $20 ton over SA thru the summer months.  US corn area in drought has slipped 4% to 25%, its lowest level in 11 months.  The Cattle- on-feed report after tomorrow’s close is expected to show cattle inventories ay 97% of YA levels.  Placements are expected to be 96% vs. YA, while marketing’s are expected at 90% vs. YA.   


Prices were sharply lower in all 3 classes with KC and MGEX down $.25 – $.30, while Chicago was down $.12 – $.14.  Chicago July-23 has held support above this month’s low of $6.03 ¾.  Support for July-23 KC rests at its 100 day MA, currently $8.36 ¾.  Today was Day 3 of the Kansas wheat tour.  Their production forecast for the state was 178 mil. bu. with an average yield of 30 bpa.  This compares to the USDA forecast from last Fri at 191.4 mil. bu. with an average yield of 29 bpa. The implied harvested acres from the crop tour is 5.933 mil. which is well below the USDA est. of 6.6 mil. and implies abandonment at 27%.  The USDA is already assuming record abandonment at 18.5%.  Wire service report at least 2 vessels of Polish wheat have been imported into the US SE as prices and ocean freight were cheaper than sourcing domestically.  Russia’s Ag. Minister forecasts their 2023 grain production at 123 mmt, with wheat accounting for 78 mmt.  This was just below the initial USDA est. of 81.5 mmt.  US winter wheat areas in drought slipped 2% to 46%, down from the Nov-22 peak of 75% and the lowest since June-22.  US spring wheat area in drought fell 4% to 7%, its lowest level in over 1 year. 

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