Nearby Chicago wheat holds limit up gains
Soybeans were sharply lower on profit taking and technical selling. It was an up and down day, with beans seeing spillover from a lower move in bean meal. March beans were limit up overnight but saw a reversal on that profit taking in bean meal and the fairly bearish numbers from the U.S. Ag Outlook Forum. That reversal in bean meal came despite record domestic prices in China due to tight supplies. At the Ag Outlook Forum, the USDA projected this year’s U.S. acreage at 88 million acres, with production of 4.5 billion bushels and an average yield of 51.5 bushels per acre. Exports are seen at 2.15 billion bushels with a domestic crush of 2.25 billion and 2022/23 ending stocks of 305 million bushels. The average 2022/23 farm price is estimated at $12.75 per bushel. Nearby soybean oil was also below the day’s highs, but mostly maintained its gains on global vegetable oil strength tied to Russia’s invasion of Ukraine, finishing the session mixed. Ukraine is a leading exporter of sunflower and canola oils. Aside from the situation in the Black Sea region, beans are monitoring weather and harvest activity in South America. The Buenos Aires Grain Exchange says 24% of Argentina’s crop is rated good to excellent, down 7% on the week.
Corn was mixed, with nearby contracts up and deferred months down on bull spreading. Nearby corn was up, but below the early highs, which followed Russia’s invasion of Ukraine, as both are major corn exporters. That and the declining production projections for South America should help U.S. sales. The USDA’s weekly sales numbers are out Friday morning. At this stage, things remain very volatile, with nearly all market movement possibilities on the table. The USDA’s Ag Outlook Forum has 2022 corn planted area at 92 million acres with record production and yield, 15.24 billion bushels and 181 bushels per acre, respectively. Compared to expectations for the current marketing year, the USDA raised expectations for food, seed, and industrial use, including ethanol demand, while leaving feed and residual use unchanged, and lowering exports. The average farm price is seen at $5 per bushel. 2022/23 ending stocks are expected to be above 2021/22. The new marketing year for corn kicks of September 1st. The U.S. Energy Information Administration says ethanol production averaged 1.024 million barrels a day, up 15,000 on the week and 366,000 on the year, with stocks at 25.507 million barrels, an increase of 24,000 from the previous week and 2.722 million from a year ago. Ethanol margins did improve slightly. Corn is also monitoring Argentina and Brazil, especially second crop corn planting in Brazil. The USDA’s next round of production estimates is out March 9th, with CONAB’s updated outlook for Brazil on March 10th.
The wheat complex was mostly sharply higher, with March and May Chicago both $.50 higher and March and May Kansas City nearly limit up at the close. The trade is waiting to see if Russia shuts off exports from the Black Sea. All indications are Ukraine has suspended activities at its ports, but Russian facilities reportedly remained open Thursday. Movement into and out of the adjacent Sea of Azov have been impacted. One sign of the potential impact on exports is demand from Egypt, the world’s biggest importer of wheat and a key market for shipments out of the Black Sea region. In their weekly tender, Cairo received one offer for French wheat, with no reported interest from Russia, Ukraine, or Romania. Wheat continues to keep an eye on the drought conditions plaguing most of the U.S. Plains, impacting not only winter wheat yields, but also possibly lowering spring wheat planted area. The eastern Midwest remains in comparatively better shape, but parts of the soft red winter region are excessively wet. Similar to corn and beans, most contracts closed below session highs, including modest losses in some far-off deferred contracts, less from an abatement in tensions and more from technical factors and profit taking. The USDA’s Ag Outlook forum projects all wheat planted area at 48 million acres, the highest in 6 years if realized, with a yield of 49.1 bushels per acres and production of 1.94 billion bushels. 2022/23 ending stocks are seen at 731 million bushels, with lower feed and residual use. The average farm price is estimated at $6.80 per bushel.