The latest weather forecasts in the U.S. and South America led to plenty of bearish sentiment for grain prices to start the week. Rainy, snowy weather across the U.S. Plains led to an ample round of technical selling that left most contracts 2% to 3% lower. Corn faded nearly 1.5% lower, with soybeans down around 1%.
Plenty more moisture is on its way to the Mid-South and eastern Corn Belt between Tuesday and Friday, per the latest 72-hour cumulative precipitation map from NOAA. Areas farther west and north will be relatively dry later this week, in comparison. NOAA’s new 8-to-14-day outlook predicts seasonally wet weather for most of the central U.S. between January 30 and February 5, with cooler-than-normal temperatures likely for most of the country next week.
On Wall St., the Dow firmed 263 points higher to reach 33,637 as investors remain hopeful that the Federal Reserve will pump the brakes on its currently aggressive interest rate policy and await another round of corporate earnings reports later this week. Energy futures were mixed. Crude oil was near-even at $81 per barrel, while diesel climbed more than 2% higher and gasoline firmed by 1.75%. The U.S. Dollar firmed slightly.
On Friday, commodity funds were net sellers of corn (-500), soybeans (-3,500), soymeal (-3,000) and soyoil (-3,000) contracts but were net buyers of CBOT wheat (+3,000).
LUNAR NEW YEAR EXPLAINER: Yesterday marked the first day of the 2023 Chinese New Year. Celebrations can last up to 16 days, but only the first seven days are considered a public holiday. It’s common for people to travel to spend time with family, exchange gifts and enjoy traditional foods. Because the celebrations heavily involve food, it can drive short-term grain demand, although that demand is also impacted from year to year by the strength of the economy, weather conditions and other factors. This year is the year of the Rabbit. An interesting side note – Fefe Ho Chloe Chiao contend that “rabbits are earnest with everything they do; they just ask that others treat them the same way.”
Corn
Corn prices spilled into the red on Monday after recent rains in Argentina (with more expected later this week) led to a round of technical selling today. March futures dropped 9.5 cents to $6.6675, with May futures down 9.25 cents to $6.6525.
Corn basis bids were steady to mixed across the central U.S. on Monday, moving as much as 10 cents higher at an Iowa processor and as much as 15 cents lower at a Nebraska processor today.
Corn export inspections faded 7% lower to 28.6 million bushels last week. That was also toward the lower end of analyst estimates, which ranged between 21.7 million and 40.4 million bushels. Mexico was the No. 1 destination, with 12.2 million bushels. Cumulative totals for the 2022/23 marketing year are still tracking well below last year’s pace so far, with 453.1 million bushels.
Brazilian consultancy AgRural slightly reduced its estimates for the country’s 2022/23 corn production from a prior forecast of 4.893 billion bushels down to 4.878 billion bushels.
Are you worried about rising interest rates? It might be worth remembering the drastic actions taken by the Federal Reserve’s Paul Volcker in the late 1970s, notes grain market analyst Bryce Knorr. “Inflation’s embers reignited until price increases approached 15% in Volcker’s first year as Fed chairman in 1979,” he recalls. “Volcker put the hammer down, raising rates past 20% and keeping them elevated long enough to finally kill inflation – along with lots of farmers’ dreams.” Knorr explores the past, present and potential future of interest rate trends in today’s Ag Marketing IQ blog – click here to learn more.
Preliminary volume estimates were for 281,949 contracts, which was moderately higher than Friday’s final count of 229,770.
Soybeans
Soybean prices faded 1% lower on Monday as Argentina received some badly needed rains and as Brazil braces for record-breaking production this season. March futures lost 15 cents to $14.9150, with May futures down 13.25 cents to $14.8850.
Soybean basis bids were mostly steady across the central U.S. on Monday but did trend 3 cents higher at an Illinois river terminal today.
Private exporters announced to USDA the sale of 7.1 million bushels of soybeans for delivery to unknown destinations during the 2022/23 marketing year, which began September 1.
Soybean export inspections saw a moderate week-over-week decline but remained relatively strong overall, with 66.3 million bushels. That was toward the higher end of trade estimates, which ranged between 33.1 million and 71.8 million bushels. China was by far the No. 1 destination, with 44.0 million bushels. Cumulative totals for the 2022/23 marketing year are still trending slightly below last year’s pace, with 1.253 billion bushels.
Brazilian consultancy AgRural notes that the country’s 2022/23 soybean harvest is now underway, with 1.8% completion through January 19, versus last year’s pace of 4.7%. Production estimates eased slightly to 5.618 billion bushels, which will be a record effort, if realized.
What are the odds for wetter-than-normal conditions later this spring? Will planting delays be imminent in some areas? Meteorologist Greg Soulje offered an in-depth analysis to attendees of the 2023 Farm Futures Business Summit – click here to review some highlights.
Preliminary volume estimates were for 234,749 contracts, shifting moderately above Friday’s final count of 182,116.
Wheat
Wheat prices faced sharp cuts after ample rain and snow across the Northern and Central Plains spurred a round of technical selling on Monday. Some contracts were down more than 3% by the close. March Chicago SRW futures dropped 19.75 cents to $7.2175, March Kansas City HRW futures tumbled 27.5 cents to $8.2050, and March MGEX spring wheat futures lost 22.75 cents to $8.90.
Wheat export inspections firmed slightly higher week-over-week to 12.3 million bushels. That was still on the lower end of trade estimates, however, which ranged between 9.2 million and 20.2 million bushels. South Korea was the No. 1 destination, with 3.3 million bushels. Cumulative totals for the 2022/23 marketing year are slightly below last year’s pace, with 468.9 million bushels.
Russian consultancy Sovecon estimates that the country’s wheat exports in January will reach 136.0 million bushels, which would be a monthly decline of 7.5% and the lowest total since last August, if realized. Russia is the world’s No. 1 wheat exporter.
Preliminary volume estimates were for 97,006 CBOT contracts, tracking 61% above Friday’s final count of 60,350.
