Grain prices made modest to moderate inroads on Wednesday following USDA’s mostly supportive data in its February World Agricultural Supply and Demand Estimates (WASDE) report, released earlier today. Questions about Argentina’s production potential helped corn and soybean prices move higher. Winter wheat prices also improved, capturing variable gains that ranged between 0.75% and 2%. Click here to read our exclusive reporting and analysis of today’s report.
A band of rain and/or snow later this week, stretching from Arkansas to Michigan, will deliver up to 1” or more additional moisture between Thursday and Sunday, per the latest 72-hour cumulative precipitation map from NOAA. The agency’s new 8-to-14-day outlook predicts more seasonally wet weather is likely for the central U.S. between February 15 and February 21, with seasonally warm conditions probable for the eastern Corn Belt.
On Wall St., the Dow sank 158 points lower in afternoon trading to 33,998 on the heels of several disappointing corporate earnings reports. Energy futures were mixed but mostly higher, with crude oil up more than 1.5% this afternoon to $78 per barrel. Gasoline saw modest gains of around 0.25%, while nearby diesel contracts faded 0.25% lower.
On Tuesday, commodity funds were net buyers of soyoil (+4,500) contracts but were net sellers of corn (-4,000), soybeans (-3,000) and soymeal (-4,500). Funds were roughly even when trading CBOT wheat contracts yesterday.
Corn
Corn prices captured moderate gains in a choppy session on Wednesday as traders absorbed the latest batch of supply and demand data from USDA. March futures added 4.5 cents to $6.7850, with May futures up 3 cents to $6.76.
Corn basis bids were steady to weak after softening 2 to 5 cents across five Midwestern locations on Wednesday.
Ethanol production spilled moderately lower in the week ending February 3, with a daily average of 1.000 million barrels versus 1.028 million barrels per day in the prior week, according to the latest data from the U.S. Energy Information Administration. Ethanol stocks eased fractionally lower.
Ahead of Thursday morning’s export report from USDA, analysts expect the agency to show corn sales ranging between 23.6 million and 59.1 million bushels for the week ending February 2.
In today’s WASDE report, UDSA’s latest analysis for corn shows lower ethanol usage and larger ending stocks. Corn used for ethanol fell by 25 million bushels. USDA didn’t note any other usage changes, leaving U.S. corn ending stocks up 25 million bushels to 1.267 billion bushels, which nearly matched analyst estimates. The season-average price received by producers remained unchanged, at $6.70 per bushel.
With Argentina’s corn production potential on the downward slide, Farm Futures grain market analyst Jacqueline Holland notes that “there may still be some export prospects for U.S. corn exporters if Argentina suppliers can’t fulfill contracts.”
Brazil’s Conab has lowered its estimates for the country’s 2022/23 second corn crop due to potential planting delays, offering a new projection of 3.736 billion bushels. Less than 12% of expected plantings have occurred in the top production state of Mato Grosso so far. “A significant portion of the [second corn] area will have to be sown in the first days after the end of the recommended climate window,” according to Conab.
Preliminary volume estimates were for 420,944 contracts, which was well above Tuesday’s final count of 248,164.
Soybeans
Soybean prices found modest gains following a round of technical buying on Thursday. March futures added 4.5 cents to $15.1975, with May futures up 2.5 cents to $15.1275. The rest of the soy complex was mixed. Soymeal futures inched slightly higher, while soyoil futures faced cuts of around 0.5%.
Soybean basis bids were steady to mixed after moving as much as 4 cents lower at an Ohio elevator and as much as 5 cents higher at an Illinois river terminal on Wednesday.
Prior to tomorrow morning’s export report from USDA, analysts think the agency will show soybean sales ranging between 14.7 million and 51.4 million bushels for the week ending February 2. Analysts also expect to see soymeal sales ranging between 100,000 and 400,000 metric tons, plus up to 20,000 MT of soyoil sales.
This month’s WASDE updates included a lower soybean crush and higher ending stocks. Soybean crush this marketing year is now forecast at 2.23 billion bushels, which is 15 million bushels lower than last month, which USDA attributes to “lower domestic soybean meal disappearance and a higher soybean meal extraction rate.” Ending stocks moved 15 million bushels higher to 225 million, versus trade expectations of 211 million bushels. The season-average price received by producers improved 10 cents from last month, at $14.30 per bushel.
“U.S. soy growers are enjoying a late-season export surge thanks to harvest delays currently ongoing in Brazil,” Holland says. “This will help keep healthy price competition in the local market for U.S. soybean sellers over the next couple weeks, but after that, growers will be increasingly reliant on crush capacity for cash opportunities in the spring and early summer months.”
Brazil’s Conab slightly raised its estimates for the country’s 2022/23 marketing year to 5.618 billion bushels. That would be a record-breaking effort, if realized, despite some unfavorable weather conditions that includes drought in the south and wet weather in other regions that has slowed down harvest.
Preliminary volume estimates were for 336,245 contracts, trending 12% above Tuesday’s final count of 301,354.
Wheat
Wheat prices captured solid gains on lower-than-expected ending stocks paired with lingering concerns over relatively dry weather forecasted in the Plains. March Chicago SRW futures rose 15.25 cents to $7.65, March Kansas City HRW futures gained 10.75 cents to $8.9650, and March MGEX spring wheat futures added 7.75 cents to $9.25.
Ahead of Thursday morning’s export report from USDA, analysts expect to see wheat sales ranging between 4.6 million and 23.0 million bushels for the week ending February 2.
USDA noted its wheat outlook for February is “largely unchanged,” adding that it made minor revisions to domestic use and ending stocks. Food use is still at a record level of 975 million bushels but did trend 2 million bushels lower from January. Seed usage firmed 1 million bushels to 70 million. Export estimates were left unchanged, at 775 million bushels. Ending stocks increased 1 million bushels to 568 million – analysts expected to see that number increase to 576 million bushels.
Season-average prices received by producers faded 10 cents lower to $9.00 per bushel. That’s a record high price for U.S. producers. “A strong dollar and ample supplies across the world mean that a lackluster U.S. wheat export season could be around the corner. So, growers with 2023 crops in dormancy may want to start booking advance sales of at least part of the 2023 wheat crop while prices remain high,” according to Holland.
Governmental officials in India told Reuters that the country may extend its current ban on wheat exports to protect local supplies. By some accounts, the ban may last until mid-2024. India is not typically a significant wheat exporter but had sold a notable volume ahead of the current ban. India is also likely to harvest a record amount of wheat this season, with an estimated 4.115 billion bushels.
Ukraine’s grain exports during the 2022/23 marketing year are down more than 29% from year-ago levels, according to the latest agriculture ministry data. That includes 371.1 million bushels of wheat, along with 637.8 million bushels of corn and 87.3 million bushels of barley. Ukraine is among the world’s top exporters of each of these commodities.
China plans to auction off 5.1 million bushels of its state wheat reserves on February 15. The country has offered a series of similarly sized auctions in recent months
Japan hopes to acquire 2.6 million bushels of feed wheat and 1.8 million bushels of feed barley via a simultaneous buy-and-sell auction that will be held on February 15. The grain is for arrival by late July.
