MarketsFarm — Although the U.S. Department of Agriculture (USDA) is set to issue its next supply and demand estimates on March 8, what’s going on in South America continues to dominate the Chicago Board of Trade (CBOT), according to Andrew Mages of Progressive Ag in Fargo, N.D.
“Typically it’s not the most important report because we just went through the acreage at the end of the month,” Mages said of the forthcoming USDA report.
That said, he noted it’s important to watch the ending stocks in the USDA report for U.S. corn as exports have not been particularly strong in 2022-23. More than likely export numbers will be reduced while their carryovers will increase.
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Monday’s USDA export inspections report placed 2022-23 corn exports at 14.31 million tonnes so far. That’s well below the 23.2 million tonnes the same time last year.
Also, Mages said USDA’s fats and oils report, scheduled for release Wednesday after the close of trade, could have something of an effect on the CBOT soy complex. While the average trade guess projected the January crush be about 189.6 million bushels, USDA reported the crush took 191 million. That was three million bushels less than the January 2022 crush.
“The crush margins have been so strong, but those margins have decreased over the last couple of months. That’s a sign that either there’s not enough soybeans, that no one is willing to bid them up, or there’s just not the export demand there should be,” he explained.
As well, Mages pointed to the conflicting soybean situation in South America. While Brazil remains on pace for a record harvest of well over 150 million tonnes, drought in Argentina has eroded its output to 30 million tonnes, which be the country’s lowest output on more than 20 years.
Mages pointed to the plus-30-cent per bushel drop in Chicago soybeans on Tuesday. He said China cancelled a one million-tonne purchase it had with Argentina and switched to cheaper soybeans from Brazil.
“Argentina won’t really have many supplies to export,” he stressed.
While wet conditions in most of Brazil have delayed its soybean harvest — and slowed the planting of its second corn crop — Mages said farmers are catching up. Also he said southern Brazil, like Argentina, is hampered by dry conditions. He suggested soybeans crops there might be worse off than what the markets have anticipated.
— Glen Hallick reports for MarketsFarm from Winnipeg.
