Markets lose profits due to weather changes

While Jacqueline and Ben are on assignment at the Farm Futures Business Summit, enjoy guest commentary from Advance Trading Inc.

Retail sales fell 1.1% in December as higher interest rates and inflationary pressures curbed spending on cars, gasoline and hardware. Wholesale price inflation fell to slowest pace since March 2021—Is a ¼ point rate hike next? DOW, -493; S&P, -49.5; NAS, -96.

Maize

Pressure from soybeans and Argentinian moisture puts some pressure on corn. Corn in March came in at $6.81 ¼, down 4 cents on the day. December Corn settled at 6.01, down 2 3/4 cents on the day.

South America remains the main focus for markets. ANEC now estimates Brazil’s corn exports in January at 5.2 million tons. This is up from 5.0 previously, which is 82% or 750 K above the corresponding figure for 2022. Shipments in the 2nd week of January fell from 1.9 to 1.6 MMT and were well above the 911K shipped in the week of last year. The country’s maize supply fell by 28 mbu, down 16%, to 147 or about 3 times its level a year ago.

Weekly US corn exports averaged about 60 a week in January-March last year. While we expect deliveries from Argentina, Brazil and Ukraine to fall to 55-60 this year, a repeat of last year’s US performance largely hinges on China’s entry into the US market. Aside from last week’s inspections, China has more or less zero unshipped sales on its books.

One factor of Chinese purchases will depend on their feed use. China increased pork production by 4.6% in 2022. This is the biggest increase since 2014. Their beef production was 3% higher and poultry increased by 2.6%.

Soy beans

Argentina gets more rain than expected; forecast gets wetter. March Soybeans paid $15.24 ½, down 15 ¼ cents on the day. November futures closed 19 cents lower at $13.74 ¼.

ANEC estimates Brazil’s soybean exports at 2.0 MMT in January, up from 1.7 previously. Soybean exports improved from 262,000 to 353 in the second week of January, but were barely 40% of last year’s total as the harvest continues to drag. Soybean meal shipments fell from 501,000 to 486 during the same period, down only slightly from last year’s implied total of 499. Brazil reported a 60 mbu increase in its soybean supply to 150 million. That is almost 87 fewer than a year ago. The soybean meal lineup was stable week over week at 1.35 MMT. This figure is 300 K or 18% smaller than in 2022.

AmSpec reported a 36% drop in Malaysia’s palm oil exports from January 1-15. ITS reported a 37% decline. According to yesterday’s AMS inspection report, U.S. unshipped bean sales were near an all-time high for this point in the selling season at 542 mbu. Over the past 3 years, a number over 500 meant the USDA was underweight on its January export forecast. Could it be that excellent sales due to crop delays in Brazil are an overestimation of potential?

Not to bring too much negative news out today, but Brazil’s agriculture minister says it can increase the planted area of ​​grains and oilseeds by about 5% each year without leading to further deforestation. There are 370 million hectares of low-productivity pasture available with the aim of converting about 25% of them to row crops.

Wheat

Good moisture levels in the Plains and more expected over the weekend. Wheat fell in all three classes today following the latest weather reports. March Chicago Wheat came in at $7.42 ½, down 9 ¼ cents on the day; New crop July futures fell 7 ½ cents to $7.53 ½. March KC Wheat settled at $8.41 ½, down 14 ¼ cents on the day, while Minneapolis Wheat fell 15 cents to $9.01.

Egypt expects to import 5% less wheat in 2023, according to the Ministry of Supply and Internal Trade. Japan will bid for 78,000 tons of US and Canadian wheat tomorrow; US HRW and 2 loads of Canadian western red winter. Wheat prices in Russia were $1 per ton lower to $305, according to one source.

Again

Normal to above-normal temperatures and thunderstorms are expected to hit Argentina over the next two weeks. Southern parts of the growing belt may receive moderate to heavy rainfall between Friday and Saturday, with total precipitation ranging from 0.75″ to 1.50″ but only 0.30″ to 0.80″ elsewhere.

Dry weather and warmer temperatures are likely to follow until severe thunderstorms are expected next Wednesday-Friday. Cooler temperatures and rainfall of 1.00 to 2.00 inches are expected during the period, with the central and northern regions receiving the best totals. 1.75” to 2.50” of precipitation is expected over the next two weeks (about 2.25 is normal). The Buenos Aires-Córdoba regions had the 9th driest period from January 1-16 in the last 38 years.

Central parts of Brazil are expected to receive near-above-normal rainfall of 4.00″ to 6.00″ over the next two weeks. Limited thunderstorms are possible in the extreme southern parts of the country over the next few days and early next week, but more organized rains are expected this Friday through Sunday. Temperatures are likely to remain normal to cool from northern Paraná, while heat in Rio Grande do Sul could set in over the next 10 days. 16% of soybean acreage had less than half normal precipitation during the 30 days ending Monday (27% in the south).

In the US, the Corn Belt and the Mid-South could continue to suffer from mild weather through next week. The central part of the US is expected to get colder early next week and temperatures are likely to remain normal to cold for 7 to 10 days.

More rain and snow is expected to hit parts of the Corn Belt and the mid-South over the next two weeks, with 1.25 to 2.50 inches of precipitation. HRW wheat fields of the Plains may also receive rain and snow over the next 14 days, likely to continue to ease the drought. Heavy snowfall is expected in the NE today and parts of IA and MN today and tomorrow, impacting logistics in the areas. Moderate rain and snow may occur over the weekend in the driest feedlots of KS, OK.

CBOT Settlements Quotes from 2:01 PM

Contact Advance Trading at (800) 747-9021 or visit advance-trading.com.

The information provided may include the opinions of the author and is subject to the following disclosures:

The risk of trading futures and options can be significant. All information, publications and materials used and distributed by Advance Trading Inc. should be understood as a request. ATI does not maintain an independent research division as defined in CFTC Regulation 1.71. Information obtained from outside sources is believed to be reliable, but its accuracy is not guaranteed by Advance Trading Inc. Past performance is not necessarily indicative of future results.

The author’s views are not necessarily those of Farm Futures or Farm Progress.