Joshua Van Ryswyk

On the Grains:
The 2022/23 El Nino growing season in South America was nearly textbook perfect for what we have been told to expect from La Nina conditions. Drought is expected in southern Brazil and Argentina but the rest of Brazil produces well enough to compensate. That is generally been the case this year. The US has likely maxxed out combined corn/soybean growing acres while South America continues to expand acres adding significant growth to their production. With the La Nina likely fading, Argentina will be poised for a significant rebound in 2023/24 corn/soybean production. USDA has modeled optimism for a rebound in crop yields following La Nina conditions in their production forecasts for this country too this season. US weather appears to be changing with drought relief coming to the western US. The NOAA drought monitor shows that the area remaining under severe drought classification is shrinking. There is still a lack of subsoil moisture reserves in the Corn Belt but most will have enough topsoil moisture to get the new crop started. Then it will come down to timely rains.

On the Grains:
Overnight markets are soft again, with beans the weakest. Harvest progress for Brazil’s huge crop continues to hold more sway over trader attitudes than bleak prospects for Argentina. Weekly export loadings last week were so-so for corn, coming in mid-range of expectations. However, they were lousy for beans. At only 691,000 tonnes, they weren’t even close to the low end of expectations that ranged from 850K to 1.7 million tonnes.

On the Grains:
Overnight markets are barely steady in corn and beans. Wheat is lower again, led by losses in KC wheat on better rains in HRW country. It’s telling that corn and beans aren’t stronger, given that on Thursday, the Buenos Aires Grain Exchange (BAGE) lowered its estimates for Argentina’s crops yet again last week. They’re now at 33.5 MMT for beans compared to USDA at 41 MMT and down to 41 MMT for corn compared to USDA at 47 MMT. The inability of those lower estimates to reignite buying stems from two other realities:

On the Grains:
As we go to press, grains are mixed in overnight trade with corn steady, beans a little firmer and wheat soft again. This morning we’ll get those holiday-delayed weekly export sales. Here are the ranges of expectations: Corn, 500,000 to 1.3 million tonnes, soybeans 300K to 500K tonnes, wheat 150K to 500,000 tonnes. We’ll also finally get a Commitments of Traders report this afternoon after a 4 week lapse due to Russian hacking. However, it will only be for the week ending Feb. 3. We’ll not know the real status of fund positioning until mid-March. Ugh.

Yesterday we had acreage, yield and avg. price forecasts ahead of USDA’s Outlook Forum yesterday morning, but can fill in some more details from the balance sheets that came out later.

On the Grains:
Markets are slightly mixed either side of unchanged in overnight trade. USDA has pre-released its first estimates for 2023-24 acreage, yields, and prices ahead of this morning’s opening day of its annual outlook conference. These could set the tone for early trade:

On the Grains:
Overnight markets are soft, particularly in wheat, which suffered downside chart reversals yesterday. It was tugged higher initially by gains for corn and beans, but weekly export inspections were at the low end of expectations and a huge snowstorm is forecast for northern and central Plains bringing lousy travel conditions but welcome moisture. HRW is down the most. Corn export inspections were so-so, falling about midway in the range of expectations.

Soybean inspections were strong again.  At 1.58 million tonnes, they neared the higher end of expectations and widened the lead over last year to 3.5% vs. USDA’s forecast for them to end up 8% below last year. The Monday night rally in beans sputtered a bit in early trade yesterday, but then “got legs” and closed at new contract highs for the March. (We detail in our weekly Brazilian operations update below how the losses in RGDS have taken the bloom off Brazil’s otherwise record crop.) The other positive sign was that all the veg oil markets moved higher yesterday, in sync with gains in soybean meal instead of counter to them via spread unwinding.