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Limit Up

By Tori Uhland

January 25, 2023

Rain makes grain, and that’s the main story in the markets this week. Much-needed moisture has made its way across the Plains in the form of snow coverage which was better than expected and setting the wheat market back a bit. Argentina and Brazil are seeing rains that are washing out the weather risk premium to corn and beans and will surely boost their production.

There isn’t much new information this week. Seasonally, we are approaching the time frame where markets tend to break (around February) before the fight for acres (mostly corn and soybeans) comes around March through May.


Corn futures have been fairly stagnant and have been trading in small ranges. Export sales two weeks ago (reported last week) were 1.13 million metric tons (mt) versus 1.09 mmt the same week last year. This is the first time in quite some time that sales were higher than expectations and were at a level considered “normal.” However, it wasn’t enough to close the gap. China has still been a small buyer but there has been no indication that they will book more. Rainfall in Argentina is putting pressure on the corn and soybean markets to start the week.


Snowfall across Kansas and the Southern Plains is helping to push the Kansas City wheat market lower to start the week. Wheat exports improved in last week’s report, to 473.1 thousand metric tons (tmt), but commitments are still running at the slowest pace in twenty years. Russian values also dropped again last week, making their wheat $62 a metric ton cheaper than U.S. hard red winter wheat in the export market.


The rains in Argentina are also pressuring the soybean market this week as they gapped lower on Sunday night’s open. Soybean meal had been the item in the bean complex that was propping the rest up, but even the meal contract is weaker after Argentina’s weather events. Export shipments for soybeans are behind, but commitments are ahead of the USDA’s forecast by 6.8 mmt, which is enough to eliminate the U.S. carryout.


The Cattle on Feed report came out on Friday with slightly bearish numbers for cattle compared to estimates. The report showed 97.1% On Feed versus 96.8% estimated, 92% Placed versus 91% estimated, and 93.9% Marketed versus 94.7% estimated. Though this isn’t great news for the cattle market, it is somewhat supportive for corn. On the other hand, the Cattle on Feed report is a warning to corn growers about demand. U.S. fat cattle inventories are 3% smaller than a year ago and Placements are 8% below a year ago. Feed demand may be shrinking this year due to the drought and liquidation of herds.

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Asian countries are shut down for the week for their Lunar Holiday, so those markets will be quiet. I mentioned some concerns about the Chinese demographics last week. Their population data came out after my article was written, and their population did, in fact, decline by about 850,000 people in 2022 from the previous year. Long term, this will have a huge impact U.S. and world agriculture. Depopulation is accelerating in developed countries. The focus of U.S. agriculture will need to shift into growing regions like India and Africa in order to find demand and markets for our ag products.

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