There isn’t much to talk about in terms of fresh news for the market to trade. Some of the main focuses right now are on the dry weather in Argentina (but they are getting helpful rains), the great precipitation in Brazil that will only add to their production, and poor export demand.
Some of the big stories in corn include the weather in South America and Mexico’s GMO situation. Argentina’s recent rains have improved crop condition ratings by 7 points, bringing the Good/Excellent total to 12 percent, but that is still 20 percent below the ratings of a year ago. Meanwhile, Brazil has great crop conditions and is expecting record production.
Mexico’s Deputy Ag Minister announced that they hope to reduce their corn imports by 30 to 40 percent by 2024. Mexico is a huge customer for U.S. corn, and without their demand, it could be devastating for U.S. markets. This is further complicated by their ban on GMO corn. Most U.S. corn is GMO, whereas Brazil’s crop is mostly non-GMO. Along with Brazil’s increased production, this could make them a top candidate for both China and Mexico’s corn needs. The U.S. Ag Attache in China also said that they expect China to import a substantial amount of corn from Brazil this year as it is competitively priced with their domestic supplies.
The head of the Ukraine Grain Association doesn’t expect their 2023 corn production to exceed 18 million metric tons (mmt) due to the war. The USDA had estimated their 2022 crop at 27 mmt, so the 2023 number would be nearly a third lower than last year’s production. 2022 was also a smaller-than-average crop for them due to the war.
Global milo interest is picking up a bit, though it is a little unusual this time of year. The U.S. sold a little over 70,000 tons of milo to China, and there are rumors that China was showing more interest over the weekend. The Commodity Credit Corporation (CCC) was also tendering for milo for Sudan.
Similar to the story in corn, the head of the Ukraine Grain Association announced that they don’t expect their 2023 wheat production to exceed 16 mmt due to the war. Their 2022 crop was estimated at 21 mmt by the USDA.
Weather models are adding more rains to the Southern Plains in the 6-15 day forecasts, which should help winter wheat production and soil moisture profiles for planting this spring, which is good for the crop but could put pressure on the futures. Wheat values had been starting to work into the feed ration until last week’s rallies once again pushed out the corn-wheat spread. This may be partly due to our historically low supplies and the market not wanting wheat to be fed in order to ration supplies, despite poor demand. U.S. hard red winter wheat FOB values are back to a $75 per metric ton premium over Russian values.
The wet weather in Brazil is still the big story in beans. They will have a record crop, but if it is too wet it might create logistics issues and delay bean shipments. If that happens, it could be positive for demand for U.S. beans. Export sales to China and unknown destinations account for over 70 percent of all sales. At the end of the last two marketing years, that number has averaged 56 percent. Taking into consideration the big Brazilian soybean crop, the trade will need to watch for any cancellations of China’s soybean purchases from the U.S.
Natural Gas prices are at their lowest levels since May 2021 after declining over 50 percent in just the last 6 weeks.
The February World Agricultural Supply and Demand Estimates (WASDE) report will be released on February 8th and the USDA Ag Outlook Forum is on February 23.