On The Money Grain Commentary 3-9-23

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Corn Outlook:

There is not much more mileage that the bulls can get out of Argentina’s drought. This week the USDA lowered their corn production more than expected to 40.0 million tons from 47.0 last month. Meanwhile, Brazil’s crop stands at a record 125.0 metric tons. Looking at exports, they were strong with inspections last week a marketing year high of 35.4 MB. However, this is being overshadowed by the USDA lowering its export forecast 75 MB to 1.850 BB. They may lower it again unless the pace of shipments picks up. For the fifth consecutive week, China was a no show which should be a real concern as Brazil has overtaken the U.S. as the world’s leading exporter. As mentioned in a previous comment, the U.S. may need to search for new markets.

Bean Outlook:

Because of the ongoing drought in Argentina, the USDA has lowered their production estimate to 33.0 million tons from 41.0 million last month. This is Argentina’s smallest crop since 2008. However, Brazil is projected to produce a record crop of 153 million tons. Although the USDA has raised U.S. exports 25 MB to 2.015 BB, inspections last week were nominal at 19.2 MB. During the past four weeks, the pace of shipments has fallen 42 percent, and are down 56 percent since peaking in November. Shipments to China last week were 9.3 MB, their smallest since the first week of October. Since November, shipments to them have declined 64 percent. Long story short, traders have been bullish soybeans because of Argentina’s shortfall. However, longer-term price strength cannot be sustained unless exports stay strong.

Wheat Outlook:

Wheat prices have been losing ground on ideas that Russia will renew its agreement with Ukraine later this month allowing the uninterrupted flow of grain from the Black Sea Region. Meanwhile, doubts are swirling. After a brief uptick in exports, inspections last week fell to 9.8 MB, their lowest since the first week of January. However, if the current pace of shipments is maintained, chances are that USDA’s projection of 775 MB will be met. Be aware that the bears are holding the upper hand for the moment, but that could soon change as global stocks are down 2.1 million tons while usage is up 2.0 million.

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