It’s been another session that’s uncovered end user demand/buying interest on breaks, with corn unchanged, but with wheat and beans up 3-8 cents at midday. NOPA crush was a bit below expectations but still record large for January and the pace of US crush remains on pace to meet the USDA’s target. Export sales were generally in line with trade guesses, though it’s clear the US corn market is boosting its share of world trade. And the macro environment is favorable – crude’s recovered all of its overnight losses, the US dollar is still hovering at weekly lows, and the DOW jones is up 80 points.
For the week ending February 8th, US exporters sold a net 78 Mil Bu of corn, vs. 70 Mil the week prior; 11 Mil Bu of wheat, vs. 14 Mil a week ago; 24 Mil Bu of soybeans, unchanged on the week; and 231,000 Short Tons of meal, vs. 177,000 a week ago.
For their respective crop years to date, the US has sold 1,417 Mil Bu corn, down 14% from this week a year ago; 776 Mil Bu of wheat, down 12%; 1,647 Mil Bu of soybeans, down 13%; and 8.4 Mil STs of meal, up 8% from last year and the highest since 2014/15.
ARC notes that to meet the USDA’s forecast exporters need to sell an average of just 22 Mil Bu of corn per week. Even sorghum sales continue at a decent pace, and total 17/18 sorghum commitments remain some 60% ahead of last year (vs. the USDA’s projected 8% increase), and China was reported to have secured two cargoes last week.
NOPA crush in January totaled 163.1 Mil Bu, vs. trade guesses of 164-165 Mil. Year to date NOPA-member crush stands at 794 Mil Bu, up 2% from last year and record large. Crush rates in the months ahead will be expanding further amid the world’s need for meal, and very positive margins across the interior US. ARC calculates the spot crush margin in Central IL at $1.50/Bu, vs. $1.22 in January and $.90/Bu a year ago. Soy oil stocks on Jan 31 totaled 1.73 Bil Lbs, vs. 1.52 a month ago, which leans a bit market negative.
NOAA’ longlead forecast this AM, as expected, features ongoing heat & dryness across the Southern & Western Plains. La Nina should weaken by summer, but this transition is likely to sustain extreme drought across a majority of the US HRW Belt through May 31. Wet weather will be ongoing through spring across the southern and eastern Midwest.
It’s far too early to place much confidence in the summer outlook, but we do mention NOAA’s forecast at present indicates above normal temps across the whole of the Central Jun-Aug, and an elevated risk of dryness west of the MS River. Much depends on the actual performance of La Nina over the next 90 days. Precip will stay absent from the Plains through March 2nd.
Midday GFS South American Weather Forecast Discussion: The midday GFS includes another round of lite/spotty showers in Cordoba & W Buenos Aires Feb 22-24, but is otherwise unchanged. Even in the 6-10 day period, coverage will be limited and cumulative totals there will exist in a range of .50-1.25”. This would no doubt be welcomed, but much more is needed to ease drought there. Otherwise, Argentina stays hot/dry over the next two weeks. Well above normal precip will be ongoing in Brazil through the period. The pace of soy harvesting/safrinha corn planting will be watched closely.
AgResource Market Comment: End users are using breaks to extend supply coverage, and it’s still too early to quantify yield loss in Argentina. Improved world weather is needed before turning bearish.
