WEEKLY GRAIN NEWSLETTER
By Jeremey Frost
This is Jeremey Frost with some not so fearless comments for www.dailymarketminute.com.
Did the January USDA report change the price destination that corn and beans have? We had a major report with several demand and supply changes earlier in the week, these changes caught some off guard. I think the report and other recent info have had enough friendly little tidbits that it has opened the likelihood that our 2023 acre war could create new all time highs for some of the grain and oilseed markets.
Tidbit #1 USDA acknowledged drought conditions via increasing the un-harvested acres and decreasing overall production in both corn and beans. If the USDA would have chosen to leave unharvested acres alone and just adjust yields lower our prices would have had more fund buying.
But the USDA helped keep a bigger headline “yield” from causing the algo’s to buy corn. What I mean by this is overall our production dropped by 200 million bushels, but not all wire services even list harvested acres. So via how the USDA decreased production they helped control price action as when the algo’s seen USDA increased corn yield the programs would have simply got a sell. This also longer term affects the trend line yields that the USDA uses.
Tidbit #2 USDA decreased demand to the tune of 150 million bushels of corn exports, 25 million bushels of corn feed usage, and 55 million bushels of soybean exports. Corn export number makes sense but is really jumping the gun considering the fact that the US is really the only corn game left for the next several months. If Brazil corn crop gets smaller our exports will likely get revised larger in the future.
The soybean export decrease only makes sense because we may not have beans to export.
As for the decrease in corn feed usage Wright on the Markets said this the other day “Take this to the bank also: By the end of this corn marketing year, corn for feed use will be 300+ million bushels higher the USDA stated. There is no way we will feed 425+ million fewer bushels of corn this marketing year.”
Tidbit #3 CONAB which is the equivalent of the USDA in Brazil pegged Brazil soybean carryout as decreasing to 206.5 million bushels from the present 220 million bushels. But that’s with an increase of nearly 955 million bushels more in production.
They are forecasted to grow nearly a billion bushels more soybeans but have fewer soybeans then before. Can you say the word demand.
Ask yourself what will happen if this Brazil soybean crop gets some hiccups? Folks Mother Nature needs to continue to be very nice to Brazil or we will see $20 beans sooner then later.
One other thing that CONAB noted was the fact that Brazil needs to see carryouts increase substantially in 2024 for national food security. Is this Brazil trying to tell China that they will be shutting off exports to them sometime in the future?
Tidbit #4 Funds sold a lot of grain in the past CFTC report. Stages are set that should accelerate prices to the upside if the funds decide to buy. Meaning some of the headlines such as a decreased carryouts have changed thus less will be as willing to sell. Exports decreased so those that wanted to sell corn because they thought our exports were overstated probably are not as likely to sell because the USDA has already acknowledged and trimmed our projected exports. Plus farmers have sold a lot of grain to start the year and I think the bin doors are not going to open as easily as they did right after the turn of the calendar.
Some of the charts have plenty of pockets of air that we funds could easily decide to go after.
If the funds do decide to join the party the technical picture looks fairly good, and will accelerate if we break the highs we had a few weeks ago...
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Included in this Week’s Edition
Price Targets
Biofuel & EPA
Demand outlook
US Dollar impact
China's impact on the grains
Grain Sales - What to Do
Seasonal Trades & Spreads
Should you buy bean meal puts
Price Action & Seasonality
Technical Analysis
All-Time Highs?