Grain Comments: 02-21-2023

Good Morning

Soybeans gapped higher overnight with a run back towards last Monday’s move highs; it was mostly downhill after that last week, but all the same bullish concerns remain with the Ag Forum looming later this week.

Heavy precipitation is on tap this week with snow in the northern Plains and belt and rains center-southeast, while the southern Plains remain dry; extend-ed maps continue to run above-normal precipitation-wise. Temp outlooks are back to running mostly normal to above normal with cold pushed out to the west.

Argentine rains were confined to fringe areas over the weekend and hold to northern regions this week, with the 6-10 day forecast still dry as well. Temps will move back warmer after some scattered frost damage over the weekend. Brazil again saw widespread rains in the past 3-4 for day for all but SW crop areas, continuing this week throughout, then limited to the center-south for the 6 to10 day period. Harvest and fieldwork delays should be limited longer-term in the north, with some dryness concerns lingering in the far south.

Last week the USDA baseline data was released which gave us our initial look at what is being projected for new crop balance sheets.  This will be followed by the Ag Outlook Forum that will take place at the end of the week. Again, these numbers will be based more on historical trends and are used more for financial and budgetary purposes rather than actual balance sheet projections, and their reaction tends to be muted on the market. While this is true, there is still some data that trade does take away from them. The main one being the USDA expects balance sheets to remain relatively tight next year, even if we see larger crops. This is especially the case on soybeans where the 2023/24 stock to use is expected to remain a tight 5.1%. This would warrant the continuation of price rationing in soybeans. Corn stocks to use is less concerning at 11.6% for 2023/24, as is wheat at 34%. These levels do not indicate rationing is needed but are still relatively tight. Baseline data also used larger yields to produce relative steady ending stocks projections across the board. This gives us an indication we may need to see more risk premium in the market than there currently is, and more than we have been forecasting. Trade will now wait for the first official new crop balance sheets that will be released in the May WASDE report.

Have a great day!